EUR-Lex - 31978D0697 - EN

In this respect the share of the market in Scotch whisky or whisky from all sources held by Teacher in the United Kingdom is of direct relevance. Teacher holds around ... % of these markets and therefore the export prohibitions under consideration restrict to an appreciable extent otherwise available supplies of whisky for dealers and consumers in other EEC countries.

These restrictions are also the more significant in view of the following considerations. In EEC countries other than the United Kingdom, Highland Cream is among the best selling brands of Scotch whisky with a market share which has continuously grown over the past few years. In addition, the provisions restrict the export trade of a branded product for which the primary level of competition is that among dealers in that brand and eliminate the main usual source of parallel imports and competition, namely, dealers in the country of the producer.

Concerning the position of the parties who are affected by Teacher's restrictive conditions, the export prohibitions prevent all 3 000 to 4 000 trade customers from exporting and competing with the numerous dealers in whisky in other EEC countries. Many of these trade customers are of considerable importance and are willing and able to engage in export activities.

Also relevant is the importance of the commercial and financial position held by Teacher, whose turnover until 1976 was substantial. In 1976 Teacher was acquired by Allied Breweries Ltd, and is therefore now part of a group of considerable importance which is widely established also in Community countries other than the United Kingdom and accordingly could benefit from Allied Breweries' retail outlets, both in the United Kingdom and in other EEC countries.

The non-exportation provisions contained in the notified conditions of sale cannot therefore be considered as having such insignificant effect on competition within the common market as to leave them outside the prohibition of Article 85 (1).

(e) The direct and indirect export prohibitions contained in the conditions of sale are likely to affect trade between Member States.

The restrictions by their nature are likely to affect trade between Member States, since they prevent trade by trade customers from the United Kingdom to other EEC Member States. They cause an artificial partition of the common market and hinder the establishment of a single market among Member States. In this case, they have a direct and actual influence on the pattern of trade between Member States since they prevent exports by trade customers and their purchasers of a product which is already distributed and established in EEC countries other than the United Kingdom. Furthermore, in the light of the considerations set out under (d) above, the provisions in question are capable of affecting trade within Member States to an appreciable extent.

The two provisions referred to above and contained in the notified conditions of sale applied by Teacher therefore amount to infringements of Article 85 (1) since August 1974.

1. Inapplicability of Article 85 (3) of the EEC Treaty

Under the terms of Article 85 (3), the provisions of Article 85 (1) may be declared inapplicable in the case of any agreement between undertakings which contributes to the improvement of the production or distribution of goods or to the promotion of technical or economic progress while reserving to users an equitable share in the profit resulting therefrom, and which: - neither imposes on the undertakings concerned any restrictions not indispensable to the attainment of the above objectives,

• nor enables such undertakings to eliminate competition in respect of a substantial proportion of the goods concerned.

(a) In the notification of the conditions of sale on 17 April 1974, and in reply by letter of 29 August 1977 to the Commission's statement of objections of 12 July 1977, Teacher submitted that in order that consumers' interests are served by the availability of Highland Cream as an alternative product of quality, it is indispensable that Teacher should provide for orderly and rational marketing of its whisky in the United Kingdom and in the other EEC countries. Distributors in these countries, who with Teacher material and financial collaboration promote sales of that product, would refuse to deal with Teacher's whisky in the absence of a reasonable degree of security.

(b) However, the sales contracts, of which the provisions in question are an essential part, are not capable in themselves of directly achieving an improvement of distribution in the United Kingdom or in the other EEC countries. They simply concern sales to trade customers and conditions on which such sales are made, mainly that trade customers and subsequent purchasers may not resell outside the United Kingdom and trade in the other EEC countries.

The non-exportation provisions further deprive consumers in EEC countries other than the United Kingdom of an important source of supply of Scotch whisky, while the nature of the goods in question and their distribution requirements do not justify a complete isolation of the United Kingdom from the rest of the common market.

The notified conditions of sale do not therefore fulfil the conditions set out in Article 85 (3).

Accordingly, the request made by Teacher for an exemption under Article 85 (3) of the conditions of sale notified on 17 April 1974 is rejected.

III. APPLICABILITY OF ARTICLE 3 (1) OF COUNCIL REGULATION NO 17

Under the terms of Article 3 (1) of Council Regulation No 17, where the Commission, upon application or upon its own initiative, finds that there is an infringement of Article 85 of the Treaty, it may by decision require the undertakings concerned to bring such infringement to an end.

In view of the serious effect on competition within the common market resulting from the conditions of sale, Teacher should be required to terminate without delay the infringement constituted by the prohibitions to export and to resale in bond contained in these conditions of sale unless it has already done so. It should also be required to refrain from any further action by means of sales conditions calculated to restrict the exportation from the United Kingdom to other EEC countries of Highland Cream bought by trade customers,

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