The Gazette 1989

SEPTEMBER

1989

GAZETTE

No Need to Notify? Block Exemptions under Article 85 of the Treaty of Rome

stantial part of the products in question. If those two positive and two negative conditions of Article 85(3) are all satisfied, the agreement may be exempted from the provisions of Article 85(1) either on an individual basis after notification to the Directorate General for Competit- ion (DGIV) in Brussels on Form A/B seeking the negative clearance, or, more commonly, pursuant to a block exemption. It is appropriate in all cases to consider whether a particular agreement can benefit or can be adapted to benefit from one of the block exemptions as an agreement benefitting from a block exemption does not require notification and thus saves the parties to the agreement consider- able time, expense and uncertainty. Broadly speaking, the regulations which provide block exemption derive from the application of the four conditions of Article 85(3) based upon the practical experi- ence gained by the Commission in reviewing individual applications for negative clearance. Peter Sutherland was a key member of the European Com- mission which devised, designed and commenced the implementa- tion of the 1992 Programme. In Blackhall Place he spoke of the information market and pointed out that commercial clients would turn for advice on a particular measure to the source which first informed them of it, whether this was a lawyer or not. The 'Big 8' account- ancy firms, with their enormous international resources, have estab- lished Brussels based information gathering and distribution systems. Should the idea of a Law Society office in Brussels really be dis- missed out of hand? • 257

The creation of the single European market by the end of 1992 means that businesses will no longer be trading in separate national markets, but in one market with common rules covering all twelve member States. The progress towards completion of the single market presents businesses with great challenges and opportunities, and inevitably businesses respond- ing to those challenges will require the services of lawyers with know- ledge and experience of the new developing legal environment. Many businesses have already reshaped their trading arrange- ments in anticipation of the single market, and many more will follow; increasing numbers of lawyers will be required to advise in relation to these developments and to draft distribution or agency agreements, franchising agreements, licences or clauses in joint venture or acquisit- ion agreements. They must there- fore recognise that all agreements, arrangements or undertakings between member States of the Community are subject to the com- petition laws of the Community. The basic rules of European competition law are contained in Articles 85 to 90 of the Treaty of Rome and in the considerable number of regulations and notices of the Commission. In addition, a substantial body of case law has already developed in relation to specific aspects of competition law. Article 85(1) prohibits all agree- ments between undertakings, decisions by associations of under- takings and concerted practices which may affect trade between member States and have as their object or effect the prevention, restriction or distortion of competit- ion within the Common Market: agreements prohibited by that Article are automatically void under Article 85(2).

Article 85(3) states that the provisions of Article 85(1) may be declared inapplicable in the case of any agreement or category of agreements between undertakings, any decision or category of decisions by associations of under- takings or any concerted practice or category of concerted practices which contributes (a) to improving the production or distribution of goods or (b) to promoting technical or economic progress while allow- ing 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 those objectives; (b) afford such undertakings the possibility of eliminating com- petition in respect of a sub- V I EWPOI NT (Contd from p.255) on quality and value for money there is every reason to believe it will thrive. If it does not do this then other professions and advisers will fill the gaps which the lawyers leave. The market, not the profess- ion, will decide. A crucial battleground will be European law as it applies to com- mercial activity in the Community. There is a great market for information in the business world on 1992 developments at the moment. Changes to the law and their implications are a very important part of this. Will the legal profession make this area its own or will complacency result in it being conceded to accountants and other advisers? By Arthur D. S. Moran, Solicitor