The Gazette 1973

Community Competition Law

Dr. Alfred Gleiss, of the firm of Messrs Gleiss, Lutz,

Hootz, Hirsch & Partner, Stuttgart, Germany, delivered

lectures on Community Competition Law and on

Merger Control to members of the Society in the Bur-

lington Hotel, Dublin, on Saturday, 27 January 1973.

The following summary has been approved by Dr.

Gleiss.

(I) Survey on EEC Competition Law

(1) There is no general competition law of the

EEC. Articles 85 et seq. contain directly applicable

cartel law. In the fields of unfair competition and

patent law, trade mark law and the like, national law

will continue to apply which will be increasingly

influenced by Community Law.

(2) Besides the Community Cartel Law contained in

Articles 85 and 86, the national Cartel Laws remain in

force. The relation between EEC Cartel Law and

national Cartel Law shall be solved pursuant to Article

87 para 2 (e) by a Regulation or a Directive to be

issued by the Council. This has not, however, been

done yet.

(3) The Court of the European Communities in the

so-called "Preliminary Dyestuff decision" of 13 February

1969 has pronounced that the application of the EEC

Cartel Law does not exclude in principle the applica-

tion of national Cartel Law but that in any clash of

rules Community Law would have precedence. A

decision in a national proceeding must not be inconsis-

tent with a decision of the Commission. If the national

decision is passed after the Commission's decision the

national authority must "take account" of that of the

Commission. In the opposite case, the national authori-

ties "must take appropriate measures"—a somewhat

vague dictum.

Thus, because of the same facts, the national authori-

ties as well as the EEC Commission may conduct pro-

ceedings and levy fines.

(4) The Cartel Prohibition of Article 85 is applic-

able to all enterprises active within the EEC, no matter

where they are located. Article 85 is not applicable to

enterprises of the Coal and Steel Industry; so far, the

European Coal and Steel Community (ECSC) Treaty

has precedence. It is applicable to agriculture with cer-

tain limitations.

(5) Restraint of trade is prohibited only, if it "per-

ceptibly" affects trade between Member States

r-.nd

competition. As per the "Bagatelle Publication" of

the Commission, this will not be the case, if the market

shares do not exceed 5% and the total annual turn-

over of the participating enterprises is not more than

15 million units of account (one unit is about 45p).

(6) Article 85 does not distinguish between Horizon-

tal Cartels, i.e. such which are concluded between enter-

prises of the same economic level, and Vertical

"Cartels", i.e. agreements between enterprises of diffe-

rent economic levels (say manufacturer and dealer).

(7) The law relating to the so-called sole distributor-

ship agreements has undergone the greatest degree of

development. In the judgment

Grundig/Consten

1966, the

Court prohibited "absolute' 'territorial protec-

tion,

i.e. the guarantee given by the manufacturer, that

a sole distributor will be the only one who may import

goods into a specific territory and that third parties

shall not sell into this territory.

The group exemption of sole distributorship agree-

ments granted by the Commission's Regulation of 22

March 1967, called in brief Regulation 67/67, is of

great importance.

According to it, agreements between manufacturer

and dealer from different Member States are admissible,

if they contain exclusive obligations to deliver and

supply without any export prohibition.

In several individual Decisions, the Commission per-

mitted special distributorship systems, especially the

"selective distributorship system" of the Swiss watch

maker Omega. In this Decision, the Commission con-

sidered it a violation of Article 85, if in the agreements

between the manufacturer and the general agents the

number of the local retailers is limited, but it granted

an exemption under Article 85 para 3, especially, be-

cause technically highly developed and relatively ex-

pensive products were affected.

(8) In the field of "horizontal" cartels, the Com-

mission came—in spectacular proceedings—to several

decisions, especially in the

Quinine and the Dyestuff

Judgment of 14 July 1972

the Court defined the mean-

ing of the concerted practices with the formula of

"conscious practical co-operation". The objective paral-

lel behaviour of several enterprises is not

per

a con-

certed behaviour but an important indication.

(9) At the end of last year, the Commission granted

a group exemption agreement for specialization agree-

ments in the field of Horizontal Cartels. Previously in

several decisions, it had already exempted specialization

agreements, even if concluded by large enterprises. One

can conclude from this that the Commission is prepared

to accept such agreements, if effective competition

remains on the markets concerned. The Regulation on

Group (or: Block) Exemptions is applicable only, if

the products in none of the Member States exceed

market shares of more than 10% and the total turnover

of the participating enterprises does not exceed 150

million units of account.

(10) It results from the Commission's fundamental

Decision of 23 December 1971 in the

Henkel

/Colgate

case

that even merely factual restrictions of research

can be restraint of trade. This applies to all fields, in

which the competition is largely influenced by the re-

sults of research.

(11) In its "EEC Cooperation Publication" of 29

July 1968, the Commission has worked out rules for

enterprise cooperations, which do not violate Article

85.

(12)

Article 86

prohibits the abuse of market domin-

ance. In this connection there are three important

decisions of the Commission. The

GEMA-Decision

2 June 1971,

the Continental Can Decision

of 9 Decem-

ber 1971 and the

Decision against Zoja

of 20 December

1972. In the latter decision, the Commission has pro-

hibited a monopolist from refusing to supply a buyer.

I shall deal in a special lecture with the problem of

application of Article 86 to enterprise cooperation

(Continental Can).

(II) Merger Control Under Article 86

(1) The EEC Treaty does not contain regulations

which prohibit expressly the merger of enterprises. On

the contrary, the Commission again and again has

taken initiatives for creating larger units of enterprises,

"enterprises of European dimension". In 1971, e.g., it

published the draft of the statute of a European joint

stock company, in order to make a special legal form

available for mergers of enterprises from different

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