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GAZETTE
SEPTEMBER
1989
No Need to Notify?
Block Exemptions under Article 85 of the Treaty of Rome
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
By
Arthur D. S. Moran,
Solicitor
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-
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.
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?
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?
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