The Gazette 1985

GAZETTE

JULY/AUGUST 1985

Care brought proceedings against the Commission before

the Court of Justice, which interpreted the Commission's

powers under Council Reg. 17/62 and ruled that the

Commission had power to take interim measures in

appr opr i a te c i r cums t anc e s .

Sub s e qu e n t l y,

the

Commission imposed substantial fines on Victor

Hasselblad and its European distributors who appealed

to the Court of Justice, which in a judgment delivered on

21 February 1984 partially annulled the decision of the

Commission and reduced the overall fine to be paid.

Enforcement of Competition Law by Irish Courts

The direct enforceability of Articles 85 and 86 of the

Treaty was confirmed by the Court of Justice in a case in

1974,

BRT-v- SABAM,

so that it has been clear since then

that parties before national courts could assert rights or

raise defences based on those Articles. However, it has

also emerged in recent years that an aggrieved party could

in addition seek damages for infringement of either

Article 85 or Article 86. The Commission has been keen

for some time to share the burden of enforcing

competition policy by de-centralising it through

emphasising the practical advantages of seeking

enforcement through the national courts. In its

Thirteenth Report on Comp e t i t i on Po l i cy the

Commission stated that it "believes it desirable that the

judicial enforcement of Articles 85 and 86 should also

include the award of damages to injured parties, because

this would render Community law more effective."

The recent House of Lords decision in

Garden Cottage

Foods Limited

-v-

Milk Marketing Board

would seem to

have established the availability in the English courts of

both injunctions and damages for infringements of

Article 86, and the same principles would apply in the case

of infringement of Article 85. Although the judgments of

the House of Lords were in interlocutory proceedings, the

majority view appeared to be that damages would be

available to an aggrieved party.

There is no definitive decision of the Irish courts on the

point, but it would appear that an action for damages —

and presumably in appropriate circumstances an

application for an injunction — would lie and could be

claimed in the normal way by issuing declaratory

proceedings. Both Article 86 and Article 90(2) were relied

upon in

Sugar Distributors Ltd. and Thomas Kelehan

-v-

Comhlucht Suicre Eireann Teoranta

(High Court, May

1975),

a case in which the Sugar Company — which has

a statutory monopoly of the right to manufacture sugar in

Ireland — decided that it would also enter the distribution

end of the business, and had refused to supply any sugar

to the plaintiff company which was a traditional

distributor in the Munster area. The Plaintiff claimed that

this constituted an abuse of a dominant position by the

Sugar Company, but after several days hearing the matter

was settled by the parties. More recently, in

Cadbury

Limited

-v-

Kerry Co-op Limited/

Mr. Justice Barrington

held that the plaintiffs' claim for damages for abuse of a

dominant position must fail because the area of County

Kerry could not be considered " . . . a substantial part of

the common Market". However, the Court does not

appear to have questioned the fact that damages had been

sought for infringement of Article 86.

Apart, of course, from enforcement through claims for

damages or injunctive relief, parties may also seek

enforcement through the Irish courts by relying on Article

85 as a defence to an action in contract. Unless an

individual or group exemption has been secured under

Article 85(3), all agreements prohibited by Article 85(1)

are automatically void. Therefore, if a company is being

sued for breach of contract it may well argue in its defence

that the particular agreement was prohibited by Article

85(1) and is therefore void. This issue was raised in

Aluminium Distributors Ltd.

-v-

Alean Windows Ltd.,

discussed in Part V.

State Aids

Apart from the competition Articles, which of course

apply to public enterprises as well as private companies,

with the limited exception for undertakings falling within

Article 90(2), legal practitioners should note the

increasing importance of the provisions of the EEC

Treaty relating to State aids, Articles 92-94, and the

significant body of case law which is emerging in this area.

The Fourteenth Report on competition policy, covering

1984, revealed the scope of the Commission's powers io

curtail the granting of aid by the Irish Government. 1i.

report refers to the fact that in December 1983 the Irish

Government informed the Commission of a proposed aid

amounting to £2.9m in favour of a producer of polyester

yam, which would require the approval of the

commission under Article 90(3). The Commission

decided on 19 October 1984 that this aid would be

incompatible with the Common Market and must not be

granted because:

"the Commission concluded that the investment

which it was proposed to support concerned

modernization of an obsolete plant which should be

carried out using the resources of the undertaking

concerned without State aid, especially since a very

large percentage of the plant's output was exported

to other Member States. The Commission also took

the view that — while the standard of living in the

area concerned was very low and it suffered from

serious underemployment — the sectoral effects of

aids to this particular industry needed to be

controlled even for the most underdeveloped areas.

Taking into account the situation of the polyester

sector which was likely to continue in the future, the

proposed aid would not promote the economic

development of the region concerned but would be

likely to distort competition in intra-Community

trade without making a contribution to regional

development sufficient to compensate for that

distortion. The aid also would have the effect of

further reducing capacity utilization in the industry

concerned."

It is worth emphasising that companies who might be

the recipients of such aid for which authorisation is

refused, or refused in part, by the Commission can appeal

to the Court to annul the Commission's decision. For

example, in the

Intermills Case,

a Belgian paper firm

appealed to the Court to annul the Commission's decision

refusing as incompatible with Article 92 a provision of

new capital to the firm by the Wallonia Regional

Executive because the Commission had considered that

this amounted to a rescue aid designed to enable the firm

to meet its current liabilities and was likely to have a very

adverse effect on competitive conditions. The Court

allowed the appeal and struck down the decision on

technical grounds, having concluded that although the

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