The Gazette 1985

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GAZETTE SEPTEMBER 1985
This means that parallel imports must remain possible
between distributors' territories. Distributors must
remain free to set prices and to sell to whomever they
wish. While in the absence of per se rules in Community
law, an individual exemption is always possible, the
policy on distribution set out in the block exemption
regulations is intended to apply to as many industries and
products as possible. Certain special rules have, however,
been laid down for brewery and petrol station contracts
(exclusive purchasing) and automobile distribution and
servicing (a mixture of selective and exclusive distribution).
We are confident that these regulations strike the right
balance between the legitimate needs of industry and the
just demands of consumers. Our policy on distribution is
designed to facilitate the penetration and opening-up of
new markets, while giving producer and consumer alike
access to the benefits of a common market. We have now
to set about implementing the regulations carefully,
explaining and clarifying where necessary.
The Commission's general policy on selective distribu-
tion has also been set out recently in a number of
decisions. We are fortunate too to have several
judgments of the Court of Justice on this issue which, I am
pleased to say, generally endorse the Commission's
approach. Summarising that approach, I would say that
our competition policy recognises the need for manufac-
turers to restrict distribution of their products in certain
circumstances to specialists. Identification of those
circumstances requires analysis of the market under
examination: in past cases, the Commission has
considered cases involving technically sophisticated
products calling for considerable pre-sales advice and
after-sales service and luxury goods demanding a
particualr sales environment. If dealers are admitted to
the selective distribution network on the basis of objective
criteria pertaining to the quality of the service they are to
offer and those criteria are applied uniformly and without
discrimination to all consumers, the agreements
concerned will not fall within Article 85(1). The principal
limit placed on the distributors' freedom of action once
chosen — the undertaking to sell only to fellow dealers or
final users, i.e. not to dealers outside the network — is
considered to be ancillary to the overall lawful purpose
and outside Article 85(1). Resale price maintenance is
unlikely to be tolerated more in a selective distribution
context than in other areas of our policy. The dangers for
the embryonic and fragile unity of the common market
are too manifest. The major problems seem to be the
identification of products in real need of selective
distribution because they are too complicated or precious
for supermarkets and the opportunities for abuse
contained in the admission process. The former requires
economic analysis and the latter may be solved at least
partially by decentralising the admission process.
The second SABA24 decision which sets out at length
some of the Commission's views on selective distribution
is currently under appeal to the Court of Justice and we
look forward to further enlightenment from the
judgment. The recent Grundig decision also explains our
policy clearly. Two 1984 decisions illustrated the limits of
this policy. The IBM personal computer2* decision granted
negative clearance under Article 85(3) to a distribution
system which, in the prevailing circumstances of the EEC
personal computer market, fell outside the terms of
Article 85(1). The selective distribution systems operated
by German sanitary equipment manufacturers Grohe26
and Ideal Standard27 on the other hand, were held to be
contrary to Article 85(1) and not to be worthy of
exemption under Article 85(1). The wholesalers in these
cases were obliged by their agreements with the manufac-
turers to sell only to plumbing contractors. The
Commission considered this an unnecessary restriction
on sales to retailers.
The Commission's hostility to export bans or
impediments in distribution arrangements in the common
market is well known and fully supported by the case law
of the Court of Justice. Our fining policy for well-
established infringerhents is also widely understood.
Attempts to divide the common market to the detriment
of consumer choice will continue to be challenged. The
opportunities offered by access to the wider common
market notwithstanding all its imperfections carry with
them certain legal obligations: manufacturers cannot
have their cake and eat it, their common market and
absolute territorial protection for their distributors.
The Commission will also have to look at a new form of
distribution, namely franchising28 . The Commission
needs to gain further experience through the decision of
individual cases before further block exemptions can be
envisaged, but is already examining the implications of
franchising for competition policy. The Court of Justice's
coming judgment in the Pronuptia case should assist the
Commission greatly in its policy development in this
area.
Services
It is now well established that Article 85 applies to the
activities of banks and insurance companies 29 as well as
to the rest of the services sector. The Commission will
continue to examine agreements notified to it and will
take whatever action is necessary to counter anti-
competitive practices to fix prices or share markets in the
EEC. On the other hand, co-operation to extend services
to a wider range of consumers throughout the common
market will be welcomed. An example of what I mean is
the Eurocheque system, a continent-wide cheque system
which enables the European traveller to write a cheque
drawn on his own bank in the local currency of the
country he is visiting. In Brussels, one rarely sees
traditional national cheques any more. An exemption
under Article 85(3) was granted last year in respect of the
agreements governing the Eurocheque network30.
As the services sector increases in size and importance
as an employer in the industrialised economies, it will
become increasingly important to apply the competition
rules in a sensitive and realistic way, taking account, for
example, of the special characteristics of the banking
sector, while remaining committed to the goals of a
competitive economy and a common market. A real
common market in services does not yet exist.
Competition policy will play its part in fostering the
moves already afoot to make it a reality.
Deregulation
Some European countries have already adopted a
limited number of deregulation measures, others are
more reticent, even sceptical. In the Commission, we are
certainly convinced that the American experience cannot
be applied as such in Europe. Our historical and present
circumstances are just too different. However, regulation
in the way of the common market receives a fairly critical
treatment in the Community Treaties and a great deal of
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