The Gazette 1985

GAZETTE

SEPTEMBER 1985

Article 87 of the EEC Treaty provides for the

enactment of legislation by the Council, on a proposal

from the Commission and after consulting the European

Parliament, "to give effect to the principles set out in

Articles 85 and 86". I have no doubt about the need for

action and the existence of the necessary powers. This

issue is not a matter of choosing between policy options;

nor is it one of Constitutional Law. The time has come to

begin consultations with the Member States, Community

institutions and all interested parties to decide how best to

move forward in the best interests of the Community and

all who trade and consume within its borders.

Rule of Reason

Proponents of a rule of reason in Article 85( 1) advocate

a balancing of the pro- and anti-competitive features of a

given arrangement under Article 85(1), rather than

concentration on the anti-competitive features to bring

the arrangement under Article 85(1) and only then

consideration of the pro-competitive features under

Article 85(3). One problem with this approach is that, at

best, it caricatures and, at worst, it distorts what the

Commission does in its decisions. Of course, we have to

establish "the prevention, restriction or distortion of

competition" (Article 85(1)). In making that analysis,

account is taken of market conditions and all the other

circumstances of the case. In some cases, what appears at

first sight to be a restriction of competition turns out not

to fall within Article 85(1) since it is in fact ancillary to an

overall lawful purpose, be it a no-competition agreement

on the sale of a business or a ban on sales outside the

network other than to end-users in a selective distribution

system

. In other cases, however, a genuine restriction of

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competition is found and can be redeemed only by Article

85(3) under which the Commission has regard to the

possible benefits of the arrangement in the light of the

Treaty's policy.

Article 85(3) is in a way our rule of reason. We do not

have

per se

infringements of Article 85(1), and every case

is considered under Article 85(1) on its merits. The

reasonable approach under Article 85(1) has already

thrown up some areas in which apparent restrictions are

revealed on analysis to be innocent after all in

competition terms if kept within certain bounds.

Community law therefore has a

two-stage approach:

under Article 85(1) a market analysis is carried out to

determine whether there is a restriction or distortion of

competition and, if so, whether it is appreciable; then, and

only then, Article 85(3), a statutory, even constitutional,

rule of reason is applied in order to consider whether, in

all the circumstances, the arrangement in question

presents objective advantages justifying an exemption.

Conclusion

Community antitrust law has undergone a series of

procedural reforms in recent years designed to reinforce

confidence in the application of rules on the rights of the

defence (due process)

. We are now turning our attention

to ways of speeding things up, while maintaining on the

one hand the Commission's ability to investigate and act

in the European public interest and respecting on the

other hand undertaking's desire for both full

consideration and prompt resolution of their cases. The

adoption of block exemption Regulations with

opposition procedures and the judicious use of

administrative ("comfort") letters to give undertakings a

feel for the attitude of the Commission in suitable cases

will enable undertakings to obtain a quick reaction.

Finally, the assumption by national courts of part of

the enforcement burden will enable the Commission to

concentrate on the larger policy issues and will reflect

more fully than now the sharing of responsibilities

between national and Community institutions which the

Treaty and the Court of Justice clearly intended.

I have not sought in this article to consider all the issues

of the Community's competition law. That this is an

impossible task in a short article shows just how rich and

complex a legal system has grown out of Articles 85 and

86 of the EEC Treaty.

•

Footnotes

17. See Competition Law Enforcement: International Co-operation in

the Collection of Information, O.E.C.D., Paris, 1984, (contains the

text of the Recommendation of 25 September 1979).

18. On joint ventures and EEC competition policy generally, see Faull,

Joint Ventures under the EEC Competition Rules.

(1984) European

Competition L.R. 358; Hawk,

op. cit.,

vol II. chap. 9; Ritter and

Overbury,

An Attempt at a Practical Approach to Joint Ventures under

the eec Rules on Competition

(1977) 14 Common Market Law

Review 601; Temple Lang,

Joint Ventures under the EEC Treaty

Rules on Competition.

3 parts, (1977) 12 Irish Jurist 15; (1978) 13

Irish Jurist 132; (1980) 15 Irish Jurist 13 and

European

Community

Antitrust Law and Joint Ventures involving Transfer of Technology

(1982) Fordham Corporate Law Institute 203.

19. In its 13th Report on Competition Policy, Brussels/Luxembourg,

1984, para. pp. 50-52, the Commission published a checklist of

criteria to be used in the "realistic" assessment of potential

competition.

20. On exclusive distribution, see Schroter,

The Application of Article 8?

of the EEC Treaty to Exclusive distribution Agreements.

(1984-85) 8

Fordham Intl. L.J. 1; Korah,

Exclusive Dealing Agreements in the

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