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CASE-LAW

C-1/71 - Societe anonyme Cadillon v Firma Hoss, Maschinenbau KG
61971C0001

OPINION OF MR ADVOCATE-GENERAL

DUTHEILLET DE LAMOTHE

DELIVERED ON 4 MAY 1971 ( 1 )

Mr President,

Members of the Court,

Société Anonyme Cadillon is a French limited company based in the Lyon area which sells various machines and equipment intended for public works and in particular machines for the manufacture of concrete.

In 1967 it entered into a sole agency agreement for France with a German undertaking which manufactures machinery of that type, Firma Höss, whose registered office is in Roding.

This agreement was terminated from 31 December 1967.

However a new agreement was entered into on either 30 January or 5 February 1968.

This agreement provided in particular that it was for a term of three years and could be renewed by tacit agreement and that the French company was to accept as consideration an undertaking to sell a minimum number of machines manufactured by Firma Höss each year, a number which was small, however, since it was between 24 and 30 machines.

But this agreement made at the beginning of 1968 ‘vécut ce que vivent les roses’ ( 2 ) as Malherbe would have said.

In fact the German undertaking repudiated it on 23 February.

Af ter attempting to make the German undertaking reconsider its position, Société Anonyme Cadillon brought an action before the Tribunal de Commerce, Lyon, for a declaration that the unilateral repudiation by the German firm of the agreement made between the two undertakings at the beginning of 1968 was null and void.

Firma Höss put forward two arguments in its defence. It maintained:

(1)

that the agreement of 1968 which it had unilaterally repudiated was void because it had entered into it under undue influence and duress,

(2)

that the same agreement of 1968 is also void because it comes within the prohibitions laid down by Article 85(1) and (2) of the Treaty of Rome.

The Tribunal de Commerce, Lyon, to which in these circumstances the case had been referred, decided by a judgment of 24 September 1970 which surprisingly was only sent to the Court on 6 January 1971. I am quoting from the operative part of that judgment) that the court:

‘suspends its decision on the substance of the case and requests the Court of Justice of the European Communities, in application of Article 177 of the Treaty, for a preliminary ruling on the interpretation of Article 85 of the said Treaty and of the implementing regulations issued thereunder in the case pending before this court between Société Anonyme Cadillon and Firma Höss.’

I

The first question which this case raises is whether the Court has been validly seised and with what questions.

In this respect, the arguments of the two parties to the main action are very different.

Firma Höss maintains principally that the judgment of the Tribunal de Commerce is too vague for the Court to be able to deduce the question or questions which are being referred to it and that in these circumstances it must therefore refuse to give a ruling and request the Tribunal de Commerce, Lyon, to deliver judgment itself.

Société Anonyme Cadillon considers on the contrary that the Tribunal de Commerce, Lyon, meant in fact to refer to the Court five main questions, the two last of which are subdivided, the penultimate into five subsidiary questions and the last question into two subsidiary questions.

In fact as the Commission well understood, Société Anonyme Cadillon would like the Court to deliver judgment on two points, one main point and the other as a secondary point. As the main point, it would like the Court to rule in what circumstances agreements of the type concluded in 1967 and in 1968 between the German undertaking and the French undertaking come within the provisions of Article 85 of the Treaty.

As a secondary point, it would like the Court to deliver judgment on the following points:

(a)

May contracts of this type which come within the provisions of Article 85(1) of the Treaty obtain the benefit of the provisions of Regulation No 67/67 when they were entered into after that regulation came into force, even if they have not been notified?

(b)

May contracts of the same type which have also been notified obtain the benefit of the provisions of that regulation when they were entered into before it was adopted?

As you can see, it is impossible to imagine two arguments more opposite than those put forward by Firma Höss on the one hand and by Société Anonyme Cadillon on the other.

I shall suggest that the Court adopts a position midway between these extremes to decide under what conditions questions may be referred to it and what limitations should be set on them.

In fact the Court has always acknowledged that it had the power and the duty to deduce from the judgment whereby a court referred a question to it under Article 177 of the Treaty the sense of the question or questions which the court hearing the main action actually intended to submit to it, even if it did not express them in the usual form.

But, on the other hand, I do not think that the Court may consider that questions have been referred to it which were not raised before the court hearing the main action and which it therefore could not have intended to submit to the Court.

In this respect, I do not share either the opinion held by Firma Höss or that held by Société Anonyme Cadillon.

The only agreement whose compatibility with Article 85 of the Treaty was contested before the court hearing the main action is the agreement concluded in January 1968, that is, after Regulation No 67/67 came into force. The wording of the judgment is clear on this point. In fact the only paragraph devoted to this question reads: ‘The defendant (that is, Firma Höss) claims that the contract of 30 January 1968 is void both because it is vitiated by duress and because it comes within the prohibition contained in Article 85 of the Treaty of Rome’.

It follows, I think, that the whole series of subsidiary questions to which Société Anonyme Cadillon would like the Court to reply were not raised before the court dealing with the main action and that therefore, however wide the Court's powers of interpretation of its judgment, it cannot, in my opinion, consider that the court intended, even indirectly, to refer these questions to you.

On the other hand, contrary to what Firma Höss maintains, it is perfectly possible to identify the questions which the court has asked with regard to the issue raised before it and according to which the contract of 1968 comes within the provisions of Article 85(1) of the Treaty.

In these circumstances, I suggest that the Court interprets the judgment of the Tribunal de Commerce, Lyon, as referring to it the following questions:

(1)

Main question: Does an exclusive sales agreement entered into between two undertakings situated in different Member States and relating to transactions to be carried out within the Common Market always come within the prohibitions laid down by Article 85(1) of the EEC Treaty?

(2)

Subsidiary question: If an agreement of this type which was made in 1968 comes within the provisions of Article 85(1), does the fact that it has not been notified to the Commission have the effect of preventing it from benefiting from the provision of Regulation No 67/67 which, in application of Article 85(3) of the Treaty, states that the prohibition laid down in Article 85(1) is inapplicable to certain agreements?

II

In my opinion the case-law of this Court and the very wording of the provisions to be applied enables these two questions to be answered quite easily.

A —

As regards the answer to be given to the main question, your judgment of 9 July 1969 in Case 5/69, Völk v Vervaecke, [1969] ECR, supplies a valuable basis.

For an exclusive sales agreement to be considered as coming within the prohibition laid down by Article 85(1), it must be capable of affecting trade between Member States.

The judgment of this Court specifies that to do this:

(1)

‘On the basis of all the objective factors of law or of fact, it must be foreseen with a sufficient degree of probability that the agreement may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States in such a way that it might hinder the attainment of the objective of a single market between States.’

(2)

The agreement in question ‘must moreover have had as its object or effect the prevention, restriction or distortion of competition within the Common Market’.

(3)

These conditions must be understood ‘by reference to the actual circumstances of the agreement’.

(4)

Therefore an agreement escapes the prohibition laid down in Article 85 when it affects the market only to an insignificant extent, in view of the weak position which the parties occupy on the market in the products in question.

In my opinion the only problem which is raised in this case is whether, having recalled these general considerations, you should also take into account a communication dated 27 May 1970 (OJ 1970, C 64, p. 1) whereby the Commission tried to make the subject-matter of the legal principles deduced by the judgment of the Court in the Völk case have more practical and more concrete application by defining beforehand what it calls ‘agreements of minor importance’ which, according to the rules which this Court deduced, cannot come within the provisions of Article 85(1) and (2) of the Treaty.

According to the Commission an agreement falls de plano into this category in two cases:

The first case is where the products covered by the agreement do not represent more than 5 % of the volume of business achieved with identical products or products considered by users to be similar because of their characteristics, price or use.

The second case is where the total annual turnover achieved by the undertakings which are parties to the agreement does not exceed either 15 million u.a., that is 15 million US dollars, approximately DM 55 million or FF 83 million, or, if the agreements are between commercial undertakings, 20 million u.a., that is 20 million US dollars, approximately DM 73 million or FF 111 million.

Then the Commission lays down the methods of calculating these different thresholds and the limits by which they can be exceeded.

It would be tempting to give this advice to the Tribunal de Commerce, because this would probably enable it easily to give a ruling on the question which it will have to settle as the court giving the judgment in the main action, in view of the size of the whole market into which the agreement must be fitted (the Franco-German market in machinery for public works).

However, I hardly like to suggest to the Court that it refers to that document since, as the Commission stresses, its communication of 27 May 1970 is only for guidance and has no legislative effect and it is possible, at least in the abstract, to speculate whether transactions may in certain exceptional situations come within the prohibition laid down by Article 85(1) of the Treaty in markets which are particularly restricted or very specialized even if they are as minor as those referred to by the recommendation of the Commission.

B —

In my opinion the very wording of Regulation No 67/67 provides the answer to the subsidiary question.

Article 7(2) thereof provides in fact that only exclusive dealing agreements which do not fulfil the conditions contained in Articles 1 to 3 of that regulation need be notified.

It follows that exclusive dealing agreements in any case where they have been entered into after that regulation came into force are, in spite of failure to notify the Commission, able to benefit from the provisions of Regulation No 67/67 which states that the provisions of Article 85(1) are inapplicable to certain contracts until 31 December 1972 on condition that these contracts fulfil the conditions contained in Articles 1 to 3 of that regulation, even if they come within the provisions of Article 85(1).

The question is whether, as the Commission believes, the same applies to exclusive dealing agreements entered into before that regulation came into force.

This is a question which the Court will probably have to settle one day. However, as I have said, it does not arise in this case since in my opinion the only contract the validity of which is contested, in relation to Article 85 of the Treaty, is the contract which was entered into in January or February 1968, that is to say, long after the adoption of Regulation No 67/67 which came into force on 1 May 1967.

Therefore I am of the opinion that the Court should rule that:

(1)

An exclusive dealing agreement, even with absolute territorial protection, may, having regard to the weak position of the persons concerned on the market in the products in question in the area covered by that absolute protection, escape the prohibition laid down in Article 85(1);

(2)

Even where it does not escape the prohibition laid down in Article 85(1) by application of the criterion defined above, an agreement of this type may, in any case where it was entered into after 1 May 1967, benefit until 31 December 1972 from the provisions of Article 1 of Regulation No 67/67 if it fulfils the conditions contained in Articles 1 to 3 of that regulation, without having to take into consideration the fact that it has or has not been notified to the Commission of the European Communities.


( 1 ) Translated from the French.

( 2 ) Translator's note: this quotation is taken from Malherbe's poem ‘Consolation à M. du Périer’ (1598) and means approximately that the agreement was short-lived.

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Citations - Legislation Articles
Regulation No 67/67 Article - 1
  • 31967R0067 Article 1 Article 1 Article 1 1 . PURSUANT TO ARTICLE 85 ( 3 ) OF THE TREATY AND SUBJECT TO THE PROVISIONS OF THIS REGULATION IT IS HEREBY DECLARED THAT UNTIL 31 DECEMBER 1972 ARTICLE 85 ( 1 ) OF THE TREATY SHALL NOT APPLY TO AGREEMENTS TO WHICH ONLY TWO UNDERTAKINGS ARE PARTY AND WHEREBY : ( A ) ONE PARTY AGREES WITH THE OTHER TO SUPPLY ONLY TO THAT OTHER CERTAIN GOODS FOR RESALE WITHIN A DEFINED AREA OF THE COMMON MARKET ; OR ( B ) ONE PARTY AGREES WITH THE OTHER TO PURCHASE ONLY FROM THAT OTHER CERTAIN GOODS FOR RESALE ; OR ( C ) THE TWO UNDERTAKINGS HAVE ENTERED INTO OBLIGATIONS , AS IN ( A ) AND ( B ) ABOVE , WITH EACH OTHER IN RESPECT OF EXCLUSIVE SUPPLY AND PURCHASE FOR RESALE . 2 . PARAGRAPH 1 SHALL NOT APPLY TO AGREEMENTS TO WHICH UNDERTAKINGS FROM ONE MEMBER STATE ONLY ARE PARTY AND WHICH CONCERN THE RESALE OF GOODS WITHIN THAT MEMBER STATE .
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