C-1/71

JUDGMENT OF 6. 5. 1971 — CASE 1/71

in Article 85(1) and which was enter­ the benefit of the block exemption ed into after the coming into force laid down in Article 1 thereof if it of Regulation No 67/67 may, even satisfies the conditions prescribed by where there has been a failure to Articles 1 to 3 of the said regula­ give notice to the Commission, obtain tion.

In Case 1/71

Reference to the Court under Article 177 of the EEC Treaty by the Tribunal de Commerce, Lyon, for a preliminary ruling in the action pending before that court between

SOCIÉTÉ ANONYME CADILLON, whose registered office is at Charolles (71),

and

JUDGMENT

Issues of fact and of law

I — Summary of facts and On 19 March 1967, Firma Höss of procedure Roding (Germany) granted Société Anonyme Cadillon of Charolles (France) The facts which form the basis of the the exclusive licence to sell its products, action and the procedure may be sum­ namely hoppers and concrete-transport­ marized as follows: ing containers, in France.

CADILLON v HÖSS

The French which basically provided: court referred the case to the Court — that Cadillon would be granted an without specifying its question in more exclusive right of sale for four years detail. from 1 January 1968 to 31 December In accordance with Article 20 of the 1971; Protocol on the Statute of the Court of — that at the end of this term the Justice of the European Economic Com contract would be renewed by tacit munity, written observations were sub agreement from year to year, unless mitted by the parties to the main action one or other of the parties gave and by the Commission of the Euro three months' notice terminating the pean Communities. contract; The Court, having heard the report of — that the licensee undertook to sell 24 the Judge-Rapporteur and the views of machines during 1968 and 30 during the Advocate-General, decided to open each of the following years; the oral procedure without a preparatory — terms as to price and payment. inquiry. On 5 February 1968, the proprietor of At the hearing on 28 April 1971 the Firma Höss sent back the German ver parties to the main action and the Com sion of this contract to Société Anonyme mission presented oral argument. Cadillon signed, but on the following For the procedure before the Court, the 23 February he repudiated the contract. plaintiff in the main action was repre Société Anonyme Cadillon then brought sented by A. de Caluwe, Advocate of before the Tribunal de Commerce, Lyon, the Brussels Bar, the defendant in the the action which gave rise to the refer main action by E. Grafmeyer, Advocate ence to the Court of Justice of the of the Lyon Bar, and E. Arendt and T. European Communities by that court Scheifer, Advocates of the Luxembourg pursuant to a decision based on Article Bar, and the Commission by its Legal 177 of the EEC Treaty.

court between Société Anonyme Cadillon and Firma Höss, as it relates to 'the The observations submitted under validity of the contract' of which Société Article 20 of the Protocol on the Statute Anonyme Cadillon claims there has been of the Court of Justice may be summar a breach. ized as follows: It follows from the file relating to the Société Anonyme Cadillon, the plaintiff case deposited by the Tribunal de Com in the main action, considers that the merce, Lyon, that the only mention following questions may be deduced from made before that court of Article 85 of the wording of the decision referring the the EEC Treaty is contained in the matter:

2. Does failure to notify an exclusive January 1968 automatically obtains the sales agreement which has been en­ benefit of Regulation No 67/67. tered into before Regulation No 67/­ (d) The question whether Article 85(1) 67/EEC of the Commission came is applicable must be considered in each into operation automatically make particular case in the legal and economic such an agreement void? context of the agreement. Most of the concessions granted do not come within 3. Does an exclusive sales agreement, Article 85(1). An agreement which has under Regulation No 67/67/EEC an insignificant effect on the market is mentioned above belong to a cate­ gory granted exemption from notifi­ not capable of affecting trade between cation, fulfil the conditions of Article Member States. An agreement which 85(1) of the Treaty for this reason only provides for an exclusive right of alone? sale does not have as its object the prevention, restriction or distortion of 4. Does an exclusive sales agreement competition in the Common Market. fall within the application of Article Finally, agreements which allow competi­ 85(1) of the Treaty when: tion on the part of the licensee with­ (a) it does not contain any exclusive out prohibiting either re-exportation supply clause, supply clause by the licensee or parallel imports (b) it does not contain any clause pro­ in the market for which the licence has hibiting re-exportation or parallel been granted cannot produce effects imports, which conflict with the Community (c) it does not contain any restriction rules on competition. with regard to prices, (e) On the assumption that the prohibi­ (d) the parties to the agreement tion is applicable, agreements drawn up occupy a weak position on the prior to the entry into force of Regula­ market in the products in ques­ tion No 67/67 are void ex tunc, whilst tion, agreements drawn up after this regula­ (e) it promotes the development of a tion came into force are fully effective new market which is inaccessible so long as they have not been held to or not easily accessible without be void, in accordance with the judg­ such an agreement? ment of the Court in Case 43/69 (Firma 5. What would be the effects of nullity Brauerei A. Bilger Söhne GmbH v fehle of such an exclusive sales agreement and Jehle [1970] ECR). which had not been notified: Firma Höss, the defendant in the main (a) if it were an agreement entered action, explains the reasons underlying into before Regulation No 67/67, its repudiation of the contract of 30 (b) if it were an agreement entered January 1968 and observes that this into after Regulation No 67/67, agreement and the one which preceded which has been granted block it fulfil the definition laid down in exemption? Article 85(1) of the EEC Treaty. In (a) Société Anonyme Cadillon replies to particular, Société Anonyme Cadillon the first question in the negative and occupies a privileged economic position refers in particular to the judgments compared with all other importers of given in Cases 56/65 and 23/67. Höss's products because of these agree­ (b) Lt claims that in the case of failure ments and this distorts 'perfect competi­ to notify an agreement, the court hear- tion'. Since, moreover, consumers do not

especially in view of the judgment of regulation whereby agreements which the Court of 9 July 1969 in the Völk- were entered into before that regulation Vervaecke case and of the Commission's and which have not been notified may communication on cases of minor im­ not benefit from the exemption even in portance (OJ, 1970, C 64, p. 1). respect of the period after the regulation If it were decided that the prohibition came into force. It claims that this in­ contained in Article 85(1) applied to terpretation runs contrary to the objec­ these agreements, they would be able tive of Regulation No 67/67 which aims to benefit from the application of Article at precluding large numbers of notifica­ 85(3) in the circumstances laid down tions of agreements which can clearly by Regulation No 67/67 of the Com­ benefit from the application of Article mission of 22 March 1967 on the 85(3) from overburdening the depart­ application of the exemption to cer- ments of the Commission.

Grounds of judgment

1 By decision of 24 September 1970, received at the Court Registry on 6 January 1971, the Tribunal de Commerce, Lyon, has requested the inter­ pretation of Article 85 of the EEC Treaty and of the implementing regulations issued thereunder in the action pending before that court between Société Anonyme Cadillon and Firma Höss.

2 As appears from that decision, Société Anonyme Cadillon sued Firma Höss before that court for the payment of FF 533 000 damages following the uni­ lateral breach of the contracts of 19 March 1967 and 30 January 1968 granting exclusive rights of sale.

8 Those conditions must be understood by reference to the actual circumstances of the agreement.

9 An exclusive dealing agreement may escape the prohibition laid down in Article 85(1) because, in view of the weak position of the parties on the market in the products in question in the territory covered by the exclusive dealing arrangement, it is not capable of hendering the attainment of the objectives of a single market between States, even if it creates absolute territorial protection.

10 This is even more the case when such an agreement does not prohibit third parties from effecting parallel imports into the territory covered by the agree­ ment or the licensee from re-exporting the products covered by the agreement.

11 However it falls to the national court to examine whether these conditions are fulfilled in each case.

CADILLON v HÖSS

12 Where the agreement falls within the prohibition contained in Article 85(1) the possible effect of Regulation No 67/67 of the Commission which provides for block exemption for exclusive dealing arrangements must also be examined with regard to agreements of this type which have not been notified.

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the oral observations of the parties to the main action and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 85 and 177; Having regard to Regulation No 67/67/EEC of the Commission of 22 March 1967; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community; Having regard to the Rules of Procedure of the Court of Justice of the European Communities,

OPINION OF MR DUTHEILLET DE LAMOTHE — CASE 1/71

THE COURT

in answer to the question referred to it by the Tribunal de Commerce, Lyon, pursuant to the judgment given by that court on 24 September 1970, hereby rules:

1. An exclusive dealing agreement entered into between parties which occupy a weak position on the market in the products covered by the agreement may escape the prohibition in Article 85(1) especially when it does not create absolute territorial protection.

2. An exclusive dealing agreement which falls within the prohibition contained in Article 85(1) and which was entered into after Regula­ tion No 67/67 came into force may, even where there has been a failure to notify it to the Commission, obtain the benefit of the block exemption laid down in Article 1 of that regulation if it fulfils the conditions prescribed by Articles 1 to 3 of the said regulation.

DELIVERED ON 4 MAY 19711

Mr President, In 1967 it entered into a sole agency Members of the Court, agreement for France with a German undertaking which manufactures ma­ Société Anonyme Cadillon is a French chinery of that type, Firma Höss, whose limited company based in the Lyon area registered office is in Roding. which sells various machines and equip­ This agreement was terminated from 31 ment intended for public works and in December 1967. particular machines for the manufac­ However a new agreement was entered into ture of concrete. on either 30 January or 5 February 1968. 1 — Translated from the French.