C-73/74

Papiers Peints Brepols SA., of Turnhout,

all assisted by Marcel Gregoire, Advocate at the Cour d'Appel, Brussels, and, in the case of the last applicant, by Guy Schrans, Advocate at the Court of Ghent, with an address for service in Luxembourg at the Chambers of Tony Biever, 83 boulevard Grande-Duchesse Charlotte, applicants, v

Commission of the European Communities, represented by Jean-Pierre Dubois and Dieter Oldekop, its Legal Advisers, with an address for service in Luxembourg at the office of its Legal Adviser, Mario Cervino, Bâtiment CFL, place de la Gare, defendant, and

Jean-Marie Pex, represented by Louis Van Bunnen, Advocate at the Cour d'Appel, Brussels, with an address for service in Luxembourg at the Chambers of Paul Beghin, Avocat-avoué, 9 avenue de la Gare, intervener,

Application for annulment of the decision of the Commission of 23 July 1974 relating to a proceeding under Article 95 of the EEC Treaty,

THE COURT

Facts

JUDGMENT OF 26. 11. 1975 —CASE 73/74

With the notification, the Group did not to the Belgian market. The Groupement enclose either the general conditions of satisfied the complainant by promising sale or circulars sent to its customers. to include German exports into Belgium in the calculation of their primes de After the Cour de Bruxelles, in co-opération. proceedings brought by Rath and Doodeheefver against the present Again, on 22 November, a complaint was members of the Groupement, had, on registered from Mr J. M. Pex, the owner 16 May 1963, given a judgment in which of a Belgian paint and wallpaper firm it held that the Groupement had infrin­ who, since July 1971, had placed several ged Belgian competition law, the wallpaper orders with the Brepols Commission asked members of the company for delivery to the GB Super Groupement for information by letter on Bazaars company. The GB company 26 November 1968. The Commission operates a cut-price policy and publicly asked for, inter alia, a copy of some announced discounts on the re-sale documents issued by the Group. prices of the Groupement.

The Commission asked the following When the wallpaper was put on sale in questions about the relationship between the GB Supermarkets, Brepols sent the the Groupement and its customers: following circular to its customers on '1. Are exports by Belgian customers 4 October 1971:

prohibited, prevented or impeded by, e.g. being required to be authorized 'In the course of last week you became in advance? aware that wallpaper from our 1970/71 2. Are foreign customers prevented from collection… has, without our re-exporting to other countries, and knowledge, been put on sale and sold in from re-importing into Belgium? a chain of departmental stores at prices from 10 to 15 % below those on the The answer to these questions was in the official price list. negative. We quickly ascertained that this To the question: wallpaper was supplied from stock by one of our wholesale customers acting in 'Are your customers under an obligation agreement with this chain of to observe your resale prices in Belgium?’ departmental stores.

the 'general conditions of sale', in It was for this reason that Mr Jean-Marie particular, to the need for strict Pex lodged a complaint with the compliance with the following three Commission alleging that there had paragraphs: been, on the part of the members of the Groupement, a collective refusal to Simply by placing an order, the customer supply wallpaper. undertakes to comply with all the obligations which arise from the general Following various communications conditions of sale and accepts the between the Groupement and the consequences of any infringements … Commission the latter, on 14 June 1973, initiated a proceeding provided for under Regardless of the method adopted, e.g. by Article 3 of Regulation No 17. display in the shop window, inclusion in advertising material or when ranges are It then considered whether the following priced, only the selling prices shown in documents, agreements and decisions the price lists may be displayed or complied with Article 85 of the EEC published. The price shown must be the Treaty: price to the public without any reference — The Règlement d'ordre interieur of to a lower price or percentage discount the Groupement of July 1971, —Circular 619 on the 1971-1973 and this applies even during clearance sales. marketing year (general conditions of sale), Re-sale to another dealer: — Circular 620 O (to wholesalers), — Circular 617 C (prix de carte), — Circular 617 V (prix de voyage), The buyer may re-sell the Groupement's — Decision to apply a joint boycott products to other dealers or against Pex, dealer in wallpaper, and intermediaries provided that they the undertaking International Decor expressly agree to these general in Brussels, conditions and fulfil the obligations — The concerted practice of Rath and thereunder towards the Groupement and Doodeheefver (société anonyme) its members and that the buyer has not pursued on the basis of these rendered himself liable to the agreements and decisions. cancellation by the Groupement or its members of the prime de co-operation. On 26 October 1973, the Commission, The re-sale price must never fall below pursuant to Article 2 (1) of Regulation that which the buyer would have to pay No 99/63 of the Commission of 25 July if he obtained the same goods direct 1963 on the hearings provided for in from a manufacturer who is a member of Article 19 (1) and (2) of Regulation No the Groupement. 17 of the Council (OJ English Special Edition, 1963-64, p. 47) informed the These conditions automatically impose Groupement of the objections raised an obligation on a second buyer also to against it. comply with the Groupement's general conditions of sale.' The Groupement submitted its observations to the Commission by note In consequence, with the exception of of 10 December 1973. Vanderborght Frères, the members of the Groupement refused to sell wallpaper to At the hearing on 18 December 1973, Mr Pex on the ground that he had the Commission, pursuant to Article 19 breached their general conditions of sale. (1) of Regulation No 17 and to Article 7 Mr Pex never tried to place an order with et seq. of Regulation No 99/63, gave the Vanderborght Frères. Groupement an opportunity to present

1. declared that the Reglement d'ordre By order of 9 July 1975 the Court, on interieur du Groupement des hearing the report of the Judge- fabricants de papiers peints de Rapporteur and the views of the Advocate- General, ordered the intervention of the Belgique of July 1971, Circulars 619, SA. GB-INNO-BM to be struck out. 620, 617 V and 617 C, and the decision not to supply wallpaper to the dealer Pex and to the undertaking On hearing the report of the International Decor constitute Judge-Rapporteur and the views of the infringements of Article 85 (1) of the Advocate-General, the Court decided to EEC Treaty; open the oral procedure without any 2. rejected the application lodged by the preparatory inquiry. Groupement for a declaration of non-applicability of Article 85 (3) in respect of the abovementioned rules and decisions; III — Conclusions of the parties. 3. ordered the Groupement forthwith to terminate the infringement specified; — Declare the action to be admissible 4. imposed the following fines in respect and well founded; of the collective boycott; — Accordingly, annul the decision of (a) BF 6 750 000 on the undertaking the defendant of 23 July 1974 of SC Usines Peters-Lacroix SA.: relating to a proceeding under Article (b) BF 6 000 000 on Les Papeteries de 85 of the EEC Treaty (IV/426 —­ Genval SA.; Papiers peints de Belgique);

PAPIERS PEINTS v COMMISSION

Mr Pex contends that the Court should: The applicants cannot understand why — Dismiss the application as unfounded measures which, with the exception of in that it seeks a declaration from the the fidelity bonus, would have been Court that the withholding of lawful if they had been exclusively supplies by U.P.L. Genval and applied by its members to products of Brepols was lawful and that the fines their own manufacture, ceased to be so imposed on account thereof were because they were applied to the unjustified; products which they import. The — Order the applicants to pay the agreement on prices can have no intervener's costs. influence on imports because a manufacturer who imports wallpaper In reply to the intervener, the Brepols does so solely because of the cost of company claims that the Court should: production and certainly not because of — Dismiss the intervention of Mr Pex as the re-sale price. unfounded; — Order the defendant and the inter­ The Commission took the contested vener to pay the costs. decision as though it were in line with its

JUDGMENT OF 26. 11. 1975 —CASE 73/74

effect which it was designed to produce. The Court could not have meant to say In the absence of any adverse effect on that, simply because it covers the trade between Member States or of the national territory, every restrictive provision by the Commission at least of agreement affects trade between Member some' evidence that it has occurred, the States, which would serve as a 'blanket' contested practice and the measure justification. which merely enforced it must be regarded as lawful. The present case has nothing in common with the situation described in Case 8/72. Of the two provisions of the Finally, according to the applicants, the règlement d'ordre intérieur which may Commission was wrong in failing to seem comparable with those in the explain how the whole of the règlement Cementhandelaren agreement, the first, d'ordre intérieur and all the general conditions of sale are liable to have an the prohibition on supplying adverse effect on trade between Member joint-buying groups and re-selling agents, is no longer in use. The second, which States; an agreement is not to be provides that, in order to meet appraised on the basis that its various administrative costs, a trader must have a provisions are indivisible. modest turnover before he can become a buyer, has, in practice, no effect. The defendant contends that the Groupement operates a comprehensive With regard to the fidelity bonus, the system of jointly fixed prices and, as Groupement, as a result of the complaint evidence of this, quotes the provisions of from the Interessengemeinschaft der the règlement d'ordre intérieur and the deutschen Tapetenfabrikanten, announced Groupement's circulars. In any event it that it would be applied to any purchase maintains that, even if the prices were whatsoever of products coming from any only a guide, their adoption by the country in the EEC. Groupement gives parties to the The agreements complained of do not agreement foreknowledge of the preclude the possibility of sales to Groupement's pricing policies, (see Case 8/72 — Cementhandelaren v Commission re-sellers who have not been approved by the Groupement and does not make it (Rec. 1972, p. 977) ground 21). more difficult for producers and re-sellers of other Member States to influence or The interpretation placed by the Court penetrate the Belgian market. on the criterion of affecting trade

On the Belgian wallpaper market there is already established a close connexion among wholesalers and retailers, some of between the obligations to charge whom are not affiliated to the fixed prices and the criterion of the effect on trade between Member Groupement, a widespread need to import. The Groupement's intention, States ('without passing through the expressed in its general conditions of sale official distribution channels'). and in its règlement d'ordre intérieur, to The Commission concludes that, taken cover the whole of the Belgian market on as a whole, the clauses which were held its own, is quite plain. The facts are, therefore, comparable to those in to be in restraint of competition are liable to affect trade between Member Cementhandelaren (quoted above). States because they are an integral part of a comprehensive system of control Furthermore, the Groupement's applied by the applicants to the customers often apply the Groupement's wallpaper market and the essential conditions of sale to wallpaper which it feature of which is the pricing policy did not supply. The defendant concludes which they followed. that wholesalers and retailers have only an extremely limited choice in obtaining The intervener, Pex, explains that, under wallpaper from Belgian manufacturers. Groupement's general conditions, the list For this reason, they must turn to foreign price is not necessarily the selling price. manufacturers but, if they do so, they are What mattered to the Groupement was often obliged to comply with the that only list price should be displayed Groupement's general conditions of sale. and that the rebates, if there were any, should not be announced or publicized. Although the Commission has studied However a dealer who, because of the the disputed clauses in their context, way he operates, wishes or is able to namely, the system of rules applied by apply only the announced prices must the applicants to the market in sell at the catalogue price and is, in this wallpaper, it emphasizes that, even when way, bound by what is clearly a fixed taken separately, the provisions of the price. agreement which was the subject of its decision are liable to affect trade between Trade between Member States is liable to Member States because: be affected because, if the intervener had — the boycott of Mr Pex was a wished to export wallpaper bought from substantial restriction on his freedom the Group, he would, in order to satisfy to obtain wallpaper not only from its rules, have had to make the foreign other Belgian manufacturers but also importer pay the prices on the from other producers; Groupement's price liste.

Brepols replies that Mr Pex has legality of a system of jointly fixed prices submitted no evidence whatever that the backed up by refusal to sell to any members of the Groupement objected, refractory intermediary, is, even under directly or indirectly, to parallel imports. Belgian law, open to challenge if the way Moreover, it appears necessary to recall in which the system operates that the present case involves an action discriminates against department stores against a decision of the Commission. In alone. The intervener alleges that some consequence the only question to be other retailers openly apply price settled is whether that decision, as reductions of 20 %, and that, in fact, communicated to the applicants, is Belgian legal opinion concedes that sound in law. manufacturers who fix prices are bound in good faith to do so in respect of all Third submission: discrimination re-sellers who are in competition with each other.

PAPIERS PEINTS v COMMISSION

Mr outcome. Pex has never been a competitor but a customer and there. was never any Thirteenth submission: erroneous inter question of eliminating him. Those pretation of Article 85 members of the Groupement who were involved suspended supplies for the time The applicants refer to competition law being until Mr Pex observed certain in the United States, the tenor of which legitimate obligations imposed by the is reflected in the Treaty, and claim that sellers. no prohibition of fixed prices by the Federal anti-trust law applies if the Brepols, which had been his main following conditions are satisfied: supplier, agreed to supply him again if — the law of the state concerned Mr Pex promised at least to observe the recognizes the legality of the fixed conditions of sale and his contractual price system and enforces it; obligations; it must be made clear that — the products concerned are in free Pex and his nominee, International and open' competition with similar Decor, supplying wallpaper purchased products; from Brepols to retailers who advertise — no system of jointly fixed prices is reductions, suffered no more than a involved. temporary and provisional suspension of supplies, the normal penalty for conduct The Groupement has not operated any of this kind. Furthermore, supplies

In view of this it is ECR 215). impossible to refer to an intention to eliminate an alleged competitor. The defendant replies that, in contrast with the legislation in force in the Furthermore, Brepols contends that United States of America, there are no suspension of supplies is not unlawful in provisions by way of exception in the itself. It quotes the principle of the Treaty, or in Community law derived defence 'non adimpleti contractus' under therefrom, which specifically legalize which the obligations of the parties are

mutual and one party can suspend the question of the commitments fulfilment of his commitments if the undertaken but not fulfilled by Mr Pex. other party does not observe his own. In fact, Brepols supplied Mr Pex until The defendant replies that Pex's alleged March 1972, six months after the alleged actions do not justify a boycott; the collective boycott decision. Rath & suspension of supplies with the object of Doodeheefver also withheld supplies forcing a dealer to follow a course of from Mr Pex although the decision conduct laid down by the suppliers is a makes no reference to any collaboration classic example of such a boycott. The between the members of the object of Article 85 is not only to ensure Groupement and that company. Finally, that there is competition between the foreign manufacturers did the same parties to a restrictive agreement but also because of their doubts about Mr Pex's that the freedom of action and of choice solvency. of a third party such as Mr Pex is safeguarded. The object of the collective The Brepols company points out that it boycott was to eliminate Mr Pex from the ceased supplies to Mr Pex not at the market, so long as he continued to act request of the members of the without regard to the conditions of sale Groupement but at the request of other imposed by the Groupement; tht fact re-sellers. Moreover it gave Mr Pex a that the action was a collective one takes reasonable time in which to comply with it out of the category of methods his obligations. available under civil law as a penalty for infringement of contractual obligations. The defendant quotes the letter of 28 September 1971 from Brepols to Mr Pex, The defendant notes that Mr Pex was at the letter of 30 September 1971 from no time reproached for not having paid Genval to Mr Pex, the Brepols circular of for the supplies of wallpaper delivered to 4 October 1971 and the Groupement's him by Brepols in order to make clear to circular of 29 October 1971 as evidence him why supplies had ceased. It was only that there was in fact an agreement to at the time of the hearing that the debts withhold deliveries to Mr Pex. The fact which Mr Pex owed to the Brepols that Brepols continued its deliveries company were mentioned as an addi­ matters little if it is established that all tional ground for the boycott. the members of the Groupement jointly decided no longer to supply Mr Pex. The The intervener explains that, after the fact that Brepols did not adhere to the boycott, he was forced to go abroad to decision is irrelevant, since Article 85 find suppliers who, as he was unknown may be applicable even if a restrictive to them, demanded payment in cash or a agreement is not fully effective. The payment on account which would have defendant offers proof that Brepols exhausted his funds. This is the expla­ continued to supply Mr Pex in secret nation why he was not in a position to after the collective decision to boycott pay Brepols's bills. him.

To ensure that the agreement on fixing The defendant replies that the prices, rebates and reductions on sale and notification was defective. Of the re-sale is observed, it necessarily follows measures capable of being taken against that the client who does not observe it the 'participating undertakings' the must be denied supplies. If the notification referred only to expulsion, departments of the Commission failed to no mention being made of the other appreciate this from this one notification, penalties provided for against customers. they can scarcely be familiar with business practice. If there were need to The purpose of notification is to enable inform them of it even more explicitly, the Commission to assess the validity of Section HI of the form should have been agreements notified to it: full answers confined to its heading 'Means provided must therefore be given. It follows from for attaining the objectives of the Article 4 (3) of Regulation No 27 that the agreement'. Again, the notification said clauses of an agreement which are not that the agreement was concerned with expressly mentioned are not regarded as 'observance of the general conditions of notified. sale'. However, these can only be in writing. A copy of them was not enclosed Even if a system of jointly fixed prices but the form did not require that general necessarily implies penalties, this does conditions of sale should be enclosed. not mean that those penalties ipso facto include a collective boycott as distinct Whatever view may be taken regarding from another measure, such as an notification of the other provisions of the individual refusal of supplies. The general conditions, it is clear that the Commission contends that it had every agreement relating to the imposition of right to treat the collective boycott jointly fixed prices on sale and re-sale sanction as not having been notified by was specifically notified. the applicants and as being accordingly liable to be punished by a fine. As conditional and temporary suspension of deliveries was in fact a normal The intervener points out that under contractual penalty for disregard by the Belgian case-law a boycott, whatever its buyer of his obligations, there was no purpose, is illegal if it is disproportionate need for it to be the subject of separate to the action of the person against whom or express notification. it is directed.

The applicants maintain that, in so far as The applicants contend that the it refers to the alleged boycott, the Commission did not follow its own decision is based on factual inaccuracies. precedents and that, even supposing that the applicants were wrong in assuming The applicants justified their refusal of that the prohibition they imposed, and supplies to the supermarkets of the GB the penalty which was its logical company not on the ground that, as consequence, were lawful, they acted in alleged in the decision, GB merely sold good faith so that although the below the recommended prices but Commission felt obliged to declare the because GB had wrongfully changed the contested clauses illegal, it had no right categories of wallpaper sold. to condemn the applicants for holding a The defendant replies that the decision contrary view.

The GB company was not, therefore, under an The Commission has on more than one obligation to apply the Groupement's occasion allowed it to be understood that quality classification system. it was in favour of exemption being granted in cases where an agreement did Ninth submission: ultra vires not have the effect of preventing or restricting parallel imports of the In the applicants' view, the fact that GB products concerned. In two decisions in was or was not under an obligation to 1968 ('Cobelaz' and Comptoir français de observe, in a Belgian retail shop, the l'azote), the Commission declared that, selling price fixed by a supplier, who is although there was in fact an also established in Belgium (more understanding on prices between the specifically, the prohibition on sales parties to such agreements, the subject to advertised reductions) cannot agreements could not adversely affect affect trade between Member States.

from each other. The boycott of Pex in subsequent years. threatened all dealers who did not wish to comply with the Groupement's In its decision in ASPA (JO 1970, L 148, pricing policy. p. 9) the Commission considered that

The applicants' legitimate expectations The applicants cannot ignore the were strengthened by the absence of any evolution of Community law as regards reaction on the part of the Commission the relationship between national law to measures, taken under Belgian public and Community law on the subject of law, which have the same effect as the competition, as exemplified by the judg­ conduct of which the applicants are ment in Walt Wilhelm ([1969] ECR 1). accused. Similarly, there was no reaction In the ASPA decision, it was because to the judgment of the Belgian Cour de all the restrictive clauses had been Cassation in the 1960 case of Griepe­ eliminated that the Commission was able koven v Union Spépha. to give negative clearance. The Com­ mission adds that it is in the process of Furthermore, in stating, in item IV (2) of re-examining the files, which, in 1969, the decision, that it is leaving open the induced it to authorize a series of question whether or not the members of restrictive agreements which were not, at the Groupement acted in good faith, the the time, liable to affect trade between defendant is in breach of the provision in Member States. As for the Commission's Article 15 (2) of Regulation No 17/62 inaction in relation to measures of under which infringements may not be national public law, its outcome must be punished unless they are committed judged in the light of the case-law of the 'intentionally or negligently'. Court (Judgment in Joined Cases 90 and 91/63, Commission v Luxembourg and As the applicants acted at all times on Belgium [1964] ECR 625). It is not the basis of the legitimate expectations possible to disregard the development of aroused by the positive action or by the Community law, particularly on the inaction of the Commission, they believe subject of competition, where progress that, if there has been an infringement of has been appreciable.

Moreover, the effect of the statement of that at that time the Groupement objections was to destroy the applicants' supplied nearly 85 % of the Belgian good faith in so far as it existed. market and it also referred to the applicants’ circulars. It was only five The intervener takes the view that the years later that the Commission stated its applicants took an enormous risk in objections. In Joined Cases 6 and 7/73 failing to take account of the very clear (Commercial Solvents v Commission indications given to them by such [1974] ECR 223) there had been no precedents in Community law as the notification or request for information principles underlying the ASPA decision before a third party lodged a complaint, and the Cementhandelaren case (quoted but, in its judgment, the Court reduced a above). fine imposed by the Commission on the ground that the latter had reacted too The intervener points out that the fact an slowly. infringement was not 'intentional' does not dispose of the principle of a fine. The defendant points out first that the The penalty applies even though the fine was imposed solely on account of mistake was made in good faith, which, the collective boycott of Mr Pex and that at most could be taken into account in Mr Pex's complaint is dated October determining the amount of the fine. 1972. The Commission's reaction on this point is dated 23 January 1973. Even on the assumption that Peters Lacroix, Brepols and Genval had, in the Twelfth submission: illegality of the fine beginning, offended solely by negligence, imposed on the Ets. Vanderborght Frères they ceased to act in good faith at the SA. latest when they became aware of the decision of the President of the Tribune The Éts. Vanderborght Frères SA. never de Commerce of Nivelles on 1 March refused to sell either to Mr Pex or to GB 1973. because it never received any request for supplies. After the Commission's decision, Brepols and Genval persisted in their refusal The answer of the defendant is that, when they made the restoration of once it is established that all the relations subject to discriminatory and members of the Groupement had jointly unacceptable conditions (joint security decided no longer to supply wallpaper to with GB, refusal of all normal credits). Mr Pex, it is not absolutely necessary, for On the other hand, the conduct of Peters the purpose of imposing a penalty for Lacroix after the decision was correct. this decision, to demonstrate that the boycott was applied by all the members. Eleventh submission: excessive fines C — Alternative Claims The applicants contend that, for the reasons set out in the foregoing In the alternative, the applicants ask the submission, the fines applied are out of Court to recognize the legality under all proportion to the actual gravity of the Article 85 of the Treaty of: situation. — the prohibition on announcing rebates on the resale price; Although the notification took place in — the establishment of a quality system; 1962, it was only in 1968 that, after the — the joint action on sales promotion. judgment in the case between the applicants and Rath and Doodeheefver, The applicants explain the ground on the Commission asked for basic which they consider these provisions to information. That judgment established be in the general interest.

3. The refusal to supply Mr Pex was a At the hearing on 30 September 1975, normal consequence of his breach of Maitre Gregoire made the following the commitments which he had statement on behalf of the Groupement entered into with the members of the des papiers peints de Belgique and of its Groupement. The legality, in terms of members. Community law, of the penalty imposed for infringement of the The applicant companies: prohibition necessarily follows from the legality of the prohibition against hereby declare that they no longer contest, with effect from the date on announcing reductions. If this were not so, the Commission would have to which it was taken and as regards the future, the decision of the Commission demonstrate that the refusal to supply Mr Pex was in itself capable of of the EEC of 23 July 1974 in so far as it affecting trade between Member prohibited the agreements States. — imposing an obligation to charge the prices fixed and display them 4. In any case, as the agreement had been notified, a measure which was — prohibiting the display of lower prices or of reductions made by no more than a means of enforcing reference to the fixed or recom­ the agreement cannot be the subject of a fine. mended prices. 5. If the refusal to supply Mr Pex can be They request the Court to note the the subject of a fine, the fine imposed reduction in the scope of the application was excessive. which follows from the foregoing. 6. Finally, the decision imposing a fine ought to be annulled because the In the course of his oral argument, statement of reasons for it is Maitre Gregoire made it clear that the inadequate. Groupement accepts the contested decision as regards the future but not as regards the past. In reply to a question put by the Court, the Groupement maintains that the The Groupement still maintains that the circular of 29 October 1971, which was Commission was unable to impose fines signed by all members of the for refusal of deliveries to Mr Pex on the Groupement, had no connexion with the ground that: decision of certain members of the 1. The prohibition against announcing Groupement to withhold supplies to Mr reductions on the prices and the Pex. Their circular was simply a obligation to require a second buyer reminder to customers, when a new to comply with this prohibition range was launched every two years, of cannot affect trade between Member the Groupement's general conditions of States. sale.

3. Even if the Groupement did in fact As the boycott is a separate penalty pursue a policy of fixed prices, the capable of being applied independently policy was expressly notified to the of other, less severe, penalties, it Commission on 30 October 1962. constitutes a prohibited practice even Anyone who has notified the fixing of though the boycott is imposed for re-sale prices can continue to act infringement of agreements which have within the limits of what he has been notified. A boycott is an extra-legal notified. penalty, added to the normal contractual penalties. 4. The notified agreement was fully operative and valid up to the date of Community law on competition cannot the Commission's decision. It was ignore a restrictive agreement on the binding on the parties and, subject to pretext that its effects are felt only within the conditions provided for under national frontiers when, in fact, one of national law, could be set up against the objects of that law is to deprive those third parties. frontiers of their economic significance.

5. Even if the suspension of supplies Mr Dubois, acting as Agent for the were not the normal contractual Commission, notes that the general penalty adopted in the case of a conditions of sale represent a decision by defaulting party to a contract but a all members of the Groupement. The form of restriction of competition, Groupement's circular of 29 October this restriction could not affect trade 1971 was signed by all the members of between the Member States. the Groupement and all stated that the reason for the suspension of supplies to 6. The Commission adduced no ground Mr Pex was non-observance of the

The Commission maintains that it is The main consideration which impelled the Commission to impose fines on all impossible to make a legal appraisal, in terms of Article 85 (1), of the collective the applicants was its concern to prevent large undertakings from using their boycott without regard to the system strength on the market to eliminate a which it is designed to preserve. The small dealer in competition with them. Commission is not under a duty to imagine clauses to which no reference In reply to a question put by the Court is made in the notification. The the members of the Groupement communication, at the formal request of declared that they have no exclusive the Commission, of the instruments of dealing arrangements either de jure or de agreement in a case where only a part of facto, with their foreign suppliers. their contents was mentioned on the notification form cannot, in any case, The Advocate-General delivered his serve as notification of the clauses not opinion at the hearing on 22 October referred to in the notification. 1975.

JUDGMENT OF 26. 11. 1975 —CASE 73/74

Law

1 By application lodged at the Court Registry on 30 September 1974, the Groupement des Papiers Peints de Belgique and its members sought the annulment of the decision of 23 July 1974 (OJ 1974, L 237, p. 3), in which the Commission declared a series of agreements and decisions of the Groupement to be incompatible with Article 85 (1) of the EEC Treaty, refused the application for a declaration of non-applicability, ordered the members of the Groupement to bring the infringements to an end immediately and imposed fines on the members of the Groupement for their collective decision to suspend supplies to Mr Pex.

The substance of the case

Adverse effect on competition within the common market

6 The applicants maintain that the decision was wrong in declaring, under item II c. 3, that they fixed re-sale prices for wallpaper dealers.

7 They do not deny, however, that retailers who have obtained their supplies direct from the Groupement or through dealers, are bound to display the lists of prices fixed jointly by the members of the Groupement and must not make any public announcement of rebates on these prices.

8 The applicants maintain that all that is involved is prohibition on announcing rebates, retailers being free to grant rebates in particular cases, even on a regular basis, provided that they do not announce them publicly.

9 Article 85 (1) of the Treaty expressly identifies agreements which 'directly or indirectly fix purchase or selling prices or any other trading conditions' as incompatible with the common market.

15 The applicants maintain that the decision not to supply Mr Pex was taken individually by each manufacturer approached by him because Mr Pex had broken his contracts.

16 The right reserved to the Groupement to decide to suspend supplies to a buyer who does not comply with the general conditions of sale was expressly included in the circulars addressed to customers by the members of the Groupement.

17 In the circular of 29 October 1971, sent by the Groupement to all its customers, it is stated that:

'In the present circumstances it appears to us essential to draw your attention to the "general conditions of sale", in particular, to strict compliance with the following three paragraphs:

Simply by placing an order, the customer undertakes to comply with all the obligations which arise from the general conditions of sale and accepts the consequences of any infringements ’.

18 It is clear from these words and from the timing of its publication that this circular was intended to reassure retailers that the Groupement was seeing that the general conditions of sale were applied and that appropriate steps would be taken against any competitor practising undercutting especially as the conditions of which the customers were reminded were the very ones which Mr Pex had infringed.

23 They maintain, secondly, that even if, in fact, the agreements and the decisions were liable to affect trade between Member States, the contested decision did not specify how this trade could be affected.

24 Thirdly, the members of the Groupement state that they believed in all good faith that the agreements and decisions did not affect trade between Member States, and that there is, accordingly, no justification for fines for a decision which merely enforced the agreements.

25 The fact that a price-fixing agreement of the type in question only covers the marketing of products in a single Member State does not rule out the possibility that trade between Member States may be affected.

26 In fact, a restrictive agreement extending over the whole of the territory of a Member State is by its very nature liable to have the effect of reinforcing the compartmentalization of markets on a national basis, thereby holding up the economic interpenetration which the Treaty is designed to bring about and protecting domestic production.

JUDGMENT OF 26. 11. 1975 —CASE 73/74

27 In this connexion it is important to identify the means available to the parties to a restrictive agreement to ensure that customers remain loyal, the relative importance of the agreement on the market concerned and the economic context in which it exists.

33 Without excluding the possibility that a restrictive pricing practice such as that in dispute may in fact affect trade between Member States, the fact remains that, when the defendant adopted a decision which went appreciably further than its earlier decisions, it ought to have supplied a more detailed statement of the grounds on which it was based.

PAPIERS PEINTS v COMMISSION

34 In this respect, the obligation on the Commission, under Article 190 of the EEC Treaty, to give reasons for its decisions is not satisfied by the straightforward assertions appearing under heading E of the contested decision entitled ‘The effect on trade between Member States'.

35 In consequence, Article 4 of Decision No 74/431/EEC of the Commission must, in accordance with the applicants' claim, be annulled.

Costs

36 Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

Lecourt Kutscher Donner

Pescatore Sørensen Mackenzie Stuart O'Keeffe

Delivered in open court in Luxembourg on 26 November 1975.

A. Van Houtte R. Lecourt

Registrar President