C-25/75

JUDGMENT OF THE COURT OF 1 OCTOBER 19751

Van Vliet Kwasten- en Ladderfabriek NV v Fratelli Dalle Crode

(preliminary ruling requested by the Gerechtshof Arnhem)

Case 25/75

Summary

Competition — Restrictive practices — Exclusive dealing agreements — Exemption — Categories of agreements — Inapplicability (Regulation No 67/67 of the Commission, Article 3)

1 — Language of the Case: Dutch.

JUDGMENT OF 1. 10. 1975 — CASE 25/75

on the interpretation of Regulation No 67/67/EEC of the Commission of 22 March 1967 concerning the application of Article 85 (3) of the Treaty to certain categories of exclusive dealing agreements (OJ 1967, No 57) especially Articles 1 and 3 thereof.

THE COURT

composed of: R. Lecourt, President, J. Mertens de Wilmars and A. J. Mackenzie Stuart, Presidents of Chambers, A. M. Donner, R. Monaco (Rapporteur), P. Pescatore, M. Sørensen and A. O'Keeffe, Judges,

Advocate-General: G. Reischl

manufactured by it and of all parts Paragraph 4 above concerning delivery to necessary for the manufacture of brushes. customers of Dalle Crode in Italy, shall be notified by Dalle Crode to their said Paragraphs 4 and 5 of the said contract customers by brochures or equivalent read as follows: means, by mentioning them in all their

VAN VLIET KWASTENFABRIEK v DALLE CRODE

offers, price lists and invoices and, in any in favour of Dalle Crode, ordered Van event, by disclosing before or during the Vliet to pay the amount claimed and preparation of the contracts of sale in declared the latter's claim to be question. inadmissible. Van Vliet thereupon appealed against this judgment to the Sales in Italy shall satisfy the following Gerechtshof (Court of Appeal), Arnhem. conditions: The Gerechtshof, Arnhem, considering Dalle Crode shall deliver the branded that the aforementioned clauses of the articles and in connexion therewith it contract in question contravene Article shall specifically require the buyer not to 85 (1) of the Treaty, examined whether, export or cause exports to be made to the in accordance with the argument relied Benelux countries. If the said buyer shall on by Van Vliet, this contract does not fail to comply with these terms then he by virtue of the provisions of Regulation shall be liable to the buyer (sic).1 No 67/67 of the Commission of 22 March 1967 benefit from a declaration of

JUDGMENT OF 1. 10. 1975 — CASE 25/75

2. A copy of the order referring the established in France or in Germany. matter reached the Court on 7 March 1975. 2. The fact that potential customers established within the Benelux market In accordance with Article 20 of the experience difficulties in obtaining Protocol on the Statute of the Court of supplies — since, to the extent to which Justice of the EEC, written observations they do not obtain these from Van Vliet, were submitted by Van Vliet Kwasten they are obliged to turn to undertakings en Ladderfabriek NV, represented by V. established in France or in West M. Phijffer, Advocate at Nijmegen and by Germany which imported the product in the Commission of the European question from Italy — cannot be Communities, represented by its legal considered as conclusive in the present adviser Bastiaan van der Esch, acting as case. It did not involve an obstacle to Agent intra-Community trade, bearing in mind the present development of such trade Upon hearing the report of the and the abolition of customs barriers Judge-Rapporteur and the views of the between Member States, so that no Advocate-General, the Court decided to additional cost or levy affects imports of open the oral procedure without any the product in question.

NV One might object that parallel imports 1. After stating that the product via France or West Germany are referred to in the contract in question theoretical rather than real but the was in fact a plastic sleeve of various question in the present case is essentially sizes, shapes and colours, for brushes, whether such a possibility exists or not.

At any rate one must not lose sight of the contract relates — in the territory in the fact that the clauses in the contract which the agreement produces its effects. do not stand in the way of such a The only restriction which' results from possibility and that at a commercial level the agreement is that it is impossible for Dalle Crode needed an intermediary and Italian manufacturers and dealers who in particular a manufacturer of paint have bought plastic handles from Dalle brushes in order to enable its product to Crode to re-sell them directly in the reach customers established in the protected territory. Under the agreement

Commission of the European Communities protected territory, Van Vliet recalls that in accordance with the criteria laid The Commission refers at the outset to down by the Commission in its the provisions of Regulation No 67/67 of communication of 27 May 1970 an 22 March 1967 (OJ 1967 No 57), made exclusive sales agreement is not pursuant to Regulation No 90/65 of the incompatible with the Treaty if the Council of 2 March 1965 (OJ 1965 No undertakings which participate therein are of so modest a size that even an 36), concerning the application of Article 85 (3) of the Treaty to certain categories absolute protection (of which there is no of exclusive dealing agreements and question in the present case) does not concerted practices within the meaning appreciably affect competition on the of Article 85 (3). market where the agreement produces its

Having formulated these considerations, the Commission exam On the basis of these observations Van Vliet concludes that the sales agreement ines the two questions and makes the in question left the other Italian following observations: manufacturers and dealers in plastic (a) On the first question handles for paint brushes with the possibility of directly marketing their An agreement such as that described in products — just as the products to which the first question falls within the

restricting the possibility of marketing or '1. Exclusive selling agreements entered of buying the products in question into between a manufacturer in one elsewhere within the common market, of the Member States and an since on the one hand the intermediaries exclusive dealer established elsewhere or consumers in the Benelux countries in the common market which cannot obtain the products in question provide that the buyers in the from buyers from Dalle Crode manufacturer's Member State shall be. established in Italy and on the other prevented from selling the products hand the same buyers are prohibited to which the contract relates to the from marketing the said products in the territory covered by the contract are Benelux countries. For that very reason included amongst the agreements the contract in question also violates the which under Article 3 of Regulation principle of the free movement of goods No 67/67 do not benefit from the within the Community, which underlies exemption. Article 85 of the Treaty, for although 2. It is not possible to take a different trade in the products at issue remains view of such an agreement according free within the other Member States it is, to whether the intermediaries and in so far as these states and Italy are consumers established in the territory concerned, subject to the restrictive covered by the contract do or do not condition in question. have a real possibility of acquiring the goods covered by the contract (b) On the second question elsewhere in the common market but outside the manufacturer's Member The hypotheses formulated in the second State. Equally it is immaterial question have no effect as regards the whether the intermediaries and answer given to the first question. consumers do or do not make use of such possibility.' In fact assuming that the products in question may be imported into the Benelux countries from the other III — Oral procedure Member States, the fact nevertheless remains that an agreement such as that At the hearing on 9 July 1975 the parties referred to in the present case impedes to the main action and the Commission the free movement within the common of the European Communities presented market of the products available in Italy, oral argument. since direct imports from that country are excluded by the exclusive dealing On that occasion Fratelli Dalle Crode, agreement. Moreover, there is nothing to represented by Mr Teixeira de Mattos, exclude the possibility that whilst Advocate of Amsterdam, argued in making use of the possibility of particular as follows: acquiring the goods to which the — the restriction in question imposed agreement relates in other Member States on Dalle Crode does not appear

amongst those exhaustively listed in territory. This allegation is moreover Article 2 of Regulation No 67/67. immaterial in the present case. This is not a restriction imposed on the exclusive dealer since it affects On the same occasion Van Vliet the producer. Besides, it also affects Kwasten- en Ladderfabriek NV, third parties, since it amounts to a represented by M. V. Phjiffer, made the prohibition on exporting to the following points: Benelux countries imposed on Italian — the solution to the problem referred traders who buy from Dalle Crode by the national court must be sought the products to which the contract by taking into account the facts and relates. the real situation in the present case. — As regards the possibility of — the application of Article 3 of importing these products into the Regulation No 67/67 is bound up Benelux countries via France or with the existence of two factors. It Germany, this is purely theoretical presupposes that the contracting since the attempts in this respect parties 'make it difficult to obtain made by Dalle Crode have failed. supplies' of the goods referred to in — The agreement in question refers not the agreement and 'in particular' that only to plastic handles and plastic they exercise rights or take measures parts for paint brushes but also to 'to prevent [dealers or consumers] rushes with plastic sleeves. In the Netherlands and in the Benelux from obtaining' these goods. — the agreement in question does not countries (sic) it was sought to avoid come within the said Article 3 since competition from Italian traders who the goods in question are available in had bought the last-mentioned other Member States of the product from Dalle Crode, since Van Community and can easily be Vliet itself also manufactured the imported into the Benelux countries paint brushes from separate parts. from these States. This agreement Moreover, these traders represent moreover applies to an indefinite approximately one-half of the Italian period and it can be rescinded on market for the products in question. simple notice. — Dalle Crode strenuously denies Van Vliet's allegation that it effected direct deliveries of the products in The Advocate-General delivered his question within the protected opinion on 17 September 1975.

4 The second question asks whether the reply to the first question may differ according to whether the intermediaries and consumers established in the territory covered by the contract do or do not have a real possibility of acquiring the products in question elsewhere in the common market, outside the Member State where the manufacturer is established and according to whether they do or do not make use of such a possibility.

5 By reason of the connexion between these two questions they ought to be considered together.

6 Article 1 of Regulation No 67/67 of the Commission of 22 March 1967 on the application of Article 85 (3) of the Treaty to certain categories of exclusive dealing agreements, stipulates the agreements to which the provisions of Article 85 (1) of the Treaty apply.

7 As is shown by the sixth and seventh recitals to the regulation, the inapplicability of Article 85 (1) of the Treaty to exclusive dealing agreements falling within the category thus laid down finds its justification in the advantages which in the present state of trade such agreements afford for the improvement and the continuity of supplies as well as the continuance of the competition system to the benefit of particular small and medium-size undertakings.

8 Nevertheless the ninth and tenth recitals to that regulation state that 'any exemption must be subject to certain conditions' with a view to ensuring that consumers shall obtain the advantages which result from exclusive dealing and with a view to ensuring competition at the distribution stage.

VAN VLIET KWASTENFABRIEK v DALLE. CRODE

12 It is apparent from the decision referring the matter that the, exclusive sales agreement in question imposes upon the manufacturer an obligation to prohibit dealers and consumers established in his State from exporting or causing to be exported the products in question to the territory covered by the contract.

13 This contract, stipulating as it does that one of the parties must take measures with a view to preventing the sale of the products in question in the territory covered by the contract by dealers and consumers established in the Member State of the manufacturer, falls under one of the cases mentioned in the second subparagraph of Article 3 (b) of Regulation No 67/67.

JUDGMENT OF 1. 10. 1975 - CASE 25/75

14 Such a stipulation, which entails an encroachment on the freedom of action of third parties, goes beyond the restrictions which may be imposed within the framework of an exclusive dealing agreement capable of escaping the prohibition contained in Article 85 (1) of the Treaty.

15 By excluding the possibility of parallel imports, this obligation has the effect of preventing intermediaries and consumers established in the territory covered by the contract from obtaining supplies.

16 Even assuming that the intermediaries and consumers established in the territory covered by the contract have real possibilities — whether or not they take advantage thereof — of obtaining the products in question within the common market outside the manufacturer's State, the absence, by reason of the said restriction, of parallel imports in respect of a considerable quantity of such products brings the exclusive dealing agreement within the provisions of Article 3 of the beforementioned regulation.

proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT

in answer to the questions referred to it by the Gerechtshof, Arnhem, by judgment dated 18 February 1975, hereby rules:

1. An exclusive sales agreement between a manufacturer in one of the Member States and a dealer established elsewhere in the

common market falls within Article 3 of Regulation No 67/67 of the Commission where it prescribes an obligation on the part of the manufacturer to prohibit intermediaries and consumers established in his State from exporting or causing to be exported the goods in question to the territory covered by the contract and where it has the effect of rendering it impossible for intermediaries and consumers established in that territory to acquire directly from the manufacturer's State an appreciable quantity of the said goods.