C-26/75

When combined with the freedom of the The abuse of such a position may be, manufacturer or its authorized agent inter alia, in the imposition of a price appointed by the public authority to fix which is excessive in relation to the the price for its service, the delegation by economic value of the service provided, a Member State to such person in the and which has the effect of curbing form of a legal monopoly of the duty parallel imports by neutralizing the governed by public law which consists in possibly more favourable price levels carrying out the technical inspection of applying in other sales areas in the vehicles before they are used on the Community or by leading to unfair public highway, leads to the creation of a trading in the sense of Article 86 (2) dominant position. (a).

In Case 26/75

GENERAL MOTORS CONTINENTAL NV, a limited company incorporated under Belgian law whose registered office is at Antwerp, represented by Michel Waelbroeck, Advocate at the Court, d'Appel, Brussels, with an address for service in Luxembourg at the Chamber of Andre Elvinger, 80 Grand-rue,

applicant, v

Commission of the European Communities, represented by its Legal Adviser, Michel van Ackere, acting as Agent, with an address for service in Luxembourg at the offices of its Legal Adviser, Pierre Lamoureux, 4 boulevard Royal, defendant,

1 — Language of the Case: French.

JUDGMENT

Facts

The facts, the procedure and the approval (procès-verbal d'agréation) conclusions, submissions and arguments (Article 3 (1) and Article 10 (1) of the of the parties may be summarized as Royal Decree of 15 March 1968). follows: Where a type of vehicle has thus obtained an approval the manufacturer I — Facts or, where he is established abroad, his sole authorized agent in Belgium shall In order to be used on the public issue, in respect of each new vehicle of highway in Belgium vehicles registered the same type which is in use on the in that country must satisfy the road, a certificate 'of conformity' which requirements of the Royal Decree of 15 attests that the vehicle entirely satisfies March 1968 which embodies a general the requirements contained in the regulation concerning the technical certificate of approval (Article 10 (4) of standards to be met by motor vehicles the Decree). and their trailers (Moniteur beige of 28 March 1968, p. 3266, as subsequently The manufacturer or his sole authorized amended on several occasions). agent subsequently affix to each vehicle the compulsory type-shield (Article 16 (2) Each type of chassis or unit-construction of the Decree). vehicle manufactured or assembled in Belgium or imported for use in that Following instructions from the Belgian country must be approved by the Minister for Transport, since 15 March Minister for Transport or his rep­ 1973 the State testing-stations, which resentative and be the subject of an until that date carried out the inspections

GENERAL MOTORS v COMMISSION

incorporated under Belgian law having its registered office at Antwerp, is the On 3 August 1973, GMC took action to sole authorized agent of Adam Opel AG, reimburse part of the amounts charged in Rüsselsheim/Main, a manufacturer of the five cases mentioned above. In two private motor cars, and of other cases BF 4 900 and in three cases BF manufacturers belonging to the General 4 425 were returned. Motors group. The Commission of the European

GMC within the meaning of Article 86 of the subsequently issues the certificates of EEC Treaty. On 26 July 1974, therefore, conformity and the type-shields for each acting on its own initiative, it set in vehicle sold through its approved dealers. motion against GMC the procedure Private customers and dealers importing provided for by Regulation No 17/62 of vehicles manufactured within the the Council of 6 February 1962, the first General Motors group into Belgium regulation implementing Article 85 and otherwise than through GMC's standard 86 of the Treaty (OS p. 204). distribution system — parallel imports — are also obliged to resort to GMC, in In pursuance of Article 19 (1) of its capacity as sole authorized agent for Regulation No 17/62 and of Article 2 (1) the approval procedures for both new of Regulation No 99/63 of the vehicles and, since 15 March 1973, for Commission of 25 July 1963 on the vehicles registered abroad for less than hearings provided for in Article 19 (1) six months. and (2) of Council Regulation No 17 (OJ p. 2268), the Commission informed Between 15 March and 31 July 1973, GMC by letter on 31 July 1974 of the GMC charged the same rates for the statement of objections which it intended issue of certificates of conformity and to raise against it. type-shields in five cases of parallel imports as it has charged previously for On 6 September 1974 GMC informed inspecting certain American models BF the Commission in writing of its views 5 000 plus BF 900 VAT). on these objections.

By reason of this infringement Article 2 of the decision imposes on GMC a fine IV — Submissions and arguments of 100 000 units of account, that is, BF of the parties 5 000 000, the decision being enforceable against General Motors NV in First submission: infringement of Article accordance with the provisions of Article 86 of the EEC Treaty 192 of the EEC Treaty. The applicant maintains that the The Commission's decision was notified contested decision infringes Article 86 of to GMC by letter dated 24 December the EEC Treaty in that it is wrong in 1974, received on 6 January 1975, and finding that GMC holds a dominant published in the Official Journal of the position in a substantial part of the Communities on 3 February 1975 (OJ common market, that it abused this 1975, L 29, p. 14). dominant position and that this abuse was likely to affect trade between Member States. II — Written procedure A — The dominant position On 7 March 1975 General Motors Continental NV brought proceedings The applicant maintains that according against the decision of the Commission to the contested decision it had 'a under Article 172 and 173 of the EEC dominant position with regard to Treaty. applications for general type approval The written procedure followed the and the issue of certificates of conformity normal course. and typeshields in Belgium, both for new Opel vehicles and those registered abroad Upon hearing the report of the for no longer than six months in a Judge-Rapporteur and the opinion of the substantial part of the common market'. Advocate-General the Court decided to However, the market in question cannot open the oral procedure without holding be defined in such narrow terms. any preparatory inquiry. (a) The activity in question, which However, the Commission replied in consists in obtaining type approval for a writing to a question put to it by the given model and issuing certificates of Court. conformity and type-shields is merely

(c) The market which the Commission (h) The case-law of the Court of Justice shows that the existence of an exclusive should have taken into consideration is the whole of the market of or the sale in right granted by national legislation is not in itself sufficient to confer on the Belgium of new motor vehicles. The Commission has not even attempted to holder of that right a dominant position establish whether GMC holds a within the meaning of Article 86, and dominant position within this market. the mere power to prevent parallel imports of a given product cannot give (d) It is true that GMC is alone rise to a dominant position in a empowered to make applications for type substantial part of the common market if approval and to issue certificates of this product is in competition with other conformity and type-shields for new products. Opel vehicles and for those which have been registered abroad for less than six The Commission does not accept this months. This does not, however, signify reasoning. that GMC is shielded from competition. Because of the intensive competition (a) The price charged for inspecting existing between manufacturers it could imported vehicles for conformity with not allow itself to alienate the owners of the national safety standards is not one of General Motor cars. This is demonstrated the parameters of competition on the by the speed with which GMC reduced market in which the various makes of

its inspection costs at the end of May motor vehicle compete ('inter-brand' 1973 after its attention had been drawn competition). It only influences to complaints from private importers of 'intra-brand' competition and makes it European-manufactured vehicles. GMC possible to favour GMC and its official was not in a position to take action distribution network therein. A without taking particular account of manufacturer or dealer who intends to competitors, buyers or suppliers. It is meet a reduction in the selling price of a impossible to isolate the market in competing model of another make by approval formalities from the general reducing the price of the approval sales market in new motor vehicles. procedure merely strengthens the

The price of the approval and testing The fact that in Belgium a large number formalities for General Motors vehicles of manufacturers or authorized agents other than parallel imports is negligible hold such a monopoly certainly and is not charged separately. It plays no constitutes a special situation when part in the 'inter-brand' competition on compared to that normally encountered the Belgian market in motor vehicles. in the application of Article 86 of the EEC Treaty. It is merely the consequence (b) The specific nature of the activity in of the Belgian legislation existing in this question prevents its being considered as field and in no way prevents the situation an integral part of the whole of the being considered from the point of view market for sales of new vehicles in of Article 86. Belgium. It results from a legal obligation which is imposed in the (d) Of course, a possibility of 'intra- general interest. It does not give rise to brand' competition exists in actual or an argument based on sales or potential parallel imports. However, by advertising. It is thus clearly distinct fixing very high prices for the inspection from the sale of motor vehicles and its formalities GMC is precisely in a ancillary activities such as the guarantee position to restrict competition, or even and after-sales service. The latter form to eliminate it by imposing a prohibitive part of the very nature of the activity of price. GMC holds a dominant position the seller of motor vehicles and are not only as a result of its exclusive right parameters of competition for the market to carry out the inspection formalities by between the various makes of such fixing the price for such formalities as it vehicles. pleases, but can also abuse this position to the extent to which it can impede The inspection procedures are parallel imports. nonetheless carried out on the basis of commercial criteria and in this way are (e) The argument based by the subject to the rules on competition applicant on the relatively small number contained in the Treaty. of applications which it received for certificates of conformity for Opel cars in (c) The applicant is therefore wrong to relation to the number of new vehicles maintain that the market to be registered in Belgium cannot be considered is the whole of the market for accepted. GMC's dominant position ex­ sales of new vehicles in Belgium, in tends to the issue of certificates of which it clearly does not hold a conformity for all vehicles which it dominant position. On the other hand, manufactures or for which it is the under Belgian legislation it alone is authorized agent in Belgium and, empowered to carry out the inspection therefore, not only for cars of the Opel formalities for vehicles in the General make. Moreover, according to the Motors group which are imported new or case-law of the Court of Justice the registered abroad for less than six concept of a 'dominant position within months. Any person acquiring such a the common market or in a substantial vehicle is totally dependent upon this part of it' cannot be defined on the basis company to obtain the necessary of abstract quantitative criteria. The certificate of conformity, for which no effects of the dominant position on the

working of competition across the of Article 86 of the EEC Treaty. Where frontiers between the Member States and such conduct corresponds to one of the on free access to the markets must be examples given in the second paragraph taken into particular account. GMC's of this provision it only gives rise at the dominant position affects the freedom to most to a rebuttable presumption of an make parallel imports and the case with abuse. Any automatic application of which this can be done. The total Article 86 to specific activities on the dependence on GMC of every parallel ground of their legal nature is not importer into Belgium of a General permissible. Motors vehicle for the issue of the certificate of conformity demonstrates (b) GMC 's purpose was in no way to the existence of a dominant position discourage parallel imports of Opel capable of falling within the ambit of vehicles by imposing an excessive rate Article 86, even though the number of for the inspection formalities for such parallel imports from other Member vehicles. On the contrary, GMC simply States has fallen. The relatively low figure maintained in force after 15 March 1973 for the parallel imports is irrelevant: the a rate which had been established solely very high cost of the inspection in relation to American vehicles and formalities during the period considered applied it for a very short period and by the contested decision was likely to in a very small number of cases to affect trade between Member States. European-manufactured vehicles.

In each of the five cases in which the conformity. This finding is sufficient highest rate was imposed the excess was evidence that it was in a position to act promptly refunded by GMC. without taking particular account of the buyers. (d) Moreover, the contested decision is wrong in finding that the requirement of B — The abuse an excessive price for the approval The applicant maintains that there can procedures 'acts to the detriment of, and be no question in this instance of an unfairly discriminates against, those abuse of a dominant position. Neither dealers who import, or are in a position the object nor the effect of the conduct to import, new Opel vehicles into for which it is criticized was to affect Belgium as parallel imports and who are competition adversely. able to compete for custom in Belgium with Opel dealers appointed by GMC'. (a) Contrary to the argument put The General Motors sales agreement forward by the Commission, the case-law prevents the import into Belgium of new of the Court of Justice shows in Opel vehicles by dealers who are not particular that the purposes of Article 85 authorized by GMC.

JUDGMENT OF 13. 11. 1975 — CASE 26/75

purchased from approved General Motors (b) Secondly, it must be borne in mind dealers. The normal result of the low that parallel imports of new or used Opel level of prices in Belgium was to render cars could and did take place: as long as unattractive the import of new cars by it has not been exempted under Article natural or legal persons for their own use. 85 (3) of the Treaty, the selective clause As regards those persons in Germany in the General Motors sales agreement who benefited from a special discount, had not been imposed on any dealer in the imposition of a sum of BF 5 000 did General Motors vehicles. Prices are not unduly impede intra-Community subject to fluctuations. The benefit of the trade but merely reduced to a certain discounts usually granted to certain extent the advantage deriving from the categories of private individuals on the special discount. As regards the natural purchase of a vehicle could have or legal persons who import used cars for encouraged them to make parallel their own use or for the purposes of imports. Competition in fact exists resale, they are not in competition with between secondhand car-dealers and the GMC or its approved dealers. In these dealers approved by GMC to the extent circumstances, even if the refund made to which the latter also sell used cars, and was not taken into account, the alleged indeed new cars in so far as the abuse could not have impeded trade secondhand and new car markets are not within the Community, nor have completely impervious to one another. protected GMC and its approved dealers against competition from third parties. (c) During the period preceding the refund and in the five cases in question For its part, the Commission considers the excessive price imposed by GMC in that the applicant has clearly abused a fact imposed on the parallel imports an dominant position. 'unfair' charge and therefore affected trade between the Member States. The

GENERAL MOTORS v COMMISSION

(a) It is not contradictory to find, on the one hand, that until the refund was made Second submission: Infringement of an essential procedural requirement or GMC decided to carry out an internal cost review payment of the excess was The applicant considers that the reasons final and was regarded as such both by given for the contested decision are the parallel importers and GMC and that contradictory and insufficient. the subsequent refund cannot alter retroactively the fact that the elements (a) Article 1 of the operative part of the constituting the infringement had existed and, on the other hand, that a calculation decision finds that GMC intentionally infringed Article 86 'by charging a price and charge made subject to an express that was abusive' for the inspection reservation would not necessarily have

this. However, in the same decision the Article 15 (2) and (5) of Regulation Commission expressly declares that there No 17 would have been no infringement if GMC had reserved the possibility of a The applicant considers that no fine subsequent adjustment when it requested should have been imposed as it put an payment for the inspection carried out end voluntarily to the infringement and in the five cases in question. It is took steps to refund all the applicants contradictory to state at the same time, who had been overcharged. GMC has not

JUDGMENT OF 13. 11. 1975 — CASE 26/75

However, these that the alleged infringement was not imports were rendered impossible by the intentional is also shown by the finding General Motors sales agreement, which that the sum requested was at first was notified to the Commission. reduced to an amount lower than that which later appeared justified. The Commission contests the applicant's arguments. (b) The contested decision is solely based on the view that GMC acted (a) The statement that GMC had intentionally. It cannot subsequently be applied to European cars the much justified on other grounds. However, for higher rate laid down for the inspection of American cars as the result of an the sake of completeness it should be pointed out that the very short period unnoticed error cannot be accepted. which elapsed between GMC's reaction GMC applied this rate with full to the complaints made and its decision, knowledge of the fact that it was taken before the Commission intervened, excessive and knowingly exploited its to reimburse all the buyers involved, dominant position by imposing unfair whether they complained or not, shows and discriminatory prices.

imposed. The existence of negligence is as it imposes a fine on the applicant. itself sufficient to justify the imposition of the penalty; at most it may result in a Any damage suffered was entirely made different assessment being made of the good and neither the object nor the gravity of the wrongful act and, therefore, effect of the price charged was to of the extent of the penalty to be discourage other persons or undertakings imposed. from importing Opel vehicles into Belgium. The alleged infringement only (c) The contested decision expressly lasted for two and a half months and was took into account in favour of the brought to an end before intervention on applicant the fact that it put an end to the part of the Commission. the infringement after a short time and refunded the excess to the five buyers in (d) In accordance with Article 15 (5) of question.

GENERAL MOTORS v COMMISSION

(d) The fine was imposed as the result V — Oral procedure of an abuse of a dominant position through the imposition of unfair prices. This fact was of course not shown in the At the hearing on 7 October 1975, the parties presented oral argument and agreements notified to the Commission answered questions put by the Court. and it is in any case absurd to maintain that an abuse of a dominant position may form the subject of a notification The Advocate-General delivered his and thus benefit from the terms of opinion at the hearing on 19 February Article 15 (5) of Regulation No 17. 1975.

Law

1 By an application received at the Court Registry on 7 March 1975 General Motors Continental NV requested the annulment of the decision of 19 December 1974 (OJ 1975, L 29, p. 14), by which the Commission imposed on GMC a fine of 100 000 u.a., that is BF 5 000 000 on the ground that, between 15 March and 31 July 1973, the applicant had infringed Article 86 of the EEC Treaty by charging an excessive amount on the import of five motor vehicles manufactured in another Member State for the inspection for conformity with the specifications contained in the approval certificate prescribed by the Belgian authorities (hereinafter referred to as the 'approval procedure') which it must carry out as the sole authorized agent of the manufacturer in Belgium.

2 The applicant put forward certain submissions against this decision which concern the infringement of the rules contained in Article 86 of an essential procedural requirement and of Article 15 (2) and (5) of Regulation No 17 of the Council of 6 February 1962 (OJ 1962, p. 204).

7 The approval procedure in the context of which the impositions in question were made is, by nature, a duty governed by public law which is so delegated by the Belgian State that, for each make of motor car the performance of this duty is reserved exclusively to the manufacturer or its sole authorized agent, appointed by the public authority.

8 However, although it entrusted this task of inspection to private undertakings the State took no measures to fix or limit the charge imposed for the service rendered.

9 This legal monopoly, combined with the freedom of the manufacturer or sole authorized agent to fix the price for its service, leads to the creation of a dominant position within the meaning of Article 86 as, for any given make, the approval procedure can only be carried out in Belgium by the manufacturer or officially appointed authorized agent under conditions fixed unilaterally by that party.

10 It thus emerges, that the submission which the applicant bases on the fact that it held no dominant position must be rejected.

The abuse

11 It is possible that the holder of the exclusive position referred to above may abuse the market by fixing a price — for a service which it is alone in a position to provide — which is to the detriment of any person acquiring a motor vehicle imported from another Member State and subject to the approval procedure.

17 However, the applicant maintains on this point that the inspections which it carried out during this period represented an unusual activity on its part, in that it had only been made to assume responsibility for them as from 15 March 1973 when the State testing-stations were discharged from undertaking these same inspections.

18 As these inspections only constituted an occasional activity on the part of the applicant and one of minute inportance in relation to the inspections which it normally carries out on the vehicles which it puts directly on the market and which are, therefore, manufactured in accordance with the standards imposed by Belgian legislation, the departments responsible applied the charge which was until then normal for the inspection of the vehicles which it imported.

JUDGMENT OF 13. 11. 1975 — CASE 26/75

19 The applicant again draws attention to the fact that following the complaints made by the parties concerned it very quickly reduced the charge for the inspection of imported vehicles of European manufacture to a level which was more in line with the real cost of the operation and refunded the excess to the parties concerned, and that this took place before the Commission began its investigations.

20 This conduct on the part of the applicant, the truth of which is not contested by the Commission, cannot be regarded as an 'abuse' within the meaning of Article 86.

21 The applicant has given an adequate explanation of the circumstances in which, in order to meet a new responsibility transferred from the State testing-stations to the manufacturers or authorized agents of the different makes of motor car in Belgium, it applied, for an initial period, to European cars a rate which was normally applied to vehicles imported from America.

GENERAL MOTORS v COMMISSION

On those grounds,

THE COURT

hereby:

1. Annuls the decision of the Commission of 19 December 1974

relating to a proceeding under Article 86 of the EEC Treaty (IV/28.851 -General Motors Continental);

OPINION OF MR ADVOCATE-GENERAL MAYRAS DELIVERED ON 29 OCTOBER 1975 1

Mr President, It is for the Minister for Transport or his Members of the Court, •representative to issue an approval for each type of vehicle.

I — Facts It is for the manufacturer or, where he is established abroad, for his sole authorized Under the Royal Decree of 15 March agent in Belgium, to check that every 1968, all motor vehicles — whether new vehicle of an approved type produced or assembled in Belgium or conforms to the specifications required imported into that country — must for such approval. satisfy certain technical requirements fixed by this regulation in order to be This technical inspection is auth­ used on the public highway. enticated by issuing a certificate of

1 — Translated from the French.