C-77/77

address for service in Luxembourg at the Chambers of J. C. Wolter, 2 Rue Goethe, applicants, v

Commission of the European Communities , represented by its Legal

Adviser, B. van der Esch, acting as Agent, with an address for service in

Luxembourg at the office of its Legal Adviser, M. Cervino, Jean Monnet Building, Kirchberg, defendant,

APPLICATION for the annulment of the decision of the Commission of

the European Communities of 19 April 1977 relating to a proceeding under

JUDGMENT

Facts and Issues

The facts and the arguments of the a dominant position within the meaning parties put forward in the course of the of Article 86 of the EEC Treaty by written procedure may be summarized reducing their deliveries of motor spirit

as follows: intended for a customer established in the Netherlands during a period of

shortage by a percentage significantly I — Facts and written procedure greater than that aplied to other

customers.

that decision under I. B. 3., of the three the Netherlands market. ABG's applicant companies the first two are purchases are distributed partly through

wholly-owned subsidiaries of the third the intermediary of the AVIA network

company, the first being responsible in of filling stations or the "white pump"

particular for the marketing of motor and by delivery to network, partly spirit in the Netherlands and the second large- scale consumers.

specializing above all in the refining of By a telex message of 6 April 1977 the petroleum products. The group formed Commission sent to the applicants a

by these three companies is one of the message informing them that a decision seven undertakings which in November had been adopted with regard to them. 1973 were directly producing premium-

Upon (i) the rules and functioning of the 2. hearing the report of the Rijksbureau voor Aardolie Judge-Rapporteur and the views of the Produkten (National Office for Advocate General the Court decided to Petroleum herein­ Products, open the oral procedure after putting after referred to as "the written questions to the parties and National Office") set up by reserving any decision with regard to decree of the Minister for a possible subsequent preparatory Economic Afairs dated 13 inquiry. November 1973, and the Olie Contact Commissie (Liaison Committee for the Oil II — Conclusions of the parties hereinafter Industry, referred

to as "the Liaison Com­

The that Court up in applicant claims the set 1950 in the mittee"), should: Netherlands to facilitate contacts between the Govern­ "Annul the decision of the Commission ment and the oil companies of the European Communities of 19 (Decision: I. C); April 1977 relating to a proceeding under Article 86 of the EEC Treaty (IV/­ (ii) the system of maximum prices

28.841 — ABG oil companies operating governed in the Netherlands by in the Netherlands) for infringement of the Law of 24 March 1961, as

an essential procedural requirement and it was applied during the crisis

infringement of the EEC Treaty or of period (Decision: I. F); any rule of law relating to its (12 (iii) the rationing scheme

BP's in the Commission's defence. course of conduct during the

period under consideration (November Having thus described the factual and

1973 to March 1974) and the criticisms legal situation underlying the action, the

made of it in the decision in dispute. applicants contest the legal foundation

They give information inter alia: of the said decision. They also criticize

BP v COMMISSION

entirely comparable to that of a number — Irrespective of these considerations of other oil companies it is incontestable the Commission based its position on a that BP does not occupy a significant wrong application of the facts when it economic position there or, a fortiori, a dominant position; concluded that, during the crisis, the

Netherlands purchasers from BP had become entirely dependent on BP so — The decision in dispute takes as its that the oil companies were "in no way basis for deducing the existence of a in competition with each other to supply dominant position on the part of BP a each other's customers". This con­

relationship of vertical dependence clusion is irreconcilable with the fact within a given market between a seller

(ABG). Such that during the above-mentioned period (BP) and a purchaser an for a number of sales points petrol approach to the problem of dominant passed to other suppliers. Moreover, the positions is contrary to the system of Commission ought to have taken into Article 86 of the Treaty. The simple fact consideration, by reason precisely of the that one undertaking depends on short duration of the crisis, the aspect of another for its supplies is not sufficient potential competition. to consider that the second undertaking has a position which permits it to Moreover the Commission cannot deny that as appears from Annex I to its operate on the market without taking particular account of competitors. A decision ABG throughout the period any con­ consideration received dominant position and dependence are under

undertaking happens to be linked to an a purchaser of BP petrol, as

accidental factual situation, which is not BP had notified ABG as long ago as

temporally fixed, and to facts subject to November 1972 that it would have changes which the undertaking which is ceased its deliveries to it as from regarded as holding a dominant position 31 May 1973. As from that date, on

is not in a position to know or a fortiori which it was impossible to foresee that

JUDGMENT OF 29. 6. 1978 — CASE 77/77

the crisis would occur, the relationship purposes of an assessment of BP's of supplier and purchaser thus ceased to conduct in these circumstances, the

for the Commission to complain that BP February 1974) had excluded the price factor as a distribution mechanism, did not apply to ABG during the crisis another mechanism became necessary to the same treatment as it reserved for its mitigate the difficulties due to an contractual customers. Identical treat­

insufficient availability of these pro­

ment of all purchasers would be ducts. This was precisely the rôle of the tantamount to placing contractual National Office which, from the customers at a disadvantage in competition between purchasers and this beginning of the crisis, was the

in its turn would amount to discrimi­ authority which shared out the reserves. The Commission's argument that the nation. Contractual customers would National Office did not have the power not receive their entitlement and to intervene in the mater of petrol customers who had preferred not to deliveries in such a way as to bind the cover themselves against certain risks oil companies moreover finds no would actually be protected at the support in the declarations of the repres­

expense of the contractual customers. entative of the Netherlands Government Moreover, if the latter had commenced which are reproduced on page 3 of the an action against BP for complying not decision (cf. also the statements of the with its obligations, BP would probably Netherlands member of the Advisory not have been able to rely with success Committee on Restrictive Practices and on force majeure as the Commission had Dominant Positions at the meeting on not at the time of this failure to fulfil contractual obligations made the least 18 February 1975). declaration capable of indicating that it The documents available show that the

bution network and of its contractual intermediary of the National Office customers, account being taken of were always sufficient to supply ABG's course of the reduction of 20 % pre­ sales points to the extent to which they scribed by the Netherlands Government. use the A­VIA mark. The Commission's argument to the — In these circumstances there can be effect that the conduct of BP might well no question in the present case of any encourage ABG to conclude long-term sort of real risk of affecting the contracts and thus in its opinion structure of the Netherlands market, sacrifice its commercial independence account being taken also of the fact that does not take into acount the effects of in the share of the Netherlands market the policy adopted by the National motor spirit held by ABG is 5 %, 2 % Office and carried out by the oil is of which attributable to AVIA, and

companies, which was precisely of such that, during the whole of the crisis, a nature as to persuade ABG not to ABG received sufficient products to conclude such contracts since in case of cover its structural needs. danger the Netherlands Government would once more come to its aid. The defendant states first of all that this

action relates to the precise scope of a

(c) The effect on trade between Member law duty under public which

States (Decision: II. C): Community law imposes on traders who — ABG never represented in the find themselves in a position to benefit

Netherlands a live factor with regard to temporarily from a dominant position

necessitate an exemption within the possibly less to other purchasers. The

policy which should have been followed meaning of paragraph (3) of that article. If such an exemption was not thought in law thus clearly differs on this point

from that adopted by the necesary because the influence of ABG's undertaking considered from the point of view of its concerted practices on competition were

too it follows that the possible own interests. small

disappearance of ABG must itself be Having thus formulated these pre­

considered as insignificant. liminary remarks the defendant proceeds to give a detailed analysis of

more than a purely national character. Liaison Committee and the National Furthermore, the quantities placed at Office, on the position and the structure the disposal of ABG through the of ABG etc.) with a view either to

JUDGMENT OF 29. 6. 1978 — CASE 77/77

supplementing or correcting it or to — It is moreover a mistake to think

giving an interpretation of it which in its that Article 86 of the Treaty requires

view is more correct. It also expresses its every vertical dominant position to

opinion on the criticisms put forward by cover in itself a substantial part of the

— Article 86 is based on the idea that everywhere active and which manifestly dominant positions may give rise to covers more than the quantities sold by abuses in vertical relationships between BP to ABG and to other clients. traders belonging to different industrial or commercial stages on the market. — The statement that during the oil

crisis "BP's purchasers were always able

— In periods of shortage it is only to turn to a sufficient number of other

is only in a supply"

logical to put the accent on the sources of true

dependence is literal it is unreal. of traders who are buying sense which as as

abuse since that provision is not such as trade-marks or patents of which applicable solely to dominant positions the Court has recognized on several which undertakings have created for occasions that confer a they may themselves. dominant position on their owners, its potential effect nevertheless remains the Furthermore, the fact that ABG same. The parallelism between this succeeded in carrying on its under­

factual monopoly and legal monopolies taking through the intermediary of the

created by such rights is incontestable. National Office and thanks to the

BP v COMMISSION

by no "point view"

of other producers reference to a of as understanding means proves that BP did not have a regards deliveries to independent distri­ dominant position allowing it to create butors. Moreover, ABG's shortfalls were difficulties for ABG or that its by no means made good and the "authority" behaviour did not bring about of the National Committee consequences contrary to Article 86 of was used only for the allocation of the

would of course become more National Committee thus by no means

important as the shortage continued. discharged the oil companies from the

However, even a brief shortage and the legal duties which were imposed upon

preference for dependent trade traders as a matter of European law. exhibited during this shortage by the Moreover, the legal duty flowing from undertakings dominating the market Article 86 which is in question here had had a definite effect. nothing to do with any preoccupations

of the public authorities as regards the (b) Abuse of a dominant position institution of a distribution system in the — BP's statement with regard to the formal sense of the term. These pre­

part played by the National Office occupations do not release the under­

undertakings concerned had taken importance in this case. First of all it action in accordance with the rules in cannot be denied that during the 12 force: its requests were not mandatory months preceding November 1973 BP and could not reasonably have been regularly supplied ABG with

regarded as such. This is confirmed by considerable quantities which covered

several facts such as the letters from the on the average 80% of ABG's needs.

Netherlands Government of 8 No­ The fact that BP's last large deliveries vember and 24 December 1973 stressing were considered by the latter as an

the need to preserve the existing advance on a contract for the refining channels of distribution, the letter from of crude oil changes none of the

the President of the Liaison Committee essentials of the matter. For an

deliveries within the contractual limits obligations arising under private law but to which they were subjected. Secondly, also over the commercial interests of

whilst it is of course true that undertakings which have a dominant "normally"

an undertaking is entitled to position and over their "planning". its treat purchasers differently according to whether or not they are bound to it (c) Effect on trade between Member by contracts, and that undertakings in a States dominant position are not bound to — ABG's disappearance from the mete out strict of treatment to equality in have market question would not the two categories of purchasers, this

does failed, by reason of the position which it not justify allowing undertakings occupies there as a competition factor, in a dominant position the right "in a shortage" to affect the structure of that very period of to treat purchasers

long-term market. Moreover, BP is not taking ound by contracts con­

account of the fan that a competitive siderably better than regular purchasers

contracts in greater quantities than but the co- operative is in a stronger

traders who are not bound in this way position with regard to the other stages.

this would mean in the long run the end At the same time competition between of any truly independent trading for the the members of the oligopoly to supply producers and thanks to this the buying co-operative presumably enslavement of trade the disappearance becomes more lively. An assessment of

of an important motive force as regards the legality of such a co-operative in price competition. terms of Article 85 thus has reasonable

chances of resulting in a negative — Moreover it would be too simplistic or an in terms of clearance exemption to state that an abuse ceases to be an (3). Article 85 However, such a abuse when a trader has neglected in clearance or exemption cannot be normal circumstances to provide for full interpreted as the conferment of Under­ reserves of liquidity and stock. powers allowing the undertakings takings have a right to expect that dominating the market to eliminate the dominant positions should not be traders concerned as competition abused. Moreover, although it is true factors. that account must be taken of the

confidence which traders place in contract law, the position nevertheless IV — Oral procedure remains that traders must also be able to

annulment of Decision No 77/327/EEC, adopted by the Commission on 19 April 1977 after receiving the opinion of the Advisory Committee on

Restrictive Practices and Dominant Positions relating to a proceeding under

Article 86 of the EEC Treaty undertaken on an application made to the Commission on 4 January 1974 by the Netherlands companies Aardolie Belangen Gemeenschap BV (ABG) and AVIA Nederland CV (AVIA).

2 That decision was notified to the addressees, who carry on production and

marketing of petroleum products in the Netherlands, on 25 April 1977 and

was published in the Official Journal of the European Communities L 117 of 9 May 1977, p. 1.

production which took place in November 1973 in a large number of

producing countries, was particularly felt in the Netherlands because of the

embargo applied to that State from December 1973, which resulted in a

considerable diminution of imports of crude oil.

5 Whilst accusing BP of infringing the provisions of Article 86 of the Treaty, the Commission nevertheless took the view that the intervention of the Rijksbureau voor Aardolie Produkten (National Office for Petroleum

Products) set up by Ministerial Decision No 573/814 of 13 November 1973

7 In view of these factors the contested decision concluded that it would not

be appropriate in this case to impose a fine on BP under Article 15 (2) of

Regulation No 17.

8 The applicants on the other hand maintain that in this case the Commission based its views on a concept of a dominant position which proceeds from an incorrect analysis of Article 86 of the Treaty and accused BP of having abused that position on the basis of an inadequate appreciation of the facts and law affecting the market.

9 They point out further that action by the Commission under Article 86 of the Treaty is all the more inappropriate in this case "when reference is made

to Council Directive No 73/238/EEC of 24 July 1973 on measures to mitigate the effects of difficulties in the supply of crude oil and petroleum

and to governments.

11 Finally, the applicants state that the fact that no fine was imposed by the contested decision does not negate the existence of their interest in

obtaining an acknowledgement from the Court of the unfounded nature of

the criticism made of them by that decision which, if it were maintained,

might in addition be a basis for the commencement of an action for damages against BP before the national courts.

12 (1) and 16 (1) of Regulation No 17 provide that the Commission Articles 15

14 Furthermore, Article 103 of the Treaty, which lays down that "Member States shall regard their conjunctural policies as a matter of common

concern", whilst providing the Community with the opportunity to meet

conjunctural difficulties by appropriate measures subject to the observance of Community objectives, is to be found amongst the provisions relating to the common economic policy and this in a field other than that of the

provisions of the Treaty relating to the competition rules, such as Articles 85 and 86.

15 Hence, the absence of appropriate rules, based in particular on Article 103 of the Treaty, which would make it possible to adopt suitable conjunctural measures, whilst revealing a neglect of the principle of Community solidarity which is one of the foundations of the Community, and a failure to act which is all the more serious since Article 103 (4) provides in terms

that "the procedures provided for in this article shall also apply if any difficulty should arise in the supply of certain products", still cannot release

this one, inevitably arise between "suppliers who have a substantial share of the market and quantities available and their customers".

JUDGMENT OF 29. 6. 1978 — CASE 77/77

18 The first question to be examined is whether, on the supposition that special market conditions such as those in this case did in fact ensure a dominant position in the Netherlands for the large oil companies established there as

against their respective customers, the factual and legal circumstances on

which the Commission relies to characterize in particular the individual conduct of BP during the crisis make it possible to consider that conduct as an abuse within the meaning of Article 86 of the Treaty.

19 The contested decision accuses BP of having abused its dominant position on the market in question by reducing its supplies to ABG substantially and proportionately to a much greater extent than in relation to all its other

generalized supply crisis all the independent companies are bound to deal in the first place with their habitual suppliers and that reductions in the

supplies to purchasers in a period of shortage must be carried out on the

basis of a reference period fixed in the year before the crisis.

23 The decision concludes that having regard to all these factors BP discrim­ inated against ABG, and the advances on crude oil made with motor spirit "different"

agreed by BP with ABG did not justify in this case a treatment

of ABG in comparison with other customers.

company sought, on the advice in particular of the Netherlands Government, to buy crude oil on the international market and have it refined.

26 It was furthermore agreed between BP and ABG that the latter might use

the refining capacities of BP to obtain motor spirit from its own crude oil.

27 Having regard to that agreement and ABG had been experiencing, since

even before the crisis, difficulties in supplying itself with crude oil, BP agreed to make it advances of petrol up to a level of 250 000 cubic metres

of crude oil belonging to it, which ABG was to return before 1 January 1974.

during the course of that same period to carry on such relations with its

customer, regard being had in particular to the fact that the plans of any undertaking are normally based on reasonable forecasts.

31 Moreover, the advances in petrol against crude oil agreed to by BP in pursuance of the processing agreement, as occur within the context of they

JUDGMENT OF 29. 6. 1978 — CASE 77/77

an agreement whose purpose was solely the refining of crude oil supplied by ABG and not the supplying of ABG with motor spirit, cannot serve as a valid argument to compare ABG's position in this case in relation to BP with that of a traditional customer of BP during the above-mentioned

reference period.

34 A duty on the part of the supplier to apply a similar rate of reduction in deliveries to all its customers in a period of shortage without having regard

to obligations contracted towards its traditional customers could only flow from measures adopted within the framework of the Treaty, in particular

Article 103, or, in default of that, by the national authorities.

35 In the absence of such Community measures the Netherlands national auth­

orities, within the framework of the Distributiewet (Law on Distribution), 1939, on 13 November 1973 set up the National Office for Petroleum Products mentioned above in order to face the difficulties met with by pur­

chasers of petroleum products during the crisis.

12 January to 4 February 1974 and outside that period, the National Office supported consumers or traders who were in difficulty.

38 For this purpose the National Office brought into force from the beginning a special distribution programme for supplying the needs of ABG without

however compelling the large oil companies, including BP, to apply a

similar rate of reduction in deliveries to all customers.

39 Through the intermediary of the National Office ABG was able, during the period of shortage, to have access for its motor spirit supplies, to other large oil companies grouped together in the Olie Contact Commissie (Liaison Committee for the Oil Industry).

40 Moreover although the intervention of the National Office was not of a

spirit not only from the oil companies grouped together in the Liaison Committee but also from the 13 other companies in quantities which

represented during the first three months of the crisis 32.5 to 37% of its normal supplies.

42 Finally it is clear that, thanks to that support and to the supply opportunities offered by the market apart from supplies coming from BP, ABG was able during the crisis to find supplies which, although limited by reason in particular of the general scarcity of products, nevertheless did put it in a

position to overcome the difficulties engendered by the crisis.

JUDGMENT OF 29. 6. 1978 — CASE 77/77

43 Hence, in view of these circumstances, it does not appear that BP in this case abused a dominant position in relation to ABG within the meaning of

pay the costs.

On those grounds,

THE COURT

hereby

1. Annuls Commission Decision No 77/327 /EEC of 19 April 1977, published in the Official Journal of the European Communities L 117 of 9 May 1977, p. 1;

2. Orders the defendant to pay the costs.