C-32/78

JUDGMENT OF 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

the infringement of Article 85 (1) of person granting the dealership and the the Treaty which follows therefrom dealers, the Commission did not has been committed by the said consider that there was reason to importer intentionally within the impose fines on the dealers as well meaning of Article 15 (2) of Regu­ cannot deprive it of the power to lation No 17 and it matters little come to a different decision in a fresh whether or not the importer was case where the conditions for the aware that at the same time Article 85 exercise of the power to impose a fine (1) of the Treaty was being infringed. set out in Article 15 (2) of Regulation No 17 are satisfied. Such difference of treatment does not constitute an 3. The fact that, in similar previous cases infringement of the principle of non­ of prohibited agreements between the discrimination.

In Joined Cases

32/78 — BMW BELGIUM S.A., Kontich 36/78 — AUTOHANDEL O. COCQUYT N.V., Bruges 37/78 — ETS. W. JORSSEN, Wilrijk 38/78 — GARAGE HINDRICKS, Roeselare 39/78 — P.V.B.A. J. SIAU-VERMEESCH, Dendermonde 40/78 — ETS. J. DE SMETH, Overiise 41/78 — ÉTS. JO VALLÉ, Bree 42/78 — ÉTS. J. DEPOTTER, Chièvres 43/78 — GARAGE J. WILIQUET S.P.R.L., Verviers 44/78 — ÉTS. RAJANS S.A., Braine-l'Alleud 45/78 — GARAGE VERHAEREN, Brussels 46/78 — S.C. DEWILDE MOTOR, Brussels 47/78 — ÉTS. AUTOGAMAS S.P.R.L., Brussels 48/78 — ÉTS. HOUYOUX, Brussels 49/78 — GARAGE LEON LOUYET S.P.R.L., Charleroi 50/78 — STATION ALBERT 1er S.A., Genval 51 /78 — S.P.R.L. AUTO-S ERVICE, La Louvière 52/78 — ÉTS A. PETIT & CO. S.A., Liege 53/78 — ETS JEAN BLAISE S.P.R.L., Lobbes 54/78 — ÉTS. CUISINIER, Mons 55/78 — ÉTS. BRIOT S.P.R.L., Namur 56/78 — GARAGE GEORGES ANTOINE, Seraing 57/78 — GARAGE HUBERT SCAILLET, Spontin

applicants,

JUDGMENT OF F 12. 7. I979 — JOINED CASES 32/78 AND 36 TO 82/78

V

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by its Legal Adviser, Antonio Marchini-Camia, acting as Agent, assisted by Francis Herbert and Jean-J. Evrard, Advocates at Brussels, with an address for service in Luxem­ bourg at the office of its Legal Adviser Mario Cervino, Jean Monnet Building, Kirchberg,

defendant,

APPLICATION for the annulment of Commission Decision 78/155/EEC of 23 December 1977, relating to a proceeding under Article 85 of the Treaty (IV/29.146/BMW), published in Official Journal 1978, L 46, p. 33,

I — Facts and written procedure its capacity as an importer of BMW vehicles, a network of specialized dealers 1. BMW Belgium SA., Kontich, a sub­ for the distribution of its products. sidiary of Bayerische Motoren Werke On 13 January 1975 it notified the AG, Munich, formed in Belgium in July Commission of the standard form 1973, organized in that Member State, in dealership agreement entered into by its

BMW v COMMISSION

dealers and applied for exemption under and the German prices narrowed, re­ Article 85 (3) of the EEC Treaty. exports to the Federal Republic of Germany became less and less significant as from that date. The second sentence of clause 1 (a) of that standard form agreement provided:

In a subsequent letter of 22 July 1975 BMW Munich stated inter alia: The difference in price resulted in new BMW vehicles being re-exported from Belgium to other Member States of the Community and elsewhere. The re­ "... May we remind you that according exports of new BMW vehicles, in to the terms of the dealership agreement, particular to the Federal Republic of re-exports themselves do not constitute a Germany, were at their highest from breach and no objection should be taken August to November 1975 inclusive. As to individual cases. Please confine your the price control measures came to an attention to cases where you suspect end on 1 November 1975, with the result there has been a sale to an unauthorized that the difference between the Belgian dealer in breach of the agreement."

JUDGMENT OF : 12. 7 1979 — JOINED CASES 32/78 AND Jo TO 82/78

BMW Belgium for its part sent, between there, and we must unfortunately May and October 1975, individual letters conclude that these dealers cannot or to several dealers on the subject of the will not understand the consequences of said re-exports. It also sent to all the what they are doing. Belgian BMW agents two circulars, one dated 4 July 1975 and the other 29 September 1975.

3. It will be clear that BMW Munich can The letter dated 4 July 1975, stated, in draw only two conclusions from this: particular, the following:

(a) Belgian prices are too low; "We have to inform you that we have unfortunately received information from BMW's Munich Head Office to the (b) Belgian dealers have excessive stocks. effect that a number of dealers have been selling BMW cars in the Netherlands and the Federal Republic of Germany. The consequences are clear enough: At a time when we are having to ration car supplies we can see no justification for such sales. (a) our prices must be brought up to those of neighbouring countries as quickly as possible; Furthermore we would remind you that the BMW agreement requires each (b) supplies of new vehicles to dealer to refrain from selling any BMW Belgium must be cut back from product to dealers who have not been October 1975. appointed for the sale of BMW goods.

5. Moreover, you will be creating so that we, your Dealers' Advisory serious difficulties both for yourselves Committee, can inform you which of and for the other members of the your fellow dealers are responsible for network by provoking BMW into any reduction in the supply of two-door what would after all be a logical and 518 models to Belgium. reaction — drastically reducing the number of cars intended for Belgium. The Dealers' Advisory Committee considers that its most important Our view is therefore that in the function is to give good advice to the present situation there is only one distribution network and the only advice solution: henceforth no BMW dealer it has to offer in this case is: No more in Belgium will sell cars outside sales outside Belgium." Belgium or to firms who propose to export them. 4. Of the 90 Belgium BMW dealers 48 signed the copy of the letter which was attached to the circular from BMW Belgium of 29 September 1975 and was We therefore ask you to agree to the returnable for the purpose of indicating above proposals by signing the attached agreement. copy.

Having been informed of the steps taken We enclose a statement by the members by BMW Belgium, BMW Munich of the Dealers' Advisory Committee who responded with a letter of 17 October fully support our arguments and who 1975, in which it expressed its satis­ will meet you personally at regional faction with the action of BMW Belgium meetings to explain their views. in the following terms:

5. On 20 October and 19 November 1975 the Automobilimporte C. Heuer On 27 January 1976 MGH applied for and MGH Motorgesellschaft mbH an interlocutory injunction against BMW undertakings, established in the Federal Belgium in the Rechtbank van Republic of Germany, informed the Koophandel [Commercial Court], Commission that Belgian dealers Antwerp, under Article 54 of the Belgian Trade Practices Act and Article 85 (1) of belonging to the BMW distribution network were no longer willing to supply the EEC Treaty. them certain new BMW models for re­ export to the Federal Republic of On 20 February 1976 BMW Belgium Germany. That information was supplied sent a further circular to all Belgian in connexion with Article 3 (2) (b) of BMW distributors in which it stated, Regulation No 17/62 of the Council inter alia: (Official Journal, English Special Edition 1959-1962, p. 87) and with its possible application in view. "On 29 September 1975 we wrote to you on the subject of the new situation arising on the Belgian market following the sale of new BMW vehicles to dealers The two undertakings claimed that in in other countries in 1975. sending their orders to those dealers they were acting as "agents" on behalf of the consumers and not as "dealers".

In a letter of 24 November 1975 MGH We are informed that this circular and suggested to BMW Belgium that it the letter attached to it are regarded by should agree that MGH would in future outsiders as instructions from importers import new vehicles into the Federal to dealers, although this was not our Republic of Germany on the basis of the intention.

…” Article 85 of the EEC Treaty does not go so far as to protect against a prohibition those who may legitimately be subject to a prohibition on selling. MGH's application to the Rechtbank von Koophandel, Antwerp, for an injunction against BMW Belgium ended That would be precisely the situation of on 11 March 1976 with a judgment the plaintiff acting as a dealer ...". embodying the terms of an amicable settlement. That judgment confirmed BMW Belgium's undertaking to refrain Further, an exchange of letters took from refusing to sell or from allowing to be sold, through its Belgian distribution place between the Heuer undertaking system, new vehicles to MGH, on and BMW Belgium between October and December 1975, the outcome of condition that MGH ceased acting as a dealer and limited itself to the role of an which was that BMW Belgium sent to agent, justifying, where appropriate, Heuer a letter dated 23 January 1976, worded as follows: each sale by the production of a proper authorization.

"By your letter of 15 December 1975 you have supplied us with proof that you In the meantime MGH had brought an have not recently been engaged in any action for damages against BMW activity other than that of an agent in Belgium in the Landgericht [Regional importations. Court] Bielefeld (Federal Republic of Germany), alleging an infringement of Article 85 (1) of the EEC Treaty. In its We hereby confirm that we will not raise judgment of 27 September 1977 the any objection in the future to your Landgericht Bielefeld dismissed the activity as an agent." action finding inter alia as follows:

subject of the present applications and of which varied according to the degree was addressed to BMW Belgium and to of responsibility established on the part the 47 Belgian BMW dealers who signed of: (a) BMW Belgium, (b) the eight the circular of 29 September 1975. In members of the Dealers' Advisory that decision, published in the Official Committee and (c) the other 39 dealers. Journal of the European Communities of Further, for three members of the 17 February 1978 (Official Journal 1978 Advisory Committee the fine was lower L 46, p. 33), the Commission confirmed than for the other five members, by the existence in this case of two reason of their lower turnover. Finally agreements prohibited under Article 85 Article 3 of the decision stipulated that (1) of the Treaty: the fines were payable within three months from the date of notification of the decision. — The agreement which the 47 Belgian BMW dealers had entered into with BMW Belgium and with each other, resulting from their written 7. BMW Belgium, the members of the declaration accepting BMW's circular Belgian BMW Dealers' -Advisory of 29 September 1975; Committee and the 39 Belgian BMW dealers mentioned in the decision made the present application, challenging that — The agreement which the eight decision, on 10 and 15 March 1978. members of the Dealers' Advisory Committee had entered into with each other and with BMW Belgium and on which was based the circular By an order of 12 April 1978, the Court from the Advisory Committee of decided to join Cases 36 to 82/78 for the 29 September 1975, the contents of purpose of the written and oral which had been approved by BMW procedure, and Cases 32/78 and 36 to Belgium. 82/78 for the purpose of the oral procedure.

Having made that preliminary obser­ vation, BMW approaches the substance 1. Infringement of Article 85 of the of the dispute by examining first of all Treaty the question of the real meaning of the circulars of 29 September 1975 (the circular from BMW Belgium and the BMW Belgium points out, in the first letter, attached thereto, from the Belgian place, that the Commission itself did not BMW Dealers' Advisory Committee). In seriously dispute that MGH and Heuer the opinion of BMW Belgium, it is acted as non-approved dealers during the erroneous to interpret those circulars as period under consideration. The text of having as their object or effect the the disputed decision did not adopt prohibition of exports of BMW cars: certain passages of the notification of their object was solely to remind Belgian complaints, in which it is stated that the BMW dealers of the prohibition on two undertakings acted as agents and selling to non-approved dealers. In fact: that they were among the undertakings who were adversely affected by the prohibition. The decision avoided that problem, merely stating (paragraph 22) (i) In order to interpret those circulars that it was unnecessary to determine correctly, it is necessary in the first place whether MGH and Heuer, in attempting to adhere to the text thereof. The text to obtain more BMW vehicles, were refers explicitly to the circular of 4 July acting solely as agents for consumers 1975, which the Commission recognizes outside Belgium. In fact, it was expressly is in no way unlawful, and which merely acknowledged by the Acting Director of the Commission's Directorate of recalls (second paragraph) the under­ Restrictive Practices and Abuse of taking entered into by the Belgian BMW dealers, under the dealership contract Dominant Positions, at the hearing on 23 "not to refrain from selling any BMW March 1977, that the argument that product to dealers who have not been MGH and Heuer had acted as agents was untenable. appointed for the sale of the BMW goods".

(ii) Secondly, the real meaning of those As for the circular of the same date circulars of 29 September 1976 may be inferred from the legal and factual context issued by the Dealers' Advisory in which they are set. Committee, that also was intended, in expressing the Committee's regret over the behaviour of certain dealers who had not followed the recommendation contained in the circular of 4 July 1975, to put a stop to practices (deliveries to non-approved dealers) contrary to the On the one hand, the issue of a further obligations contained in the dealership circular after that of 4 July 1975 was agreement. done as a result of instructions given to BMW Belgium by BMW Munich. As BMW Munich had always insisted — as is recognized by the disputed decision itself — in its contacts with BMW The Commission's argument was based Belgium, that the objective was to stop on a method of interpretation which sales by dealers to non-approved dealers consisted in disregarding the clear, and not to prohibit exports as such, it decisive passages in the circulars and in was difficult to imagine that BMW concentrating on other passages which, Belgium, a wholly-owned subsidiary of removed from their context, were BMW Munich, in sending the circular capable of suggesting the intention of the could have been pursuing any aim other part of BMW Belgium to prohibit all than that — laid down by the parent exports. company — of preventing the continuation of sales to non-approved dealers. The file does not contain any factor of such a nature as to defeat that presumption. On the contrary, BMW That method, doubtful in itself, is still Munich exercised particularly tight less justified if the circumstances in control over the activities of BMW which the circulars of 29 September 1975 Belgium: at the material time, three were sent out are brought to mind. executives of BMW Belgium were Following the price freezing measures employees of BMW Munich. The v COMMISSION

— As for the conduct of BMW Belgium, there are numerous factors proving that, The very fact that the date on which during the period from 29 September most of those letters were sent was very 1975 to 20 February 1976, BMW close to that of the circular of 29 Belgium did not at any time object to September 1975 from BMW Belgium, sales by Belgian dealers to private contradicts the interpretation given to individuals or approved dealers outside that circular by the Commission. It Belgium: it objected only to sales by its hardly seems plausible that such a dealers of BMW cars to non-approved circular could have been intended to dealers. prohibit exports absolutely when letters 'addressed to the same people individually within a matter of days disclosed only a concern to prevent deliveries to non-approved dealers. In sending the circular of 20 February 1976 to its dealers, BMW Belgium's only aim was to remind them of the terms of the dealership contract. Its attitude at that juncture could not have been Two of those individual letters addressed dictated by the Commission's request for on 23 October 1975, that is to say three information of 26 November 1975. It weeks after the circular of 29 September was not until 17 November 1976 that the 1975, to the dealers Warnez and Yde, Commission, in its notification of the who BMW Belgium had good reason to complaints, informed BMW Belgium of believe had delivered cars to non- its objections with regard to the circular approved dealers in Germany, clearly- of 29 September 1975.

JUDGMENT OP 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

In the light of all.those factors BMW The fact, relied on by the Commission Belgium concludes that the circulars of (defence, p. 20), that immediately after 29 September 1975 were intended only the circular of 29 September 1975 the as a reminder of the undertakings arising dealer Sels notified MGH of its decision under clause 1 of the agreement, and to refuse all deliveries "without proof of that they were not interpreted by the MGH's capacity", does not prove the recipients as going beyond that aim or as opposite. It did not require a great deal being meant to impose a general of research to ascertain in what capacity prohibition on exports from Belgium. MGH was acting. The fact that MGH The Commission's argument (defence, ordered 12 vehicles at once in its own page 20) to the effect that neither the name was such as to enable Sels members or the Advisory Committee nor

BMW v COMMISSION

The fact that BMW Belgium asked its dealers to return to it a signed copy of the circular does not in any way imply that the circular had the meaning which The above considerations make it clear the Commission ascribes to it. As that BMW Belgium cannot have meant numerous dealers were no longer to ask its dealers to subscribe to a complying with clause 1 of the dealership general prohibition, but that its sole aim agreement, it was not unreasonable of BMW Belgium to ask them to renew was to prevent sales to non-approved dealers. Although some of the terms of their undertaking in writing. Further­ more a request to that effect was the circular of 29 September 1975, taken out of context," may have created the addressed to certain dealers individually impression that BMW Belgium's aim in a letter sent by BMW Belgium. went beyond that, it cannot be said that BMW Belgium acted with the "deliberate intention" of committing an act contrary to the Treaty. Precisely to But, to be strictly accurate, there was avoid committing such an act, BMW another reason why BMW requested its Belgium submitted the text of the agents in this case to sign the copy of the circular to its usual legal adviser: that circular and to return it. That reason is was evidence of its concern to comply essentially practical in nature: it was to with the law.

T OF 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

— the short period between the issue of the circular of 29 September 1975 and of the circular of 20 February 1976, It is not contested that at the material time, there existed a considerable price — the fact that the alleged infringement difference between Belgium and the had no real effect on trade between Federal Republic of Germany and that Belgium and the other countries of the subsequent changes in Belgium and the Community, other than to make in the other Member States brought more difficult the purchase in about a levelling off in the differences Belgium of new BMW vehicles by between the prices charged to consumers non-approved dealers, that is to say and the decline in exports to Germany. by firms which, in any case, could But all that is irrelevant in so far as it is not legitimately claim to be entitled established that the circulars at issue to supplies of cars. were intended to prohibit all exports to other Member States: as the object of the agreement was unlawful, the question whether that agreement had any The Commission replies by describing appreciable effect on intra-Community first the practice followed by it, and also trade is irrelevant.

BMW v COMMISSION

JUDGMENT OF F 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

A .more thorough analysis of those moreover to confirm this. Similarly, the difficulties shows that the real purpose of circular from the Dealers' Advisory the circular was to prohibit all exports of Committee is quite unequivocal. BMW vehicles. Admittedly it refers to the circular from BMW Belgium of 4 July 1975, but it is also true that it recommends the Belgian BMW agents to refrain from all exporting, giving them the advice: "No more sales outside Belgium."

BMW v COMMISSION

Further as regards the letters and prior Finally, the position of the other dealers to the circulars, they could not eliminate who signed the circular and who had not all doubt as to the meaning of the received personal letters must not be circulars except to the extent to which forgotten. In the case of those dealers, it those letters constituted circumstances may be wondered whether, faced with affecting all the parties to the agreement. the terms of those circulars, they must

JUDGMENT OP 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

(iii) As regards the conduct of the parties, the fact that the applicant did not — the exports in question (very few in oppose sales to individuals or to number) could have been the result approved dealers abroad by Belgian of a deliberate intention not to dealers does not constitute proof of the comply with the instructions restricted meaning of the circular of 29 received; September 1975, in so far as the applicant could know of those exports only after being informed thereof by the network in the neighbouring country in — those exports seem above all to which the sales had taken place, and in the meantime the instructions from concern "transit" operations which were authorized at the time when the BMW Munich of 17 October 1975, the Commission's request for information of dealership agreement imposed a 26 November 1975 and the proceedings general export prohibition, commenced by MGH in the Rechtbank van Koophandel, Antwerp, on 27 January 1976 must have persuaded it to be somewhat cautious. and even if it be admitted — which it is not — that the dealers in question understood the circular in the sense suggested by the applicant, nevertheless Further, the applicant's attempts to show the fact that just a few of the recipients that the recipients of the circulars of 29 of the circulars may have interpreted

BMW v COMMISSION

(2) The fine (b) The significance of signing the circular from BMW Belgium of 29 September 1975 As regards the principle of imposing a fine, the Commission points out in the In the Commission's submission, the first place that the applicant's argument signing by the dealers concerned of the to the effect that it did hot act circular from BMW Belgium of 'intentionally', finds no support in the 29 September 1975 was a constituent advice of its Counsel of 26 September element of the agreement concluded 1975. The fact of distributing a circular between those parties. Requiring the the terms of which clearly express a dealers to sign the circular was not just a general export prohibition must be taken simple device to prevent it from passing to indicate the deliberate intention, not unnoticed. In truth, the gross negligence, of the author thereof. To accept any argument to the contrary would be to open the door to dubious practices and to make it more — the fact that BMW Belgium has, on difficult for the Commission to prove a other occasions, insisted on signature deliberate intention.

JUDGMENT OF 12 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

Furthermore, even if it be admitted that BMW Munich did not allow BMW Belgium such autonomy, the only consequence is that the conduct in question must be regarded as being If, in spite of all those factors, the Court marked by a unity of action on the part none the less were to consider that the of the two companies, so that it would deliberate nature of the infringement be permissible to ascribe that conduct to alleged by the disputed decision has not them both so as to hold them jointly been proved, there would arise the liable for the infringement of Article 85 question whether it should not, in of the Treaty. The fact that, accepting exercise of its unlimited jurisdiction that hypothesis, the Commission omitted (under Article 17 of Regulation No to take advantage of that unity of action 17/62), substitute its decision for that of so as to extend the liability of the sub­ the Commission and declare that the sidiary to the parent company can in no infringement was committed negligently, way vitiate the legality of the decision as there is in any case evidence before it taken against the subsidiary. to prove negligence.

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Further, as regards the amount of the which apply to all the applications. First fine, the Commission emphasizes that it they challenge the assertion that the matches the degree of blame on the part undertaking entered into by them at the of the applicant, which, in full awareness request of BMW Belgium 'henceforth to of the limits to its selective distribution sell no cars outside Belgium' was system, did not hesitate deliberately to understood or interpreted as having the infringe Article 85 of the Treaty. object or the effect of partitioning the markets. In fact:

Taking account of the tenor of the circular of 29 September 1975, its context, the nature of the selective distri­ bution system, which is in itself — The letters, produced by the restrictive, but none the less permitted defendant in Annex 5 to its defence, under Article 85 (3) of the Treaty, and sent by BMW Belgium to certain the fact that the fine was not only dealers to remind them of their con­ punitive in aim, but was also meant to tractual obligation not to sell to 'non- constitute a deterrent, both particular approved dealers', show clearly that and general, the fine imposed in this case the sole concern of BMW Belgium does not appear excessively severe. was to ensure compliance with the selective distribution system, in the form in which it had .been accepted as. valid by the Commission, and B — Cases 36 to 82/78 reveal, once again, that the intention both of the importer and of the dealers was to avoid sales outside Belgium to non-approved dealers. (1) Submissions and arguments of the The fact that MGH and Heuer applicants experienced 'increasing difficulties in obtaining new vehicles in Belgium' does not in any way prove that the The applicants begin their factual prohibition on parallel imports was arguments with general considerations strengthened, simply because it was

JUDGMENT OF F 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

In support of these arguments, the applicants state their readiness to prove, — In order to appreciate fully the inter alia, by all forms of evidence, that significance of the undertaking MGH and Heuer were not acting as entered into by the applicants when agents and that there existed, at the time they signed the BMW Belgium when the circulars of 29 September 1975 circular of 29 September it is essential were , signed a psychological climate of to emphasize the dealers' total distrust amongst the Belgian BMW economic dependence on BMW dealers with regard to the would-be Belgium. It is sufficient to read in agents who were in reality nothing but particular the provisions of clauses 3 independent dealers. Further, they and 6 to 16 of the agreement to criticize the Commission's statement to become convinced of that. The effect the effect that they did not deny 'the — taking into account also the fact unlawful nature of the agreements

BMW v COMMISSION

Further, the Commission cannot rely on the minutes of the hearing before the Commission (defence, p. 14) to infer that (i) As regards their participation in the the applicants accepted the unlawful agreement restricting competition, the nature of those circulars. There it had applicants point out in the first place that simply been said that 'if one considers it the question whether the dealers in the abstract and removed from its consented freely is a question of fact: in context, the circular of 29 September each case it is necessary to consider whether, in the absence of the 1975 may be interpreted as an agreement between undertakings, the object of constraints imposed upon the dealers by which was to restrict competition and to the risk of losing their dealership if they affect trade between Member States' were to oppose the will of the supplier, the dealers would have indicated (minutes of the hearing, p. 10). their agreement to the circular of 29 September 1975 in the same way, that is to say without reservation.

Going on to examine the precedents (decisions of the Commission, case-law Even if one were compelled to admit that of the Court), relied on by the defendant economic dependence is not sufficient to in support of its argument that the vitiate consent, it would not necessarily position adopted in the present case in follow that there is justification for the disputed decision was in accordance imposing a fine on dealers for having with a practice and a case-law that are participated under those conditions in an consistent and hence well-known, the agreement, however unlawful it may be.

(ii) Going on to state their position Finally it should be noted that the with regard to the imposition of the fine, economic dependence of the dealers on the applicants repeat that it was never BMW Belgium, even supposing, as the their intention to subscribe to a general Commission does, that it was not total, export prohibition. At the time of the may have been sufficient to induce some two meetings which took place on 13 of them to sign an agreement although and 31 October 1975 between BMW they did not necessarily approve of all its Belgium and its dealers, after the issue of terms. It cannot be denied that there was the circulars of 29 September 1975, the insistence on the part of BMW Belgium dealers expressed their concern over the that the dealers should give their conduct of certain dealers in Belgium agreement. Such was the role which and abroad who were reselling outside BMW Belgium had caused the members Belgium, and, in the course of the of the Advisory Committee to play; the meeting of 31 October 1975 they latter did not even take part in the protested to BMW Belgium, which in its drafting of the circular which they signed correspondence was apparently treating for sending to the dealers. in the same manner those who had sold to non-approved dealers and those who had complied with their undertakings (see annex 6 to the defence, p. 6). Besides, the object of the discussion which took place on 31 October 1975 was not to prohibit all sales of vehicles abroad, but to see that all the dealers complied with their undertakings, in The applicants end by pointing out, in particular by taking care not to sell to the light of certain cases specifically non-approved dealers.

In the first place, they did not take any initiative in the matter. As the Admittedly, the terms of the "warning" might seem excessive, but a look at the Commission observes, it was on the first paragraph of the circular of initiative of BMW Belgium that the 29 September 1975 makes clear that in it members of the Advisory Committee BMW Belgium is reminding the dealers were induced to give their agreement of the prohibition, laid down in the to the terms of the "warning" of agreement, on selling to "non-approved 29 September 1975. That document was dealers". The practical difficulty drafted in advance by BMW Belgium experienced by the dealers in and the applicants were called together distinguishing between genuine agents merely for the purpose of approving it. and independent dealers largely explains One cannot rule out the possibility that, the terms of the circular and of the by seeking the support of the Advisory "warning", but does not affect its real Committee, BMW Belgium expected to meaning, which in the minds of the obtain the agreement of the dealers to its signatories thereto was to protect the circular of 29 September 1975 more Belgian selective distribution network easily. However that may be, as from the against exports effected at the request of moment when they were asked to give non-approved dealers. their support, the only course open to the applicants, by virtue of the degree of economic dependence binding them to BMW Belgium was to fall into line. Secondly, at no time during the preparation of the incriminated circulars did the members of the Advisory Thus it was wrong to claim that the Committee have in mind the risk of a applicants had acted "intentionally" and possible application of Article 85 (1) of had "consciously" infringed the the Treaty. In their view, as in the view Community rules. Moreover, the of all the dealers, the agreement could applicants, who manage their under­ not have had any effect other than that takings personally, do not run a legal authorized by the selective distribution department which could have drawn system. That is indeed why the members their attention to the risks of approving of the Advisory Committee had the terms of the circular of 29 September considered it was useful to draw the 1975. Hence it is unjust to ascribe to particular attention of the dealers to the them — as the Commission does — a fact that their concern was solely to knowledge of the case-law of the Court prevent sales to non-approved dealers. and the practice of the Commission, in

In those circumstances it is going too far to make that fact alone a basis for the Having clarified those points, the imposition of a heavier fine than that Commission states emphatically, with imposed on the other dealers. In so far as regard to all the applications, that the it imposes such a fine on the members of disputed decision is not based on the refusal to sell to MGH and Heuer as the Advisory Committee, the decision should therefore be annulled on the proof of the existence of an infringement ground that it is insufficiently and of Article 85 of the Treaty. The question unclearly reasoned, as well as being whether or not that refusal was justified contrary to Article 15 of Regulation. No in the light of clause 1 (a) of the deal­ 17/62 of the Council and to the principle ership agreement, and the existence of a of non-discrimination. "legitimate suspicion" on the part of the dealers as to whether those two under­ takings were genuinely acting as agents The applicants end by adding to the has no relevance to this case: such

offer of proof made jointly with the factors could not alter the legal appraisal other dealers a further offer to prove of a clause which prohibits the Belgian that the "warning" of 29 September BMW dealers in a general manner from 1975 was drafted by BMW Belgium and continuing to "sell cars outside Belgium presented by it for signature to the or to firms who propose to export them" members of the Advisory Committee on (circular from BMW Belgium of the occasion of a meeting convened for 29 September 1975). that purpose.

It then states its views, with regard to each group of applicants, on the legal The applicant's argument to the effect arguments advanced by the applicants. that the undertaking entered into by the dealers at the request of BMW Belgium was not understood or interpreted as having the object or the effect of (a) Cases 44 to 82/78 partitioning the markets does not stand up to the obvious implications of the very terms of the circular and the "warning" or of the factual and legal (i) On the question of participation in context in which they are situated. The the agreement restricting competition, it argument relied on in this regard by the points out in the first place that the applicants whereby the circulars in existence of close ties amounting to question did not have any effect on the economic dependence on BMW Belgium conduct of the dealers as regards sales cannot be regarded as sufficient to vitiate outside Belgium is not relevant, since the consent, at least not to the point of possible lack of any such effect does not holding that there was not, in spite of enter into consideration once it is the signing of the letter attached to established that the object of the the circular from BMW Belgium of agreement was restrictive of competition. 29 September 1975, genuine agreement, that is to say "the expression of an independent will with a real possibility of choice".

whether the restriction on their such a fine is based on the dealer's independence of which they complain negligence, which, by its very nature, precluded their free consent. Whatever does not require the author of the act to their reasons may have been, the fact have performed it intentionally. that some dealers did not sign suggests that refusal was possible in face of the "proposals" which they must have known to be contrary to the rules on competition. Even if it cannot be denied The minutes of the meetings of 13 and that there was "insistence" on the part of 31 October confirm, moreover, that the distinction between sales to non- BMW Belgium to induce the dealers to give their consent, that fact must have approved dealers, prohibited by the made those dealers realize that, as was agreement, and other export operations was well-known to the dealers. The clear from the text thereof, the function of the circulars was not limited to a applicants omit to mention that those proposal to subscribe to undertakings minutes also refer to "sales, to private already entered into under the dealership individuals in Germany" and speak in a agreement. general manner of the disadvantages of sales outside the dealer's area (defence, annex 6, p. 6).

— various debates and questions in the (b) Cases 36 to 43/78 European Parliament had underlined the importance of the question of export prohibitions in the motor trade (defence, annex 1); (i) As regards the imposition of the fine, the Commission observes that the applicants are wrong to claim that they — after removing the export prohibition did not intend to commit the BMW Munich submitted new deal­ infringement in question. When a contr­ ership agreements to its dealers and actual clause forming part of an in accompanying letters drew their agreement clearly has an object which is attention to that essential difference indisputably restrictive of competition, it as against the previous version; necessarily follows that the author intended to commit the infringement. By sending their "letter" attached to the circular from BMW Belgium of — as is evidenced by the aforesaid 29 September 1975, supporting the minutes of the meetings of 13 and proposals contained therein and urging 31 October 1975, the dealers had the dealers to fall in with them, the the question of exports specifically members of the Advisory Committee brought to their notice. actively participated in the infringement: thus their intention to commit it is proved.

Committee, if their concern really was to inferred that they did not act on their prevent sales to non-approved distri­ own initiative) was accepted as a butors, should have insisted on that point mitigating circumstance. in their circular: precisely the opposite occurred, for not once did the circular refer to sales to non-approved dealers. It (ii) As to the amount of the fine, the is not by chance that the members of the Commission denies that the applicants Advisory Committee, in the special suffered a heavier fine by virtue of the position vis-à-vis the dealers which they fact — purely fortuitous according to occupied of their own choice, actively them — that they were members of the supported a proposal to prohibit exports, Advisory Committee at the time. The thus urging the other dealers to give their consent to it. Therefore it is natural greater severity of the fine was due to the fact that, occupying a position which that they be held responsible for the entailed a certain amount of unlawful consequences resulting from responsibility and authority in the their conduct. The fact that no complaint relations between BMW Belgium and its was lodged by private buyers is not dealers, the applicants supported, with relevant to this case: the applicants the weight of that authority, the themselves are in a good position to proposals of BMW Belgium and thus know that a private individual, however took a more active pan in the well-informed of his rights he may be, rarely involves himself in proceedings infringement than the other dealers. against commercial undertakings.

3 BMW Belgium, which is a wholly-owned subsidiary of the Bayerische Motoren Werke AG company of Munich (hereinafter referred to as "BMW Munich"), on 13 January 1975 notified to the Commission the standard form distribution agreement entered into by its dealers and applied for exemption under Article 85 (3) of the EEC Treaty. That standard form agreement contains no general export prohibition but prohibits Belgian BMW dealers from selling new BMW vehicles to non-approved dealers. Further, it largely corresponds to the standard agreement which is used as a basis for the selective distribution system operated in the Federal Republic of Germany and West Berlin by BMW Munich, which the Commission, by Decision of 13 December 1974 (Official Journal 1975 L 29, p. 1), exempted under Article 85 (3) from the prohibition laid down in the first paragraph of that article, on the ground in particular that no prohibitions on exports were laid down in the terms of the agreement.

4 In fact one of the essential characteristics of the selective distribution system thus authorized by the Commission is that the BMW dealers, although undertaking not to sell to non-approved dealers, remain free to sell not only within their own area, but also anywhere else in the Common Market, to other BMW dealers, to consumers or to their agents.

5 In 1975 the prices of new BMW cars were appreciably lower in Belgium than in other Member States, by reason, at least in part, of the price-freezing measures imposed by the Belgian Government between 5 May and 1 November 1975.

JUDGMENT OF 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

"... May we remind you that according to the terms of the dealership agreement, re-exports in themselves do not constitute a breach and no objection should be taken to individual cases. Please confine your attention to cases where you suspect there has been a sale to an unauthorized dealer in breach of the agreement."

BMW v COMMISSION

9 On 29 September 1975 all the Belgian BMW dealers were sent two circulars on the basis of which the Commission considered that Article 85 (1) had been infringed. The first of those circulars, issued by BMW Belgium itself, stated inter alia:

"Apart from sending individual letters to specific dealers, we wrote to all of you on 4 July 1975 referring you to the provisions of the BMW distribution agreement-concerning sales to unauthorized dealers.

However, reports are still coming in from our Munich Head Office and from the importer in the Netherlands to the effect that Belgian dealers are selling cars there and we must unfortunately conclude that these dealers cannot or will not understand the consequences of what they are doing.

3. It will be clear that BMW Munich can draw only two conclusions from this:

5. Moreover, you will be creating serious difficulties both for yourselves and for the other members of the. network by provoking BMW into what would after all be a logical reaction — drastically reducing the number of cars intended for Belgium.

JUDGMENT OP 12. 7. I979 — JOINED CASES 32/78 AND 36 TO 82/78

Our view is therefore that in the present situation there is only one solution: henceforth no BMW dealer in Belgium will sell cars outside Belgium or to firms who propose to export them.

"We therefore ask you to agree to the above proposals by signing the attached copy.

We enclose a statement by the members of the Dealers' Advisory Committee who fully support our arguments and will meet you personally at regional meetings to explain their views.

Agreed . . ."

11 Having been informed of the steps taken by BMW Belgium, BMW Munich reacted with a letter of 17 October 1975 in which, after congratulating BMW Belgium on its action with regard to sales to non-approved dealers, it continued in the following terms:

"As already mentioned on 17 January, 23 June and 22 July 1975, we must again ask you, in respect of any measures taken, to bear in mind that:

— no action may be taken against your dealers simply because they have re-exported cars; warnings may be given only where a dealer is suspected of selling cars to non-approved dealers in breach of his agreement,

— no action may be threatened against your dealers unless made necessary by a proved breach of their agreement."

12 BMW Belgium waited four months before acting upon those instructions by sending a further circular on 20 February 1976 to all the Belgian BMW distributors, in which it stated, inter alia:

"On 29 September 1975 we wrote to you on the subject of the new situation arising on the Belgian market following the sale of new BMW vehicles to dealers in other countries in 1975.

In no case do we wish, or did we wish, to prevent a BMW dealer from trading with an agent acting for private customers, but we do oppose transactions between BMW dealers and resellers.

…”

13 In the meantime, on 20 October and 19 November 1975 the Auto- mobilimporte C. Heuer and MGH Motorgesellschaft mbH undertakings, established in the Federal Republic of Germany, had informed the Commission that approved dealers belonging to BMW Belgium's distribution network were no longer disposed to deliver them certain models of new BMW vehicles for re-export to the Federal Republic of Germany. That information was given in the context of, and for the purpose of, the possible application of Article 3 (2) (b) of Regulation No 17/62 of the Council (Official Journal, English Special Edition 1959-1962, p. 87).

14 On 3 November 1976 the Commission decided to initiate, against BMW Belgium and the Belgian BMW dealers who had signed the letter attached to its circular of 29 September 1975, the procedure which ended in the adoption of the disputed decision.

15 According to that decision the aforesaid circulars of 29 September 1975 made clear the intention of BMW Belgium and of the members of the Advisory Committee to stop all exports of new BMW vehicles from Belgium. Article 1 of the decision concludes therefrom that BMW Belgium, the members of the aforesaid Advisory Committee and the Belgian BMW dealers who signed the letter attached to the circular from BMW Belgium of

BW v COMMISSION

18 Under Article 3 (1) of the said regulation the procedure relating to decisions which require undertakings or associations of undertakings to bring to an end an infringement of Articles 85 and 86 of the Treaty may be opened "where the Commission, upon application or upon its own initiative, finds"

JUDGMENT OF 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

that there is such an infringement. In that case it matters little whether Heuer and MGH had in this case a "legitimate interest" in requesting the opening of the procedure, as the Commission was entitled to do so upon its own initiative.

19 (b) The applicants also challenge the legality of the disputed decision by submitting that a thorough examination both of the text of the circulars of 29 September 1975 and of the general context in which those circulars are set and of the conduct of the parties shows that the sole object of the said circulars was to remind the Belgian BMW dealers of the prohibition on selling to non-approved dealers, occurring in clause 1 of the dealership agreement, and that it was precisely in that sense that they were understood by the dealers who signed the letter attached to the circular from BMW Belgium.

2: Although it is true that the circular from BMW Belgium of 29 September 1975 begins with a reminder of the terms of the dealership agreement concerning sales to non-approved dealers, that does not alter the fact that that reminder is not accompanied by any distinction between the case of non-approved dealers who, acting on their own account, are not entitled to supplies from Belgian BMW dealers and the case of dealers who, acting as agents for consumers, are entitled to such supplies by virtue of the selective distribution system notified to the Commission. Moreover, the text of that circular taken as a whole, and the text of the circular of the same date from the Advisory Committee, refer to export operations in general.

23 The legal and factual context in which the circulars of 29 September 1975 are set confirms moreover that, by sending the said circulars to the Belgian BMW dealers, BMW Belgium and the Advisory Committee exceeded the terms of the BMW dealership agreement as regards resales to non-approved dealers. In this regard it is sufficient to compare the terms of those circulars with the reservations expressed by BMW Munich in its communications of 22 July 1975 and 17 October 1975 addressed to BMW Belgium. In the first of its communications, in which reference is made to a letter of 9 July 1975 sent by BMW Belgium to a Belgian dealer on the subject of re-exports of new vehicles, BMW Munich expressly recalls the dealership agreement auth­ orized by the Commission, under which only deliveries to independent dealers are prohibited. In the second communication, subsequent to the circulars of 29 September 1975 and sent to BMW Belgium as a result of those circulars, BMW Munich reverts to the conditions of the dealership agreement, specifically stating that no steps may be taken against the Belgian dealers "simply because they have re-exported cars".

24 The argument that BMW Belgium, being a wholly-owned subsidiary of BMW Munich, could not have pursued an aim different from that prescribed by the parent company cannot in this case usefully contribute to the in- terpretation of the circulars in question. The bond of economic dependence

JUDGMENT OF 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82 /78

existing between a parent company and the subsidiary does not preclude a divergence in conduct or even a divergence in interests between the two companies. The reservations expressed by BMW Munich in the aforesaid communications, particularly in that of 17 October 1975, confirm moreover that the point of view expressed in those circulars, taking into account par­ ticularly the wording thereof, called for clarification from the parent company.

29 In sending those circulars to all the Belgian dealers, BMW Belgium played the leading role in the conclusion with those dealers of an agreement designed to halt such exports completely.

jo The Belgian dealers, including the members of the Advisory Committee who gave their consent to the circular from BMW Belgium of 29 September 1975 did, by virtue of that consent, subscribe to such an agreement, the detailed content of which is determined by the said circulars.

31 Having regard to their content and their scope, the above-mentioned agreements had as their object the prevention, restriction or distortion to an appreciable extent of competition within the Common Market in respect of a product of a particular make.

32 By attempting to partition the markets, as regards the export of products of a particular make, those agreements were also capable of affecting trade between the Member States within the meaning of Article 85 (1) of the Treaty.

33 Therefore it follows that BMW Belgium, the members of the Advisory Committee and the Belgian dealers who signed the circular of 29 September 1975 did, on the basis of the circulars in question, subscribe to agreements incompatible with the Common Market and prohibited by the said Article 85 (1).

34 As the agreements were maintained in force until the date of the circular from BMW Belgium of 20 February 1976, the applicants were guilty of an infringement, lasting until that date, of the provisions of the aforesaid article.

38 For those reasons the applications are unfounded, in so far as they refer to Article 1 of the disputed decision.

(2) The fines

39 On account of the infringement referred to in Article 1, Article 2 of the disputed decision imposes fines on BMW Belgium and on the 47 Belgian BMW dealers who took part in that infringement by virtue of Article 15 (2) (a) of Regulation No 17/62 of the Council.

BMW v COMMISSION

40 It is clear from the disputed decision that in imposing those fines the Commission considered, on the one hand, that BMW Belgium and the members of the Belgian Dealers' Advisory Committee "were aware that in agreeing a general export prohibition they were infringing Article 85 (1) of the EEC Treaty", and, on the other hand, that the Belgian BMW dealers who signed the letter attached to the circular from BMW Belgium of 29 September 1975 were guilty of negligence.

41 (i) BMW Belgium claims first that, in so far as the circular of 29 September 1975 merely reminded dealers of the prohibition on sales to non-approved dealers, laid down in the clause 1 of the dealership agreement notified to the Commission, Article 2 of the disputed decision was in infringement of Article 15 (5) (a) of Regulation No 17/62, in so far as that provision imposes a fine on BMW Belgium on account of a clause which had been notified.

That argument must be rejected, having regard, in the first place, to the fact that it was not until 20 October 1975 that the Commission was informed by the MGH undertaking of the refusal of certain Belgian approved dealers to supply new BMW vehicles for re-exportation, and secondly to the fact that as early as 17 October 1975 BMW Munich had drawn the attention of BMW Belgium to the parts of the circular which were not in order.

46 Finally BMW Belgium alleges that the amount of the fine in question is too high, having regard to the short period between the issue of the circular of 29 September 1975 and of the circular of 20 February 1976 and to the fact that the infringement had no real effect on the trade between Belgium and the other Member States of the Community, other than to. make more difficult the purchase of new BMW vehicles in Belgium by non-approved dealers, that is to say by firms which in any case could not legitimately claim to be entitled to such supplies.

47 As to the first point, it is sufficient to note that the Commission expressly took account, in the sixth subparagraph of paragraph 26 of its decision, of the duration of the infringement in fixing the amount of the fine imposed on BMW and on the eight members of the Advisory Committee and that nothing in the arguments relied on by those concerned shows that that amount was disproportionate in relation to their turnovers.

BMW v COMMISSION

48 As for the second point, it is to be noted that the applicant itself recognizes that the number of re-exports of new BMW vehicles from Belgium and other Member States was, particularly from August 1975, sufficiently large to induce BMW Belgium to intervene more and more frequently in the affairs of its Belgian distribution network, to the point where it considered it necessary to send out and have distributed throughout that network the circulars of 29 September 1975 which are at issue.

JUDGMENT OF 12. 7. 1979 — JOINED CASES 32/78 AND 36 TO 82/78

Belgium, the eight members of the Advisory Committee thus actively helped to strengthen, in the minds of the Belgian distributors, the authority of the exhortations contained in the circular from BMW Belgium of 29 September 1975. If their concern had really been to prevent sales to non-approved distributors, they should have made that clear by express words in their circular, instead of using terms which gave to understand even more clearly that the prohibition on re-exportation was to apply to all sales outside Belgium.

52 (iii) Finally the other Belgian BMW dealers question whether the imposition of fines on them was well-founded, claiming that they never intended to subscribe to a general prohibition on re-export and that their economic dependence on BMW Belgium was of such a nature as sub­ stantially to vitiate their consent to the aforesaid circular. Further they submit that the fines are all the more unjustified in their case because in all its previous decisions whereby fines were imposed for infringements of Article 85 (1) of the Treaty the Commission had never penalized dealers but only those granting the dealership. Thus it is claimed that by treating the Belgian BMW dealers, apparently without valid reason, more severely than in the past it had treated dealers placed in comparable situations, the Commission infringed the principle of non-discrimination to the detriment of those dealers.

53 In this case it is clear from the foregoing that the dealers in question committed an infringement of the provisions of Article 85 (1) of the Treaty. The fact that in similar previous cases the Commission did not consider that there was reason to impose fines on resellers as well cannot deprive it of such a power expressly granted to it by the said regulation, where the conditions required for the exercise thereof are satisfied.

58 Since the applicants have failed in their submissions they must be ordered to pay the costs. Each applicant shall pay a part of the costs of the Commission corresponding to the amount of the fine imposed upon it expressed as a percentage of the total fines.

On those grounds,

THE COURT

hereby:

1 . Dismisses the applications as unfounded.

2. Orders the applicants to pay the costs. Each applicant shall pay a part of the costs of the Commission corresponding to the amount of the fine imposed upon it expressed as a percentage of the total fines.