C-126/80

SALONIA v POIDOMANI AND GIGLIO

have repercussions on the distribution a result of the entry into force and the of those products. termination of the agreement in Such an agreement is therefore question. capable of affecting, as far as the 6. A selective distribution clause products in question are concerned, restricting the supply of the products trade between Member States. covered by the agreement in question However, it escapes the prohibition to approved licence-holders alone laid down by Article 85 (1) of the does not infringe Article 85 (1) or the EEC Treaty if it has no appreciable first paragraph of Article 86 of the effect on such trade. EEC Treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating 5. In the case of newspapers and per- to the capacity of the retailer and his iodicals, an assessment of the appreci- staff and the suitability of his trading ability of the effects which a distri- premises on connexion with the bution agreement may have in the requirements for the distribution of territory of a Member State on the the product and that such criteria are market in such publications from laid down uniformly for all potential other Member States is stricter than in retailers and are not applied in a the case of other products. discriminatory fashion. In order to determine whether an exclusive distribution agreement for 7. An exclusive distribution agreement national newspapers and periodicals is concluded between trade-union as- capable of having an appreciable sociations, each of which has a large effect on the market in such pub- membership, does not constitute an lications from other Member States, it agreement "to which only two under- is necessary to consider first whether takings are party" within the meaning that market may employ for the sale of Article 1 (1) of Regulations Nos of newspapers in the area concerned, 19/65 and 67/67 and does not channels of distribution other than therefore come within the categories those governed by the agreement and, of agreements which, under the secondly, whether demand for the aforesaid regulations, may be aforesaid products is rigid inasmuch exempted from the application of at is shows no substantial variations as Article 85 (1) of the EEC Treaty.

JUDGMENT OF 16. 6. 1981 — CASE 126/80

on the interpretation of Articles 85 and 86 of the EEC Treaty,

THE COURT

composed of: J. Mertens de Wilmars, President, P. Pescatore and Lord Mackenzie Stuart (Presidents of Chambers), A. O'Keeffe, G. Bosco, A. Touffait, O. Due, U. Everling and A. Chloros, Judges,

Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

possibility of being supplied. They state it an infringement of the prohibition moreover that publishers supply only on agreements laid down by Article those persons who have entered into a 85 of the Treaty and, having regard contractual relationship with them, to the special provisions governing which is best described in the National admission to the newspaper trade, Agreement and Rules Regulating the the minimum requirements, the Resale of Daily Newspapers and Period- obligations and penalties imposed icals entered into on 23 October 1974 upon retailers, does the agreement between the Federazione Italiana Editori lead to a distortion of the conditions Giornali [Italian Federation of News- of competition? paper Publishers] and the Federazione Sindacale Unitaria Giornalai [United Federation of Trade Unions of News- 2. Is not the said Agreement agents]. They also explain that the incompatible with and does it not agreement in question which prohibits, in therefore come within the prohib- communes with over 2 500 inhabitants, ition laid down by Article 85 (1) of the supply of publications for sale except the Treaty to the extent to which it to retailers in possession of a licence creates discrimination against issued by an Inter-Regional Joint retailers, in spite of the proper Committee in accordance with that licence for the sale of newspapers agreement, is absolutely lawful in so far issued to them by the competent as the case-law of the Corte Suprema administrative authority, merely di Cassazione [Supreme Court of because they do not agree to obtain Cassation] defined it as a contract for a licence to engange in the retail the consignment of goods on sale or trade, the issue of which is, under return which, as such, is governed by the the provisions of the said Agreement, principle of freedom of choice. left to the discretion of the Inter- Regional Joint Committees (and now the National Committee for the Since the parties in question had adopted Distribution of Daily Newspapers these viewpoints, the court, taking the and Periodicals [Commissione view that the rules contained in the Nazionale per la Diffusione dei agreement were decisive for the purpose Quotidiani e Periodici]? of giving a ruling and that they raised certain questions on the interpretation of Articles 85 and 86 of the EEC Treaty, 3. Does not the Agreement interfere stayed the proceedings by order of 12/17 with freedom of competition, in May 1980 and requested the Court of which the choice expressed by Justice of the European Communities to consumers determines the number of give a preliminary ruling under Article sales outlets for newspapers, in the 177 of the EEC Treaty on the following same way as the rules regulating the questions: market applied by the Netherlands Association of Dealers in Bicycles and Related Goods, which contain " 1 . Does the National Agreement of 23 principles and restrictions similar to October 1974 Regulating the Resale those of the Agreement on daily of Daily Newspapers and Periodicals newspapers and which were constitute a national agreement prohibited by the Commission protecting the market in the distri- (Decision of 2 December 1977, bution and sale of all types of Official Journal L 20 of 25 January newspapers, national and foreign, is 1978)?

4. May the clauses prohibiting supply open the oral procedure without any for sale, contained in Article 2 or the preparatory inquiry. Agreement in question and Article 1 of the Rules Governing the Functioning of the Joint Com- II — O b s e r v a t i o n s submitted mittees, be regarded as satisfying u n d e r A r t i c l e 20 of t h e objective criteria such as to preclude P r o t o c o l on t h e S t a t u t e of any abuse and may they be t h e C o u r t of J u s t i c e of t h e exempted under Article 85 (3) even EEC if they were laid down for the purpose of contributing to an The Commission first of all examines this improvement in distribution? case in the light of the Italian legislation on competition.

undertaking, whilst complying with the 6. Does not the conduct laid down in principle of equality of treatment". and governed by the Agreement in This situation has not been altered at all question constitute an abuse of a by the Italian Constitution of 1948, dominant position?" which was adopted at a period at which it was impossible to foresee the In accordance with Article 20 of the successive development which would Protocol on the Statute of the Court of bring Italy up to the level of the principal Justice of the EEC, observations were industrialized countries. In fact, the submitted by the Commission of the provisions of the Constitution do not European Communities, represented by specifically concern the field of compe- Sergio Fabro, a member of its Legal tition, whilst permitting the legislature to Department, acting as Agent. The legislate, if it so desires, in this matter. written statements of case lodged by Mrs However, no law aiming to regulate Bagheri and by the Federazione Italiana competition has been introduced until Editori Giornali were not accepted, the now into the Italian legal order.

SALONIA v POIDOMANI AND GIGLIO

Moreover, there is no doubt that the agreement in question infringes the principle of free access to the market which seems to be Is should also be emphasized that for guaranteed by Article 41 of the Article 85 (1) to be applicable it is not Constitution. It is therefore necessary to necessary for the undertakings which conclude that in the present state of implement a restriction on competition Italian legislation and case-law on to be situated in several Member States, competition, this case is difficult to since it is also possible for undertakings resolve. situated in a single Member State directly to affect intra-Community trade, as follows for example from the judgment given by the Court in Case 8/72 (Vereeniging van Cementhandelaren, Dealing next with the dispute from the [1972] ECR 977). point of view of Community law, the Commission points out that the various questions put by the court making the reference raise problems of law which are either identical or very closely linked In order to come within the prohibition and that it is therefore necessary to laid down in Article 85 (1), an agreement examine them jointly. must moreover have as its object or effect "the prevention, restriction or distortion of competition".

Treaty. According to the case-law of the Court, this reply cannot be abstract and it is necessary to take into account the existing or at least foreseeable effects of The Commission explains that, using this a restriction on competition on intra- concept as a starting-point, it has sought Community trade. A restriction having to define in specific terms this concept of an insignificant or inappreciable effect on "appreciable effect". With this end in

view it has adopted certain criteria First of all, although it is true that the according to which an agreement agreement monopolizes sales of news- entered into between undertakings is not papers (the word "newspaper" means in covered by the provisions of Article 85 fact not only the daily newspapers but (1) where the products which it concerns also periodicals of all kinds), solely do not represent, in the part of the Italian newspapers are in fact involved. common market in which the agreement takes effect, more than 5 % of the volume of business and where the annual turnover achieved by the undertakings However, because of the little demand which are parties to the agreement does for foreign newspapers in Italy, foreign not exceed 15 million units of account publishers have no interest in establishing or, where the agreements are made their own distribution network and between commercial undertakings, 20 prefer to use the normal existing distri- million units of account. These criteria bution network, so that in practice were made public by the Commission in foreign newspapers are also subject to its communication of 2 June 1970 the restrictions resulting from the (Official Journal C 64) concerning agreement. agreements of minor importance which are not covered by the provisions of Article 85 (1) of the EEC Treaty. It is therefore necessary to see whether or not the adverse effect on trade in foreign newspapers in Italy is It is however clear that these criteria can appreciable. only be indicative. It is in fact possible that in special cases an agreement exceeding the above-mentioned quanti- tative limits does not appreciably affect Although the categories concerned are in either intra-Community trade or com- agreement that the present system is not petition whereas an agreement of minor sufficient to develop sales appropriately, importance might have such an effect. it is difficult to calculate ' the increase which might result for Italian newspapers from liberalizing that system or in- The agreement which forms the subject- creasing sales points and, above all, to matter of the main action, in other calculate the increase which would result words the National Agreement Regula- for foreign newspapers, the purchase of ting the Resale of Daily Newspapers which meets very varied needs. and Periodicals, is a typical reciprocal exclusive dealing agreement and as such undoubtedly comes within the prohibition laid down in Article 85 (1). There is, In any case, it is not possible to state that moreover, no question of examining the there is close inter-dependence between possibility of granting it an exemption sales of Italian newspapers and sales of within the meaning of Article 85 (3), foreign newspapers. Even if it were since that agreement has never been possible to calculate in each country of notified. the Community the relationship between the sale of national newspapers and the sale of foreign newspapers, the different percentages which would be observed The case is not however as simple as it would not enable a significant seems at first sight. comparison to be made since each

national market has its own charac- Editori Giornali and the Federazione teristics (for example, in Belgium many Sindacale Unitaria Giornalai must be French newspapers are sold in the considered each as a single undertaking. French-speaking part of the country, An agreement entered into between whereas Netherlands newspapers are several undertakings is always of greater hardly sold in the Dutch-speaking part). economic importance and cannot therefore come within the category of agreements which may be presumed not to infringe the Treaty. In such a situation, it is quite difficult to state whether or not the restriction on intra-Community trade in newspapers and periodicals implemented by the It is, moreover, impossible to apply agreement in question may be considered Article 1 (2) of Regulation N o 67/67, to be appreciable. It if considers it to be although the agreement is one to which appropriate for the purpose of giving undertakings of a single Member State judgment in this case, the national court are parties and concerns the resale of might perhaps order an expert report. In products within that State, because that the Commission's opinion, having regard agreement affects trade between Member to the special situation of the market in States. foreign newspapers in Italy, a percentage lower than 5 % might objectively have appreciable effects on intra-Community trade. In fact, on a market which is Finally, the Commission states that the already difficult per se, the effect of a agreement in question cannot be distortion in competition, even slight, exempted as an agreement of minor might be that certain traders quite simply importance. Although it is not able, in do not enter the market in question. In the present state of affairs, to define the those circumstances, traders have a restriction quantitatively for the purpose tendency to accept the market share of applying the percentage of the volume which they have obtained without of business, the Commission considers seeking to increase it, which would that, in view of the special nature of this require of them inordinate and un- case, the percentage quoted may, for the profitable efforts. It follows therefore purposes of being appreciable, be lower that even a minimal restriction may have than that laid down in its communication an appreciable effect on the market. of 2 June 1970.

down in Article 85 (1) of the Treaty if it though the Agreement concluded on 23 appreciably affects trade in foreign October 1974 between the newspaper newspapers in Italy. In the present state publishers and the distributors might be of affairs, the Commission is not able to open to doubt as regards its compatibility establish whether or not that restriction with Community law, nevertheless none is appreciable. In view of the foregoing, of the parties to the case had relied on the Commission considers in any case the agreement in support of its that, in view of the special nature of the submissions. The defendants had referred market in foreign newspapers in Italy, a to the agreement solely in order to percentage lower than 5 % (contrary to point out that it imposed no obligation what was laid down in its communi- on them to deliver newspapers and cation on agreements of minor periodicals to the plaintiff and that it was importance of 2 June 1970) may be therefore devoid of any importance for considered as appreciable. In any case, the purposes of the solution to the the agreement in question does not come dispute. within the block exemptions laid down by Regulation N o 19/65 and Regulation N o 67/67. Moreover, the agreement cannot form the subject-matter of the She observed, secondly, that the national declaration of inapplicability laid down court was asking the Court of Justice to in Article 85 (3) of the Treaty, since the give a ruling on an agreement the conditions laid down for the application contracting parties to which are not of Article 85 (3) are not fulfilled". parties to the main action and could not have intervened in that action. Since the signatories to the agreement could not intervene in the proceedings before the Court of Justice, they had no oppor- tunity to express their views on the Ill — Oral procedure conformity of the agreement with the provisions of Community law. A comparable situation was considered by the Court in the case of Foglia v Novello Mrs Bagheri, represented by Riccardo where a reference for a preliminary Luzzatto of the Milan Bar, and the ruling was quite correctly declared Commission of the European Com- inadmissible. munities, represented by Sergio Fabro, a member of its Legal Department, acting as Agent, submitted oral argument at the sitting on 3 February 1981. She pointed out in conclusion that if the Court were to rule on the questions referred to it, its ruling would in any Mrs Bagheri considered that the event be inutiliter data. It was necessary, reference for a preliminary ruling in her view, to emphasize yet again that submitted to the Court by the Tribunale the solution to the dispute did not depend on a appraisal of the 1974 Civile, Ragusa, was inadmissible. Agreement in the light of Community law. Furthermore, the agreement was no longer in force when the facts of the case She observed first of all that it was occurred since it had been repudiated on impossible to discern any issue of 11 May 1976 by the Newsagents' Community law in the proceedings Federation with effect from 31 March pending before the national court. Even 1977.

In any event, Mrs Bagheri examined the type incorporated in the previous questions submitted by the national agreement. court. In her opinion, these questions essentially amounted to asking whether agreements between undertakings which all belong to the same Member State The Commission wondered, however, come within the scope of Article 85 of whether during the period in which it the EEC Treaty. It was possible to infer was applied the previous agreement from certain provisions of Regulations might not, if only indirectly, have Nos 17 and 67/67 that such agreements hindered the sale of foreign newspapers were generally regarded as incapable of in Italy. affecting trade between Member States. However, in exceptional circumstances, even agreements restricted to under- takings in a single Member State might As the result of an inquiry conducted by have adverse effects on intra-Community its departments in October 1980, the trade. That was not the case of the Commission had come to the conclusion agreement in question which applied that demand for foreign newspapers in exclusively to Italian publications Italy was not elastic and that the entry distributed in Italy and did not contain into force of the new distribution any rules governing the distribution of agreement had not led to any variations foreign publications, which were, in sales. Since the market in question was moreover, put on the market in a very small and restricted one, it was accordance with different systems. The quite conceivable that an increase in the system defined in the 1974 Agreement number of sales outlets would by no could not therefore hinder trade between means result in an increase in sales of Member States in any way. Any foreign newspapers and periodicals in influence which that system might have Italy. on sales of foreign newspapers in Italy was considered by the Commission merely as a theoretical possibility and had by no means been proved. In those circumstances, the conclusion to be drawn was that the Agreement of 24 October 1974 had not given rise to the slightest restriction on sales of foreign newspapers in Italy. In reply to the question put to it by the Court, the Commission of the European Communities in the first place produced two tables setting forth the turnover of As regards the admissibility of the Italian newspaper publishers between application, the Commission took the 1972 and 1979 and Italian imports of view that the Court should, in foreign newspapers between 1972 and accordance with its case-law, give a 1977 respectively. ruling on the questions which the national court had considered it necessary to submit to it for the purposes of the solution to the case. The Commission then observed that the Agreement of 23 October 1974 was no longer in force and had been replaced by a new agreement which no longer The Advocate General delivered his contained any restrictive clauses of the opinion at the sitting on 25 March 1981.

SALONIA v POIDOMANI AND GIGLIO

4 The Tribunale Civile, Ragusa, hearing the case at first instance, took the view, on the basis of Judgment N o 2387 of 4 September 1962 of the Court of Cassation, that the before-mentioned rules were not contrary to Italian domestic law and, in particular, were not contrary to the provisions of Article 2598 of the Civil Code. However, it did not rule out the possibility that the clauses of the national agreement prohibiting publishers of newspapers and periodicals from delivering these products to sellers who had not obtained the trade licences might prove to be incompatible with the rules of competition contained in the EEC Treaty and in order to clarify this point it referred the following questions to the Court:

" 1 . Does the National Agreement of 23 October 1974 Regulating the Resale of Daily Newspapers and Periodicals constitute a national agreement protecting the market in the distribution and sale of all types of newspapers, national and foreign, is it an infringement of the prohibition on agreements laid down by Article 85 of the Treaty and, having regard to the special provisions governing admission to the newspaper trade, the minimum requirements, the obligations and penalties imposed upon retailers, does the agreement lead to a distortion of the conditions of competition?

2. Is not the said Agreement incompatible with and does it not therefore come within the prohibition laid down by Article 85 (1) of the Treaty to the extent to which it creates discrimination against retailers, in spite of the proper licence for the sale of newspapers issued to them by the competent administrative authority, merely because they do not agree to obtain a licence to engage in the retail trade, the issue of which is, under the provisions of the said Agreement, left to the discretion of the Inter- Regional Joint Committees (and now the National Committee for the Distribution of Daily Newspapers and Periodicals [Commissione Nazionale per la Diffusione dei Quotidiani e Periodici]?

5 The defendants in the main action allege that in the present case the Court has not been validly seised, under Article 177 of the Treaty, of a request for a preliminary ruling. They maintain, in the first place, that the questions referred to the Court bear no relation to the real subject-matter of the dispute since neither the plaintiff nor the defendants have relied on any rule of Community law in support of their arguments. They contend, moreover, that the questions submitted relate to an agreement to which none of the parties to the case is a signatory. Finally, they point out that the interpret- ation of the Treaty sought by the national court serves no useful purpose since the National Agreement of 23 October 1974 was no longer in force when the facts giving rise to the action occurred and it could not therefore at that time constitute the legal basis for the refusal on the part of the newspaper distributors to supply the plaintiff.

6 As the Court stated in its judgment of 19 December 1968 in Case 13/68 Salgoil [1968] ECR 453, Article 177 of the Treaty, which is based on a distinct separation of functions between national courts and the Court of Justice, does not allow the latter to criticize the reasons for the reference. Consequently, a request from a national court may be rejected only if it is quite obvious that the interpretation of Community law or the examination

SALONIA v POIDOMANI AND GIGLIO

of the validity of a rule of Community law sought by that court bears no relation to the actual nature of the case or to the subject-matter of the main action.

JUDGMENT OF 16. 6. 1981 — CASE 126/80

10 For those reasons, the objection raised by the defendants in the main action must be dismissed.

Substance

1 1 The purpose of the first and third questions submitted by the national court is, in the first place, to establish whether the terms of an agreement, which is national in its scope, and which restricts the supply of newspapers and period- icals merely to retailers approved by a trade body comprising the repres- entatives of the national newspaper publishers' and newsagents' associations, constitute an infringement of the rules of competition under Article 85 of the EEC Treaty.

12 According to that article, an agreement which "may affect trade between Member States" and which has as its "object or effect" to harm "competition within the common market" is prohibited as incompatible with the common market. This applies to an agreement which, as the Court stated in its judgment of 6 May 1971 in Case 1/71 Cadillon [1971] ECR 351, makes it possible to foresee, on the basis of all the objective factors of law or of fact, with a sufficient degree of probability that it may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States in such a way that it might hinder the attainment of the objectives of a single market between States and which has as its object or effect the restriction or distortion of competition within the common market.

1 3 In the present case, the agreement referred to by the national court provides for the exclusive distribution in Italy of Italian newspapers and periodicals and involves, inter alia, the application of a selective distribution clause contained in Article 2 whereby only approved retailers have access to the supply of newspapers and periodicals.

17 However, it should be recalled that such an agreement escapes the prohibition laid down by Article 85 if it has no appreciable effect on trade between Member Sates. Although, in the case of newspapers and periodicals, an assessment of the appreciability of the effects which a distribution agreement may have on the market is stricter than in the case of other products, it is necessary nevertheless to take into account, for the purpose of determining whether an agreement is capable of having an appreciable effect on the market in newspapers and periodicals from other Member States, first the fact that this market may employ, for the sale of newspapers in the area concerned, channels of distribution other than those governed by the agreement and, secondly, that demand for the aforesaid products is rigid inasmuch as it shows no substantial variations as a result of the entry into force and the termination of the agreement in question.

18 In this connexion, the fact that the statistics produced by the Commission during the written procedure and supplemented at the sitting reveal that the demand for newspapers and periodicals from other Member States has not been subject to substantial variations between 1972 and 1979 constitutes one of the factors which have to be assessed.

19 It is for the national court to determine, on the basis of all the relevant information which it may have at its disposal, whether the agreement in fact satisfies the above-mentioned conditions and thus comes within the prohibition laid down by Article 85 (1).

JUDGMENT OF 16. 6. 1981 — CASE 126/80

25 In the case of an agreement such as that referred to by the national court, it is necessary to take account of those of its provisions which define the criteria governing the choice of approved retailers, such as the tenth

SALONIA v POIDOMANI AND GIGLIO

paragraph of Artide 3 and Artide 4 of the contested national agreement which provide that the licence shall be granted as a rule to persons who "possess the aptitude to pursue the occupation of newsagent".

26 In the present case, it is for the national court to determine, in the light of all these factors, whether genuine conditions exist which are capable of justifying the application, in the context of the agreement with which it is concerned, of the contested selective distribution criterion.

27 The answer to the second and sixth questions must therefore be that a selective distribution clause such as that contained in the national agreement referred to by the national court, restricting the supply of the products covered by the' agreement to approved licence-holders alone, does not infringe Article 85 (1) or the first paragraph of Article 86 of the Treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distri- bution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion.

The fourth question

T h e fifth q u e s t i o n

32 In its fifth question, the national court asks whether the contested agreement may qualify for block exemption under Regulation No 19/65 of the Council of 2 March 1965 and under Regulation N o 67/67 of the Commission of 22 March 1967.

33 Article 1 (1) of Regulation N o 19/65 of the Council (Official Journal English Special Edition 1965-1966, p. 35) provides that in accordance with Article 85 (3) of the Treaty, Article 85 (1) does not apply to categories of agreements "to which only two undertakings are party" and which display certain characteristics.

34 The same provision is contained in Article 1 (1) of Regulation N o 67/67 of the Commission (Official Journal English Special Edition p. 10). Therefore it follows from these provisions that an agreement may qualify for block exemption under the aforesaid Regulations Nos 19/65 and 67/67 only on condition that it is an agreement "to which only two undertakings are party".

35 It is undisputed that the national agreement referred to by the national court was concluded between the Italian publishers' association and the Italian newsagents' association. Since the parties to the agreement are trade-union associations, both of which have a large membership, they cannot be regarded as "two undertakings" within the meaning of the aforesaid Regu- lations Nos 19/65 and 67/67, with the result that the condition contained in Article 1 (1) of those regulations does not appear to have been met in the present case.

SALONIA v POIDOMANI AND GIGLIO

1. An exclusive distribution agreement for newspapers and periodicals such as that referred to by the national court comes within the prohibition laid down by Article 86 (1) of the Treaty only if it proves capable of having an appreciable effect on trade between Member States.

2. A selective distribution clause, such as that contained in the national agreement referred to by the national court, restricting the supply of the products covered by the agreement to authorized licence-holders alone, does not infringe Article 85 (1) or the first paragraph of Article 86 of the Treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion.

OPINION OF MR REISCHL — CASE 126/80

3. The agreement referred to by the national court could not, in the absence of notification to the Commission in accordance with Article 4 (1) of Regulation No 17 of the Council of 6 February 1962, be the object of a declaration of inapplicability under Article 85 (3) of the Treaty.

4. Since the agreement referred to by the national court is not an agreement "to which only two undertakings are party" within the meaning of Article 1 (1) of Regulation No 19/65 of the Council of 2 March 1965 and of Regulation No 67/67 of the Commission of 22 March 1967, it does not come within the categories of agreements which, under the aforesaid regulations, may be exempted from the application of Article 85 (1) of the Treaty.