C-229/83
ECLI:EU:C:1985:1
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LECLERC / AU BLÉ VERT
JUDGMENT OF THE COURT 10 January 1985 * In Case 229/83
REFERENCE to the Court under Article 177 of the EEC Treaty by the Cour d'Appel [Court of Appeal], Poitiers, for a preliminary ruling in the proceedings pending before that court between
Association des Centres distributeurs Edouard Leclerc, Paris, SA Thouars distribution et autres, Sainte-Verge,
and Sàrl 'Au blé vert', Thouars; Georges Lehec, Auxerre; SA Pelgrim, Thouars; Union syndicale des libraires de France, Paris; Ernest Marchand, Thouars; Jeanne Demée, née Palluault, Thouars,
on the interpretation of Articles 3 (f) and 5 of the EEC Treaty,
THE COURT
composed of: Lord Mackenzie Stuart, President, G. Bosco and C. Kakouris, Presidents of Chambers, A. O'Keeffe, T. Koopmans, U. Everling, K. Bahlmann, Y. Galmot and R. Joliét, Judges,
Advocate General: M. Darmon Registrar: J. A. Pompe, Deputy Registrar
gives the following
* Language of lhe Case: French.
JUDGMENT OF 10. 1. 1985 — CASE 229/83
JUDGMENT
Facts and Issues
The facts of the case, the course of the Where books published in France are re- procedure and the observations submitted imported, the retail selling price fixed by the pursuant to Article 20 of the Protocol on importer is to be no lower than that fixed by the Statute of the Court of Justice of the the publisher. EEC may be summarized as follows: Decree No 81-1068 of 3 December 1981 adopted in implementation of the above- mentioned law states that the principal 1. Facts and procedure distributor of the imported books, who as such must comply with the requirements of the Law of 21 June 1943, is deemed to be 1.1. French Law No 81-766 of 10 August 1981 provides that: the importer within the meaning of the decree. Under that law all publishers or natural or legal persons who act in their All publishers or importers of books are stead (principal . distributors of imported required to fix a retail selling price for the works) must deposit a copy with the legal- books that they publish or import; deposit department of the Ministry of the Interior. Retailers must sell at an effective retail 1.2. The 'Centre Leclerc' supermarkets are selling price of between 95% and 100% of retail outlets which initially sold groceries the price fixed by the publisher or the but have extended their activities to inter importer; that rule does not apply in respect alia the sale of books. They have the repu of associations which facilitate the purchase tation of selling goods at low prices. of school books, or to books purchased by the State, local authorities, educational SA Thouars distribution, which is a member establishments or vocational training or of the Association des Centres distributeurs research institutions, trade unions, works Edouard Leclerc, sold books at selling councils or libraries open to the public; prices lower than those allowed under the above-mentioned rules. A number of booksellers and the Union syndicale des Retailers may sell at prices lower than those libraires de France [French booksellers fixed in accordance with that rule books association] brought an action before the published or imported more than two years President of the Tribunal de grande instance previously, the last delivery of which took [Regional Court], Bressuire, adjudicating in place more than six months previously; commercial interlocutory proceedings, against SA Thouars distribution, which If a book is published with a view to being issued a third-party notice against the distributed by sales on a commission basis, Association des Centres distributeurs subscription or mail order more than nine Leclerc. The President of that court months after the first edition was put on the prohibited the Centre Leclerc in question market, the price may be fixed by the from selling books at prices which did not publisher at his own discretion; otherwise conform to the Law of 10 August 1981 and the price must be fixed at a level no lower fixed periodic penalty payments for any than that of the first edition; breaches of that prohibition.
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1.3. The Association des Centres distri its legal department, assisted by Nicole buteurs Edouard Leclerc appealed to the Coutrelis. Cour d'Appel, Poitiers, which took the view that it was necessary to consider whether Upon hearing the report of the Judge-Rap the Law of 10 August 1981 was likely to porteur and the views of the Advocate infringe Community rules on the free General, the Court decided to open the oral operation of competition in the Common procedure without any preparatory inquiry. Market and whether the considerable However, it requested the parties in the restrictions which that law imposes on main proceedings, the French Government competition had the effect of distorting and the Commission to reply in writing to competition. certain questions.
By judgment of 28 September 1983 the Cour d'Appel, Poitiers, therefore set aside 2. Written observations submitted to the the interim orders made by the President of Court the Tribunal de grande instance, Bressuire. It stayed the proceedings and, pursuant to 2.1. The Association des Centres distri- Article 177 of the EEC Treaty, referred the buteurs Edouard Leclerc points out that following question to the Court of Justice traders wishing to adopt the sales method for a preliminary ruling: developed by Edouard Leclerc give a con tractual undertaking never to fix a profit Must Articles 3 (f) and 5 of the Treaty of 25 margin higher than that recommended by March 1957 establishing the European the Association. For the sale of books and Economic Community be interpreted as similar articles that margin is set at 18%. prohibiting the setting-up in a Member The Law of 10 August 1981 deprives that State, by law or by regulation, in respect of clause limiting profit margins of its effect. books published in that Member State and books imported into that State, in particular That law is incompatible with the EEC from other Member States, of a system Treaty because it leaves retailers only a very which compels retailers to sell the books at narrow margin within which there can be the price fixed by the publisher or the competition as regards prices and because it importer without being able to reduce that places considerable restrictions on price by more than 5%. competition in relation to imported books. Article 3 (f) of the EEC Treaty applies to 1.4. The judgment of the Cour d'Appel, any measure that restricts effective Poitiers, was received at the Court Registry competition whether by abolishing it, on 10 October 1983. limiting it or modifying it; evidence of this is provided inter alia by Article 85. Pursuant In accordance with Article 20 of the to Article 5, Member States too are required Protocol on the Statute of the Court of to comply with Article 3 (f). A measure Justice of the EEC, written observations severely restricting price competition were submitted by the Association des jeopardizes the attainment of the objectives Centres distributeurs Edouard Leclerc, of the Treaty. In support of its view, the represented by Philippe Jousset of the Laval Association des Centres distributeurs Leclerc Bar, by the French Government, represented cites the Commission Decision of 25 by Jean-Paul Costes on behalf of the November 1981 in the matter of VBBB/ Secretary-General of the Comité intermi VBVB (Official Journal L 54 of 25 February nistériel pour les questions de Coopération 1982, p. 36) and the judgment of the Court économique européenne and by the of 25 October 1977 (Case 26/76 Metro SB- Commission of the European Communities, Großmärkte v Commission and SABA [1977] represented by Daniel Jacob, a member of ECR 1875).
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The fixing by the national authorities of a publishing sector as a whole, which was minimum price for books is also contrary to unsatisfactory for the publishers, the Article 30 of the Treaty. Since the Law of retailers, and the public. That disorgani 10 August 1981 allows the publisher or the zation led France to reintroduce the importer to fix the retail selling price, it is statutory system of a single fixed price for easy for a French publisher who also books. imports books to place the works that he publishes in a privileged position by comparison with those that he imports. The The need for a special mechanism for book result is a monopoly which restricts trade prices, whether set up by law or regulation within the Community. Thus a French by inter-trade agreements and commercial bookseller who wishes to order direct from practices, is recognized in all Member States a Belgian publishing house is forced to buy and in most Western countries. It was at the price fixed by a French importer, reviewed by the Council of Europe which without there being any possibility of considered, in Recommendation No 930 of competition as regards prices. That state of 8 October 1981, that a system of fixed affairs is particularly flagrant with regard to prices for books constituted the best means comic books and practical handbooks of ensuring the presence on the market of a (books on cookery, hunting, do-it-yourself large number of books and a large number etc.) which represent 20% of the books sold of retail outlets. The Commission itself by the Centre Leclerc supermarkets and raised no objections to that situation, which which are often printed in Belgium or Lu it recorded in its 12th report on competition xembourg. Moreover the Leclerc super policy in 1982. markets near the frontiers are unable to offer competitive prices to their foreign The French Government emphasizes that customers and thereby to respond to books are cultural works. They are irre competition. placeable as the expression and the pre eminent medium of intellectual reflection The Association des Centres distributeurs and literary and poetic creativity. The Edouard Leclerc takes the view therefore continuing existence of publishers of works that the Law of 10 August 1981 is of reflection and creativity and the interme incompatible with Article 3 (f) in particular diaries whose task it is to bring such works of the EEC Treaty, and that it distorts to the public's notice by increasing their competition within the Community; it awareness, by informing them and by giving constitutes a measure having an effect them advice, must be safeguarded. Giving equivalent to quantitative restrictions on competitive forces free rein is certainly not imports and its adoption constitutes an the most appropriate and effective policy for infringement of Article 5 of the EEC the book sector. Treaty.
• 2.2. The French Government points out Moreover, as a result of the language that the Law of 10 August 1981 merely factor, the linguistic market does not brings the French system of book prices altogether correspond to the Common more closely into line with that which exists Market. in all the countries of the Community and which had been applied in France from the Publishers and intermediaries were directly beginning of the 20th century until 1979. threatened by the freedom of prices which The decision of a number of supermarkets had existed after 1979. That freedom gave in the 1970's to break into the book market supermarkets a position of superiority in the with a policy of systematic discounts led in sale of books. Their policy of reduced profit 1979 to the abandonment of the single price margins requires a rapid turnover of stock system. The result was disruption of the and therefore excludes works of reflection
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and creativity. By selling huge quantities of bibliographical research. Having regard to a limited number of titles, supermarkets those services, price cannot be regarded as were in a position to impose their choice on the decisive factor. In permitting discounts publishers and to influence the latter's of up to 5% for all transactions and larger policy. There was a danger that works of discounts in favour of the bodies listed and reflection and creativity, which are not also larger discounts on books published or available in supermarkets, would disappear, imported more than two years previously of to be replaced by books for light reading. which there has been no delivery in the For financial reasons small publishers of preceding six months, the law also allowed cultural works were not able to stand up a degree of flexibility. Thus the law had the against the negotiating power of the distri effect of increasing the competition as to the
butors. Specialized bookshops were quality of all the services provided and that incapable of competing with the prices is in the public's interest. charged by supermarkets and were deprived of sales of works involving no commercial risk. They too were therefore in danger of disappearing. The organization of the trade The legislation in question does not impose solely in the terms of the objective of selling any restriction on imports of books since books at the lowest prices cannot guarantee national books and imported books are the public a real variety of choice such as accorded the same treatment. The prices of exists in France, where a range of some imported books are determined by the 240 000 titles is available and the annual person deemed to be the importer, that is to production exceeds 25 000 titles of which say the person who completes the legal- 12 000 are new publications. deposit formalities, at his absolute discretion.
Thus the Law of 10 August 1981 has a completely neutral impact on trade within the Community and it does not have Since Articles 3 (f) and 5 of the Treaty lay the effect of promoting the marketing of down only general principles, it is not national products. The Court has held necessary to interpret them in this instance. (judgment of 7 June 1983, Case 78/82 The French legislation on book prices must Commission v Italy [1983] ECR 1955 be assessed exclusively in the context of (tobacco); judgment of 16 November 1977, Articles 30 et seq. of the Treaty. Each Case 13/77 GB-Inno-BV v ATAB [1977] Member State retains the freedom to lay ECR 2115) that national measures regu down rules governing its internal trade and, lating the fixing of prices which apply therefore, there can be no objection to without distinction to domestic and to adopting rules governing the retail sale of imported products do not in themselves
books. The Law of 10 August 1981 does not constitute a measure having an equivalent confer any power on the State as regards effect to a quantitative restriction if they do the actual fixing of prices. Publishing houses not affect the freedom of producers to fix remain entirely at liberty to introduce the retail prices of their products. The effect competitive prices if they so wish. The rule of such measures is usually limited that retail discounts may not exceed 5% is exclusively to the State concerned. not a restriction on competition inasmuch as competition between book retailers must be assessed in the first place in relation to the services provided, such as the number of Books published in France and re-imported titles available, the advice given to the come within the terms of the fifth paragraph public, the possibility of ordering single of Article 1 of the Law of 10 August 1981 copies of a title sought — since it is not which is intended to ensure a coherent possible to stock the full range of more than approach and to avoid any abuse by re 240 000 titles — and the assistance given in importing books previously exported.
That
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objective is covered by the tenth recital in negative effects of such conduct, in all those the preamble to Commission Directive No cases there is an agreement between under 70/50/EEC. takings or unlawful conduct. In the absence of such an agreement or conduct, Article 5 may not be relied on. Moreover any measure adopted by a State of an economic The law has no effect on the exportation of nature has the effect of distorting books to other Member States. Publishers competition. To take the view that Article 5 are entirely free to fix their export prices as prohibits such measures is tantamount to they see fit and the distributors in other asserting that States may no longer legislate countries fix their prices on the basis of the on economic matters. Although it is not a rules which are in force there. priori impossible that national measures specifically intended to protect undertakings from the effects of competition may infringe Article 5 in conjunction with the rules on competition even without there having been In consequence the French Government any agreement or unlawful conduct on the takes the view that the provisions of the part of the undertakings, in this instance it Treaty, and in particular Articles 30 et seq., is not necessary to consider that hypothesis must be interpreted as meaning that a further, since no such exceptional circum national measure applicable without stances have been cited. distinction to books published in the Member State and to books imported from other Member States that compels retailers to sell books at the price fixed by the On the other hand it is necessary to publisher or the importer and prohibits them consider the provisions on the free from offering discounts on that price of movement of goods. The system of prices
more than 5%, does not constitute a established by the Law of 10 August 1981 measure having an effect equivalent to a makes the retail selling price fixed by the quantitative restriction. publisher or the importer compulsory for all retailers. Taken as a whole it should therefore be regarded as a rule fixing (minimum and maximum) prices which applies without distinction to national and 2.3. The Commission notes that Article imported products. According to the 3 (f) of the EEC Treaty refers to the task case-law of the Court (judgment of 24 and the activities of the Community and January 1978, Case 82/77 van Tiggele does not impose any obligations on Member [1978] ECR 25; judgment of 6 November States; it does not in itself constitute a 1979, Joined Cases 16 to 20/79 Danis directly applicable rule of law.
It is the [1979] ECR 3327), it is not in itself a precursor of the specific provisions of barrier to trade within the Member States. Articles 85 to 94 and is not relevant if those articles are not applicable Since the measure in question is a State measure which does not derive from the action of undertakings, However two provisions of the Law of 10 Article 3 (f) is not relevant to the August 1981 lead to imported books being proceedings. Similarly Article 5 does not treated differently.
The first is the fifth contain any rule imposing a specific paragraph of Article 1 according to which obligation. As regards competition it refers 'where the imported books were published by implication to Article 85 et seq. Although in France, the retail selling price fixed by in that context a State might conceivably be the importer shall be no less than that fixed held at fault for encouraging or facilitating by the publisher'. That provision prevents unlawful conduct or for increasing the importers of books that were published in
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France and are being re-imported from trade. It is doubtful whether, in order to giving consumers the benefit of potentially promote cultural books, it is appropriate to lower prices prevailing in another Member protect small retail outlets. The retail outlets State. Secondly, pursuant to the fourth for books in France include: 19 500 outlets paragraph of Article 1 retailers must sell at where books are sold as a subsidiary line an effective selling price of between 95 % side by side with other products and which and 100% of the price fixed by the generally have a stock of only 200 to 300 publisher or the importer. The main books; 4 000 retail outlets where book sales distributor of the imported books is deemed represent approximately 40 % of total to be the importer so that the price is fixed turnover; and only 1 000 bookshops, by a single importer and any other importer generally in larger towns and cities, where is prevented from selling at lower prices. the sale of books is the single main activity. In its report submitted to Parliament in June 1983 on the implementation of the Law of 10 August 1981, the Minister for Cultural Affairs listed a number of other measures intended to provide active support to the It is thus established that there is a measure book sector. Even if it is desirable to protect having equivalent effect. The grounds listed small retail outlets, measures such as the grant of loans to booksellers and
in Article 36 of the Treaty cannot be relied improvements in their vocational training on to justify that measure, as the very are equally capable of contributing towards wording of the provision shows. Moreover that protection and they do not hinder no account may be taken of any imperative trade. requirements within the meaning of the judgment of the Court of 20 February 1979 (Case 120/78 Rewe-Zentral [1979] ECR 649) which may exist, in view of the fact that the provisions in question apply with different effect to national products and The Commission therefore proposes that, in imported products. answer to the question referred to the Court, it should be stated that Articles 3 (f) and 5 of the Treaty do not prohibit Member States from restricting the right of retailers to depart from the retail prices fixed by the producers; Article 30 must be interpreted as In the alternative the Commission meaning that the obligation imposed on nevertheless considers whether there are any retailers by virtue of the provisions in such imperative requirements in this case question to charge a fixed price for the and it reaches the conclusion that the retail sale of books — with a discount conditions laid down by the Court for allowed of up to 5 % — constitutes a reliance on such requirements, even if it measure having an effect equivalent to a were possible in this case, are in any event quantitative restriction on imports, which is
not satisfied. The Law of 10 August 1981 is prohibited by Article 30, in so far as, on the allegedly justified in terms of the desire to one hand, the retail price of books protect literary creativity and to ensure the published in France and re-imported into survival of the richness and diversity of that country must be fixed by the importer culture embodied in books. Measures at a level which is no lower than that fixed intended to promote books of cultural value by the publisher and, on the other hand, the are permissible, but it has in no way been importer of a book published in another established that the means chosen to attain Member State is required to conform to the that objective are appropriate and are the retail selling price fixed by the principal means that cause the least hindrance to distributor of that book.
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3. Replies to the questions put by the view, Article 3 (f) does not prohibit either Court the Community or the Member States from intervening in the free operation of the market; it does not prescribe a strict laissez- 3.1. At the Court's request, the French faire policy. The aim of the prohibitions Government produced the complete text of which the Treaty imposes on Member States the Report of the Minister for Cultural in order to ensure the free movement of Affairs, submitted to the French Parliament production factors is not to deprive the in June 1983, concerning the application of Member States of all power to regulate such the Law of 10 August 1981. factors but to eliminate restrictions on imports and exports. The Commission produced an exchange of letters between it and the French Government concerning the compatibility of In addition to the prohibitions addressed to that law with Articles 30 and 36 of the EEC the Member States, the Treaty contains — Treaty. in Articles 85 and 86 — prohibitions addressed to undertakings to ensure that they cannot do what Member States are
3.2.1. The Commission was asked whether prohibited from doing, namely obstructing Article 3 (f), viewed in the context of the the abolition of trade barriers. As the Court Treaty and in particular in conjunction with stated in its judgment of 5 April 1984 Article 5, may be interpreted as prohibiting (Joined Cases 177 and 178/82 van de Haar Member States from requiring commercial andKaveka [1984] ECR 1797), even though operators by law to act in a way which the prohibitions directed at Member States would be contrary to the rules on are complementary to those aimed at under competition laid down in Articles 85 and 86 takings and are directed towards the same and which would not qualify for exemption goal of the unity of the market, the under Article 85 (3), if the conduct in objective, the scope and the conditions of question were the subject of agreements application are different. between undertakings or derived from the practices of" undertakings; if so, what criteria are to be applied in order to assess whether a resale price maintenance system A State measure might in principle validly for books which is applied pursuant to produce effects comparable to those of an binding legislative provisions is compatible agreement prohibited under Article 85.
On with a system ensuring that competition the other hand, if Member States render within the Common Market is not distorted. ineffective the prohibitions imposed by the The Commission's answer was as follows : Treaty on undertakings, they are failing to fulfil their obligation under Article 5. That is the case : Article 3 (f) of the Treaty is the precursor of the Chapter which lays down the rules on competition both for undertakings (Articles Where a Member State prescribes, promotes 85 and 86) and for Member States (Articles or facilitates the conclusion of restrictive 90, 92, 93 and 94). agreements or the abuse of a dominant
position; The obligations imposed on the Member States in order to ensure that competition is not distorted are set out in the rules Where it increases the effects of such concerning public undertakings and certain agreements or abuses by extending them to State aids. However, in the Commission's undertakings which are not parties thereto;
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Or, finally, where exceptionally a State abroad must be sold at the prices originally measure restricting competition is adopted fixed by the publisher; however, no fixed with the specific intention of enabling price is imposed on imported books. undertakings to circumvent Articles 85 and 86 and where it cannot be claimed that it is in the public interest. In the United Kingdom resale price main tenance is regulated by the 'Net Book Agreement' and is authorized under an Apart from those three cases, Articles 3 (f) express derogation for books from the and 5 do not prevent Member States from general rules on competition. prescribing conduct that would be contrary to the rules on competition if it was the subject of agreements between undertakings The same system of resale price main or derived from the practices of under tenance also operates in Ireland for Irish takings. books and applies to the sale of British books in Ireland.
As far as those three cases are concerned, In Denmark for the last 140 years, by virtue the criteria for assessing whether a State of a system resulting from a private measure is compatible with Articles 3 (f) agreement authorized by provisions dero and 5 of the Treaty are the same as those gating from the ordinary civil-law set out in Article 85 (3). competition rules, the selling price of Danish books is fixed by the publisher and the price of foreign books by the main or 3.2.2. The Commission states in addition exclusive importer. that it had decided that certain aspects of the French system of book pricing might be incompatible with Article 30 and, therefore, In Luxembourg a system of fixed prices is in on 17 April 1984 it sent the French fact applied. Government a formal request for obser vations in accordance with Article 169 of the Treaty. In Greece there are no exceptions to the general prohibition of resale price main tenance, even for the book sector. The Commission is also in the process of investigating the systems of fixing book In Italy there are no legal provisions prices in the Netherlands and in Belgium, concerning resale price maintenance which but has not yet reached a final decision on is therefore permitted; it is applied to books whether to institute proceedings under by virtue of a collective agreement between Article 169. The Commission gave the the Italian Publishers' Association and the following details of the practices prevailing Booksellers' Association. in the book sector in other Member States:
In Belgium there is no general prohibition of In the Federal Republic of Germany the resale price maintenance. A price agreement national legislation provides for inter alia a concluded by the Cercle Belge de la derogation for the book trade from the Librairie, a private association, for the general prohibition on resale price main French-speaking region is not in fact tenance clauses in distribution agreements. applied. A system established for the Dutch- The majority of the publishers fix selling speaking region by the Vereeniging ter prices and the system also includes a clause Bevordering van het Vlaamsche Boekwesen according to which German books bought was declared contrary to Article 85 by the
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Tribunal de Commerce [Commercial underlying idea of the economic interpé Court], Brussels, and replaced by a nétration sought by the Treaty is that collective system in the form of uniform commercial operators in the various general conditions of sale. Member States must be able to compete with each other freely, without hindrance In the Netherlands the national competition from State measures. Under the system rules allow for resale price maintenance on established by the Law of 10 August 1981, an individual basis and make the application the prices of foreign books are fixed by the of collective resale price maintenance importers who are operators already subject to special derogations; one such established on the French market but at a special derogation has been accorded for different stage in the marketing process to the book trade. The Hoge Raad [Supreme that of the publishers who are the direct Court] has declared the system unlawful on competitors of French publishers. 'Inter- the basis of Article 85 in so far as it extends brand' competition does in fact exist in part to re-importations from Belgium and in of the book sector, namely in the case of addition the Arrondissementsrechtbank of practical handbooks (books on cookery and Harlem has stated that the collective system do-it-yourself, travel guide-books and so must not lead to a prohibition of parallel on) in respect of which the price is a major imports including re-importations. factor in determining the reader's choice. The fixing of the price of foreign books by importers and not by the publishers is likely As regards the agreement between the to make it more difficult for books from the
Vereniging ter Bevordering van het Common Market to penetrate the French Vlaamse Boekwezen (Belgium) and the market in significant quantities. In 1982 Vereeniging ter Bevordering van de practical handbooks accounted for 9.5% of Belangen des Boekhandels (Netherlands) French imports of books from other which was the subject of the judgment of Member States. Such books represent a the Court of 17 January 1984 (Joined Cases significant proportion of the books sold in 43 and 63/82 VBVB and VBBB v shops like the Centre Leclerc supermarkets. Commission [1984] ECR 19) the Commission is at present considering proposals made by the two associations with a view to complying with the Commission The view expressed by the Commission in Decision of 25 November 1981. its written observations is nevertheless incomplete and inaccurate inasmuch as it is based on the hypothesis that, taken as a
3.3. In reply to the Court's questions, the whole, the Law of 10 August 1981 must be Association des Centres distributeurs regarded as a rule fixing prices applying Edouard Leclerc and the French without distinction to national products and Government made the following obser imported products. The decisions of the vations on the view put forward by the Court concerning the fixing of minimum or Commission in its written observations that maximum prices (the Tasca, Danis and van Article 30 of the Treaty prohibits measures Tiggele cases) cannot be applied to that law stipulating that the retail selling price of since it contains no provision regarding the reimported books must be fixed by the level of prices. importer at a level no lower than that fixed by the publisher and that importers of books published in another Member State must Contrary to what its title might suggest, the conform to the retail selling price fixed by Law of 10 August 1981 is a law concerning the principal distributor of those books. competition in the French book trade. Competition is controlled by setting a
3.3.1. The Association des Centres distri- derisory 5% limit on the margin of price buteurs Edouard Leclerc points out that the competition, which is the most important
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element in a system of free competition. The rules, which are not contested in principle. question referred to the Court of Justice by Even if the detailed rules on fixing the the Cour d'Appel, Poitiers, is in fact prices of books published in another concerned with the interpretation of the Member State are considered to apply rules on competition and not that of Article differently to imported works and to those 30, to which the Commission's proposed published and marketed in France, that reply is confined. difference of treatment is not such as to hinder intra-Community trade.
In making the persons charged with effecting the legal deposit of an imported book responsible for In the light of the rules on competition, fixing the price, the legislature merely specifically Article 85, the system set up in sought a reasonable and appropriate France is a collective system of resale price equivalent to the system applied within maintenance with international and national French territory, since it would be difficult implications; the national implications to impose obligations outside French themselves are, however, also liable to affect territory on foreign publishers. In practice,
trade between the Member States inasmuch publishers who regularly export books to as the national market is divided up by a France rely on a principal importer, which number of vertical distribution agreements may be a distributor, a representative office covering the whole of the French market. or a French subsidiary and which they Such a system is contrary to Article 85 (1) authorize to carry out their marketing and does not qualify for exemption under policy. Article 85 (3). The national law imposing such a prohibited system therefore constitutes an infringement of Article 5 in In addition the French Government conjunction with Article 3 (f) of the Treaty. produces statistics of imports of books from EEC countries in 1982 showing that imports of books published in other Member States represent 4.88% of the total turnover of
3.3.2. The French Government points out French publishers; that proportion becomes that the provisions of the Law of 10 August even smaller if allowance is made for the 1981 which the Commission considers fact that the figure for imports includes in incompatible with Article 30 of the Treaty part the cost of marketing and distribution are absolutely necessary to ensure the in the countries of origin which is not the effectiveness of that law and cannot be case for the turnover of French publishers. contrary to Article 30.
The provision concerning re-importations is an auxiliary clause which cannot be separated from the text as a whole, and without which the system of fixed prices for books published 4. Oral procedure and marketed in France would lose its effectiveness. Without that safeguard clause At the hearing on 17 June 1984 the a French retailer, in particular in border following persons presented oral argument areas, could obtain supplies from foreign and replied to questions put by the Court: wholesalers and sell re-imported books at Mr Jousset, for the Association des less than the price prevailing in France.
The Centres distributeurs Édouard Leclerc; intra-Community trade involved in such a Mr Guillaume, for the French Government; transaction would be merely illusory and in and Mrs Coutrelis and Mr Jacob, for the reality it would pursue only the purely Commission of the European Communities. internal objective of evading the effects of the French price-fixing rules. It is difficult to see by what other means it would be The Advocate General delivered his opinion possible to ensure the coherence of the on 3 October 1984.
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Decision
1 By a judgment of 28 September 1983, which was received at the Court on 10 October 1983, the Cour d'Appel [Court of Appeal], Poitiers, referred a question to the Court under Article 177 of the EEC Treaty for a preliminary ruling on the interpretation of various rules of Community law, in particular the provisions relating to free competition in the Common Market and Articles 3 (f) and 5 of the EEC Treaty, so as to enable it to assess the compatibility with Community law of national legislation requiring all retailers to abide by the selling prices for books fixed by the publisher or importer.
2 The question was raised in proceedings between Association des Centres distri buteurs Edouard Leclerc (hereinafter referred to as 'Leclerc') and Thouars distri bution, part of the Leclerc Group, on the one hand, and various booksellers in Thouars and Union syndicale des libraires de France [French booksellers' association], on the other. The dispute concerns the need to comply with the retail prices for books fixed under Law No 81-766 of 10 August 1981 on book prices (Journal Officiel de la République Française of 11 August 1981).
3 Leclerc has retail outlets throughout France which initially sold groceries but have extended their business to cover other products including books. The outlets have the reputation of charging low prices. It appears that Thouars distribution, like other distributors in the Leclerc group, has sold books at prices undercutting the prices fixed under the aforementioned legislation.
4 Under the Law of 10 August 1981 all publishers or importers of books are required to fix retail prices for the books which they publish or import. Retailers must charge an effective price for sales to the public of between 95% and 100% of that price. The law exempts certain private and public entities, such as libraries and educational establishments, from having to pay that price and it authorizes clearance sales, subject to certain conditions, if the provisions of the law are contravened competitors and various types of association may seek an injunction or claim damages; criminal proceedings may also be brought.
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5 As far as imported books are concerned, the last paragraph of Article 1 of the law provides that 'where imported books were published in France the retail price fixed by the importer shall be no less than that fixed by the publisher'. Decree No 81-1068 of 3 December 1981 (Journal Officiel de la République Française of 4 December 1981), issued pursuant to the Law of 10 August 1981, further provides that the principal distributor of imported books who must comply with the requirement laid down in Article 8 of the Law of 21 June 1943 — namely the requirement that a complete copy must be deposited with the Ministry of the Interior — is deemed to be the importer.
6 In proceedings commenced by several booksellers, the President of the Tribunal de grande instance [Regional Court], Bressuire, ordered Thouars distribution to make its retail prices for books comply with the Law of 10 August 1981 or incur penalty payments and declared this order also to apply to Leclerc, against which a third- party notice had been issued.
7 On appeal, the Cour d'Appel, Poitiers, took the view that in order to resolve the dispute it was necessary to ascertain whether the Law of 10 August 1981 was such as to infringe the Community rules on free competition in the Common Market since it considerably restricted competition as regards both books published in France and imported books, and since booksellers in other Member States were not subject to such restrictions. Accordingly, the Cour d'Appel referred the following question to the Court of Justice for a preliminary ruling:
'Must Articles 3 (f) and 5 of the EEC Treaty be interpreted as prohibiting the setting-up in a Member State, by law or by regulation, in respect of books published in that Member State and books imported into that State, in particular from other Member States, of a system which compels retailers to sell the books at the price fixed by the publisher or the importer without being able to reduce that price by more than 5%?'
8 Article 3 (f) of the EEC Treaty sets out one of the general principles of the Common Market, which are applied in conjunction with the relevant chapters of the Treaty devoted to their implementation. It envisages 'the institution of a system ensuring that competition in the common market is not distorted', a general objective which is enlarged on by, inter alia, the rules on competition set forth in
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Chapter 1 of Title I of Part Three of the Treaty. The second paragraph of Article 5 of the Treaty requires Member States to 'abstain from any measure which could jeopardize the attainment of the objectives' of the Treaty. Thus the question referred by the national court, concerning the compatibility of legislation of the type described above with Articles 3 (f) and 5, seeks to establish whether that legislation accords with the principles and objectives of the Treaty and with those provisions of the Treaty concerned with their detailed implementation.
9 Articles 2 and 3 of the Treaty set out to establish a market characterized by the free movement of goods where the terms of competition are not distorted. That objective is secured inter alia by Article 30 et seq. prohibiting restrictions on intra- Community trade, to which reference was made during the proceedings before the Court, and by Article 85 et seq. on the rules on competition, which it is appropriate to consider first.
The application of Articles 3 (f), 5 and 85 of the EEC Treaty
10 Leclerc maintains that the French Law on book prices does not introduce State price controls but rules restricting price competition, since the prices are freely fixed by publishers and importers. Hence the law should be considered first from the point of view of the rules on competition laid down in the Treaty. In that regard, Leclerc submits that the law establishes a collective system of price main tenance which undertakings are precluded from establishing by Article 85 (1) of the Treaty and which is contrary to the system of undistorted competition in the Common Market which Article 3 (f) designates as one of the aims of the Community. The second paragraph of Article 5 of the Treaty therefore imposes on Member States an obligation to refrain from adopting such measures, since they are likely to render Article 85 ineffective by enabling private undertakings to circumvent the constraints embodied therein and are thus likely to jeopardize the attainment of one of the aims of the Treaty.
11 The French Government considers that Articles 3 (f) and 5 of the Treaty merely lay down general principles and do not in themselves give rise to obligations. Article 85, on the other hand, applies, in its view, only to certain practices on the part of undertakings and cannot be construed, even in conjunction with Articles 3 (f) and 5, as prohibiting Member States from adopting measures which might have
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an effect on free competition. The limitation of price competition at retailer level — price competition at publisher level being moreover free — should be examined in the light of Article 30 et seq., the only potentially relevant Treaty provisions in this case.
12 The Commission considers that Articles 3 (f) and 5 cannot be interpreted in such a manner as to deprive Member States of all power in the economic sphere by prohibiting them from interfering with free competition. Since Article 85 concerns only practices on the part of undertakings and not State measures, it would only be the exceptional case — where a Member State required or facilitated the conclusion of prohibited agreements, heightened their impact by extending them to third parties or pursued the specific aim of enabling undertakings to circumvent the Community competition rules — that the adoption of such State measures could constitute a failure to fulfil the obligations arising under the second paragraph of Article 5 of the Treaty. The Commission therefore considers that the compatibility with the Treaty of legislation of the type in question is to be considered solely in the light of Article 30 et seq.
13 In accordance with the aim laid down in Article 3 (f) of the Treaty, the following are incompatible with the Common Market and prohibited by virtue of Article 85 (1) of the Treaty: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the Common Market, and in particular those which directly or indirectly fix purchase or selling prices or any other trading conditions. Thus, Article 85 (1) covers agreements, decisions and concerted practices in restraint of competition between undertakings, subject to exemptions granted by the Commission under Article 85 (3) of the Treaty.
1 4 Whilst it is true that the rules on competition are concerned with the conduct of undertakings and not with national legislation, Member States are none the less obliged under the second paragraph of Article 5 of the Treaty not to detract, by means of national legislation, from the full and uniform application of Community law or from the effectiveness of its implementing measures; nor may they introduce or maintain in force measures, even of a legislative nature, which may render ineffective the competition rules applicable to undertakings (cf. judgment of 13 February 1969 in Case 14/68, Wilhelm v Bundeskartellamt, [1969] ECR 1, and judgment of 16 November 1977 in Case 13/77, Innow ATAB, [1977] ECR 2115).
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15 However, legislation of the type at issue does not require agreements to be concluded between publishers and retailers or other behaviour of the sort contemplated by Article 85 (1) of the Treaty; it imposes on publishers and importers a statutory obligation to fix retail prices unilaterally. Accordingly, the question arises as to whether national legislation which renders corporate behaviour of the type prohibited by Article 85(1) superfluous, by making the book publisher or importer responsible for freely fixing binding retail prices, detracts from the effectiveness of Article 85 and is therefore contrary to the second paragraph of Article 5 of the Treaty.
16 The French Government, while maintaining that Article 85 of the Treaty is not applicable to legislative measures, seeks to justify the legislation at issue on the ground that its aim is to protect books as cultural media from the adverse impact that untrammelled competition in retail prices would have on the diversity and cultural level of publishing. The French Government further maintains that such legislation is necessary both in order to conserve specialist booksellers in the face of competition from other distribution channels which rely on a policy of reduced margins and a limited range of titles and in order to prevent a small number of large distributors from being able to impose their will on publishers to the detriment of poetic, scientific and creative works. It is therefore indispensable in order to preserve books as an instrument of culture and has counterparts in most of the Member States.
17 The Commission, which also considers that Article 85, even in conjunction with Article 5, does not apply to a case such as this, does not share the French Government's assessment of the state of competition in the book trade. It contests the utility and desirability of special national rules for the book trade. Nevertheless, it recognizes that publishers and booksellers have retail price main tenance agreements or practices in most Member States, even though the various national systems exhibit considerable differences, from one Member State to another, as regards their application and detailed rules.
18 It may be observed that the Commission, which has publicly stated its intention to investigate all those systems and practices, has not yet succeeded in bringing that investigation to a conclusion or in determining what approach to adopt with regard to the exercise in this sphere of the powers conferred on it by the Treaty and by Regulation No 17 of 30 October 1962. Moreover, it has so far failed to
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submit any proposal for action to the Council. Nor has it initiated any proceedings under Article 85 of the Treaty with a view to prohibiting national systems and practices for fixing book prices.
19 The only Commission decision relating to the fixing of book prices concerned a transnational agreement between trade associations in two Member States which the Court held to be incompatible with Article 85 (1) of the Treaty in its judgment of 17 January 1984 in Joined Cases 43 and 63/82 (VBVB and VBBB v Commission, [1984] ECR 19). In that judgment the Court observed that national legislative or judicial practices, even on the supposition that they are common to all the Member States, cannot prevail in the application of the competition rules set out in the Treaty. However, neither the Commission's decision nor the Court's judgment took a stand on the compatibility with Article 85 of the Treaty of purely national price-fixing agreements.
20 It is thus apparent that the purely national systems and practices in the book trade have not yet been made subject to a Community competition policy with which the Member States would be required to comply by virtue of their duty to abstain from any measure which might jeopardize the attainment of the objectives of the Treaty. It follows that, as Community law stands, Member States' obligations under Article 5 of the EEC Treaty, in conjunction with Articles 3 (f) and 85, are not specific enough to preclude them from enacting legislation of the type at issue on competition in the retail prices of books, provided that such legislation is consonant with the other specific Treaty provisions, in particular those concerning the free movement of goods. It is therefore necessary to consider those provisions.
The application of Articles 30 and 36 of the EEC Treaty
21 The Commission considers that the legislation in question constitutes a measure equivalent in effect to a quantitative restriction on imports, contrary to Article 30 of the Treaty. It observes that two provisions of the Law of 10 August 1981 are peculiar to imported books, namely: first, the price of imported books is to be fixed by the importer, the principal distributor being deemed for this purpose to be the importer; and, secondly, where books published in France are imported, the retail price is to be no lower than that fixed by the publisher. In the Commission's view, those two provisions impede imports by making it impossible for importers to
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charge lower prices and preventing them from penetrating the French market by means of price competition. Leclerc expresses substantially the same view.
22 The French Government argues that legislation of the type at issue is not contrary to Article 30. In its contention, each Member State remains free to regulate its domestic trade. The restriction on retail price competition does not in any way restrict imports. Imported and domestic books are treated identically in that respect. The principal distributor is responsible for fixing the price of foreign books because he performs an equivalent commercial role in the domestic market to that performed by the publisher in distributing French books. The French Government contends that the provision relating to books published in France and re-imported is vital in order to make the legislation as a whole coherent and to prevent the re-importation of books from being used as a device for circumventing the law.
23 Article 30 of the EEC Treaty prohibits quantitative restrictions on imports and all measures having equivalent effect in trade between Member States. The Court has consistently held that under that article any national measure which is capable of hindering intra-Community trade, directly or indirectly, actually or potentially, is to be considered a measure having an effect equivalent to a quantitative restriction. That would be the case, for instance, where national legislation treated domestic products differently from imported products or disadvantaged, in any manner whatsoever, the marketing of imported products vis-à-vis domestic products.
24 In that regard two different situations to which the national legislation in question applies must be considered: first, that of books published in another Member State and imported into the Member State concerned, and, secondly, that of books published in the Member State concerned and re-imported, following exportation to another Member State.
25 As regards books published in another Member State and imported into the Member State concerned, a provision whereby the retail price is to be fixed by the importer responsible for complying with the statutory requirement to deposit one copy of each imported book with the authorities, that is to say the principal distributor, transfers the responsibility for fixing the retail price to a trader at a different stage in the commercial process than the publisher and makes it impossible for any other importer of the same book to charge the retail price in the
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importing State that he considers adequate in the light of the cost price in the State in which it was published. Contrary to the French Government's contention, such a provision does not merely assimilate the rules applying to imported books to those applying to domestic books but creates separate rules for imported books which are liable to impede trade between Member States. Such a provision must therefore be viewed as a measure equivalent in effect to a quantitative restriction on imports, contrary to Article 30 of the EEC Treaty.
26 On the other hand, in so far as the legislation applies to books published in the Member State concerned and re-imported following exportation to another Member State, a provision requiring such books to be sold at the retail price fixed by the publisher does not make a distinction between domestic and imported books. Nevertheless, such a provision discourages the marketing of re-imported books by preventing the importer from passing on in the retail price an advantage resulting from a lower price obtained in the exporting Member State. Accordingly, it constitutes a measure equivalent in effect to a quantitative restriction on imports, contrary to Article 30.
27 However, the above finding is not applicable where it is established that the books in question were exported for the sole purpose of re-importation in order to circumvent legislation of the type at issue.
28 The French Government again invokes, as justification for the two provisions at issue, the imperative requirements of consumer protection, referring to its view, which is mentioned above, that books as cultural media need to be protected.
29 As far as that point is concerned, it must be noted that national legislation which requires traders to abide by specific retail prices and discourages the marketing of imported products can be justified solely on the grounds set out in Article 36 of the Treaty.
30 Since it derogates from a fundamental rule of the Treaty, Article 36 must be interpreted strictly and cannot be extended to cover objectives not expressly enum erated therein. Neither the safeguarding of consumers' interests nor the protection of creativity and cultural diversity in the realm of publishing is mentioned in Article 36. It follows that the justification put forward by the French Government cannot be accepted.
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31 The question referred by the Cour d'Appel, Poitiers, must therefore be answered as follows:
1. As Community law stands, the second paragraph of Article 5 of the EEC Treaty, in conjunction with Articles 3 (f) and 85, does not prohibit Member States from enacting legislation whereby the retail price of books must be fixed by the publisher or by the importer and is binding on all retailers, provided that such legislation is consonant with the other specific provisions of the Treaty, in particular those relating to the free movement of goods.
2. In the context of such national legislation, the following constitute measures equivalent in effect to quantitative restrictions on imports, contrary to Article 30 of the EEC Treaty:
(a) provisions whereby the importer responsible for complying with the statutory requirement to deposit one copy of each imported book with the authorities, that is to say the principal distributor, is responsible for fixing the retail price;
(b) provisions requiring the retail price fixed by the publisher to be applied to books published in the Member State concerned and re-imported following exportation to another Member State, unless it is established that those books were exported for the sole purpose of re-importation in order to circumvent the legislation in question.
Costs
32 The costs incurred by the French Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.
On those grounds,
THE COURT
in answer to the question referred to it by the Cour d'Appel, Poitiers, by judgment of 28 September 1983, hereby rules:
1. As Community law stands, the second paragraph of Article 5 of the EEC Treaty, in conjunction with Articles 3 (f) and 85, does not prohibit Member States from enacting legislation whereby the retail price of books must be fixed by the
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publisher or by the importer and is binding on all retailers, provided that such legislation is consonant with the other specific provisions of the Treaty, in particular those relating to the free movement of goods;
2. In the context of such national legislation, the following constitute measures equivalent in effect to quantitative restrictions on imports, contrary to Article 30 of the EEC Treaty:
(a) provisions whereby the importer responsible for complying with the statutory requirement to deposit one copy of each imported book with the authorities, that is to say the principal distributor, is responsible for fixing the retail price;
(b) provisions requiring the retail price fixed by the publisher to be applied to books published in the Member State concerned and re-imported following exportation to another Member State, unless it is established that those books were exported for the sole purpose of re-importation in order to circumvent the legislation in question.
Mackenzie Stuart Bosco Kakouris
O'Keeffe Koopmans Everling Bahlmann Galmot Joliet
Delivered in open court in Luxembourg on 10 January 1985.
P. Heim A.J. Mackenzie Stuart
Registrar President