C-43/85

ANCIDES v COMMISSION

OPINION OF ADVOCATE GENERAL SIR G O R D O N SLYNN delivered on 27 November 1986

My Lords, The relevant facts can be briefly summarized. Since 1969, UNIDI has been organizing Expo Dentals in various Italian cities. In 1973, Unidi notified its rules governing participation in Expo Dental to the Commission and applied for negative clearance or an exemption under Article This appears to be the first case before the 85(3). Those rules limited what might be Court concerning the application of the exhibited at Expo Dental exhibitions, what competition rules of the EEC Treaty to business might be conducted thereat and trade fairs. imposed restrictions upon exhibitors from taking part in other defined exhibitions as well as conferring a discretion on the orga- nizing committee to refuse admission to would-be exhibitors.

Ancides (Associazione nazionale commer- cianti internazionali dentali e sanitari) asks the Court, pursuant to Artide 173 of the Treaty, to annul Commission Decision Those rules were modified after notification 84/588 (Official Journal 1984, L 322, p. to the Commission and before the 10), a decision which renews until 31 Commission's decision so as to provide that December 1993 an exemption under Article the ban on participating in competing 85(3) which was originally conferred in exhibitions, total in the original version of 1975 on UNIDI (Unione nazionale the rules, should only be valid for half the industrie dentarie italiane) in respect of the period of time between successive Expo latter's rules governing a periodic trade fair Dentals (at that time held approximately called 'Expo Dental'. every 18 months).

In July 1975, the Commission published a views on the objections expressed by decision (the '1975 decision' (Official Ancides and, finding them persuasive, Journal 1975, L 228, p. 17)). The adopted the contested decision renewing the Commission found that the rules were exemption. clearly capable of prejudicing the freedom of trade between Member States to such an extent that the attainment of a single market between the Member States might be jeopardized. It refused the request for There are two relevant differences between negative clearance but granted an exemption the rules notified in 1973 and the rules to the Expo Dental rules, the exemption to granted exemption in 1984. First, Expo expire on 31 December 1983. Article 2 of Dentals are now held annually rather than the decision provided that UNIDI was to every 18 months. The period prior to Expo inform the Commission of any refusal to Dentals during which exhibitors are admit an exhibitor to any Expo Dental. prohibited from participating in competing trade fairs has been reduced corre- spondingly from nine months to six, that is, half the interval between Expo Dentals. Second, exhibitors refused admission to or Since then, the relationship between Ancides expelled from Expo Dentals may appeal as and UNIDI has come under strain and of right to an arbitration board. This appeal various attempts to regulate matters by procedure was introduced at the agreement came to nothing. On the basis of Commission's request (paragraphs (4) and the information before the Court, Ancides (6) of the contested decision). seems to have become stronger as imports of foreign dental equipment into Italy have increased whilst UNIDI has become more defensive of Italian manufacturers' interests. In particular, UNIDI was responsible for an In seeking the annulment of the contested advertising campaign on behalf of Italian decision, Ancides argues that the manufacturers called 'sorridi italiano' (Smile Commission infringed Ancides' rights of Italian). This seems to have been a factor in defence by breaching Article 19 of Regu- inducing Ancides to break with UNIDI lation No 17/62 and Articles 1, 5 and 7 of following the 1983 Expo Dental and to Regulation No 99/63 (Official Journal, concentrate on organizing its own English Special Edition 1963-64, p. 47) and exhibitions. that it misapplied Articles 85 and 86 of the Treaty. In this connection, Ancides considers that the Commission has wrongly assessed the importance of both the inno- vations in the new Expo Dental rules. It is for this reason, when, in 1984, UNIDI applied to have the 1975 decision renewed and the Commission published a notice in the Official Journal (Official Journal 1984, C 130, p. 3) in accordance with Article The Commission accepts that the 19(3) of Regulation No 17 (Official application is admissible in so far as it Journal, English Special Edition 1959-62, p. concerns the rights of Ancides as an asso- 87), that Ancides responded in writing to ciation but, rightly in my view, as Ancides the Commission saying that the exemption itself accepts, contends that Ancides cannot should not be renewed and giving detailed raise issues which are the concern only of its reasons. The Commission obtained UNIDI's constituent members.

'As the Court recalled in its judgment of 13 3. Where the Commission intends to give February 1979 in Case 85/76 Hoffmann La negative clearance pursuant to Article 2 or Roche [1979] ECR 461, the abovementioned to take a decision in application of Article provisions', meaning Article 19 (1) and (2) 85 (3) of the Treaty, it shall publish a of Regulation No 17/62 and Article 4 of summary of the relevant application or noti- Regulation No 99/63, 'are an application of fication and invite all interested third parties the fundamental principle of Community to submit their observations within the law which requires the right to a fair time-limit which it shall fix, being not less hearing to be observed in all proceedings, than one month. Publication shall have even those of an administrative nature, and regard to the legitimate interest of under- lays down in particular that the undertaking takings in the protection of their business concerned must have been afforded the secrets.' opportunity, during the administrative procedure, to make known its views on the Regulation No 99/63, the Commission truth and relevance of the facts and circum- regulation dealing with the hearings stances alleged and on the documents used provided for in Article 19 of Regulation No by the Commission to support its claim that 17/62, provides as follows: there has been an infringement of the Treaty'. 'Article 4 However, this is clearly not directly relevant since the paragraph quoted from the The Commission shall, in its decisions, deal 'Pioneer' case is referring to the position of only with those objections raised against an undertaking against whom the undertakings and associations of under- Commission proposes to take an unfa- takings in respect of which they have been vourable decision. afforded the opportunity of making known their views. Article 19 of Regulation No 17/62 provides as follows: Article 5

Article 7 tigated Ancides' allegations in depth, in my view Ancides has not established that the Commission was in breach of these rules. The Commission published the requisite notice, received and considered the written 1. The Commission shall afford to persons objections and was not asked, nor required who have so requested in their written proprio motu to provide, for oral represen- comments the opportunity to put forward tations to be made. their arguments orally, if those persons show sufficient interest or if the Commission proposes to impose on them a fine or periodic penalty payment. As to the substance, the gist of Ancides' claim is that the Commission's exemption gives UNIDI an artificial advantage in the relevant market (which is the market for dental equipment trade fairs, as opposed to 2. The Commission may likewise afford to that for dental equipment) which amounts any other person the opportunity of orally to a dominant position. UNIDI itself expressing his views.' interprets the exemption as a 'mandate' as is shown by copies of advertising material annexed to Ancides' application. Ancides asserts that every operator in the dental The Commission's reply is, essentially, that equipment sector is obliged to participate in it complied with the requirement imposed UNIDI's Expo Dental. As the Commission by Article 19 (3) to publish a notice giving points out, there is some inconsistency in the grounds on which it proposed to grant the position Ancides takes. In arguing that an exemption and took into account the Commission should have regarded the Ancides' comments, although those schism between Unidi and Ancides as of comments were refuted to its satisfaction by importance, Ancides draws attention to the UNIDI and therefore did not affect the fact that its own position on the market now outcome. Ancides did not ask for a hearing; allows it to hold competing trade fairs, in any case it was not entitled to one as of which rather weakens the argument that it is right. Both Article 19 of Regulation No impossible for it and its members to survive 17/62 and Article 7 of Regulation No without participating in Expo Dentals and, 99/63 make a distinction between the therefore, that UNIDI has a dominant undertakings whose agreements or conduct position. By Ancides' own admission, the is under investigation and other concerned 1984 Expo Dental was not attended by parties. Only the former have a right to be large numbers of Ancides' members who heard. The Commission has a discretion preferred to participate in an exhibition whether to hear the latter category. Ancides organized by Ancides to celebrate its 25th was given the opportunity to put its views anniversary. and did so. There was therefore no breach of those articles or of any other of the articles of Regulation No 99/63. On the other hand, it does seem likely that the granting of the exemption will give UNIDI more power than market forces alone would have given it. UNIDI's rules Although there is no evidence — either now have a privileged status and way — as to whether the Commission inves- participants may well be dissuaded from

abandoning Expo Dental. However, as the thing to have a ban on participating in Commission observes, even on the competing exhibitions for a period of nine assumption that the exemption confers a months before an Expo Dental held every dominant position on UNIDI, that does not 18 months; it is another for that ban to be of itself give Ancides a cause of action. of six months if the Expo Dental is held Article 86 prohibits abuses of a dominant annually, particularly if it is henceforth to position and not the mere holding of a be held every year in June and in Milan. dominant position. Ancides' action is not Obviously, if the exhibition is held in the brought against the Commission under same month of each year, the ban will also Article 175 for failure to act against alleged operate on the same months in every year, abuse of a dominant position, nor has which is not the case if the exhibition is to Ancides made a complaint to the be held every 18 months. However, the Commission alleging such abuse. I therefore Commission replies that there was nothing consider that the question whether there has in the Expo Dental rules requiring the been an abuse of a dominant position does exhibition always to be held in June; there not directly arise, though it seems unlikely was no rule that the exhibition should in that UNIDI has a dominant position, given future always be held in Milan, but only a the evidence of Ancides' ability to hold a subsequent declaration by the members that competing exhibition in the period they were favourable to the idea of fixing immediately before an Expo Dental and the Milan as the site of the exhibition. In fact, it strong position on the Italian market of its emerged at the hearing that the 1986 Expo members. Dental was held at the end of September in Genoa. In consequence, Ancides seems to place less reliance on this part of its case. Nevertheless, the question still remains whether a ban of six months' duration in every twelve, as opposed to one of nine months in every eighteen, is likely to The question in the case is thus whether the operate so harshly or unfairly that the arguments raised by Ancides concerning the Commission's decision cannot be allowed to Commission's assessment of competition in stand. the relevant market and the inferences it drew from that assessment disclose such manifest error, misdirection or unreason- ableness on the Commission's part that the The contested decision states in paragraph decision must be annulled. 10 that

The concentration of exhibitions 'promotes only have three months in which to hold the marketing of products in that, nine their own exhibition, once it is shown that it months out of eighteen, the costs borne by is by no means certain that Expo Dental exhibitors are reduced and consequently the exhibitions will always be held in June and cost price of their products, while for the always in Milan, Ancides has not established other nine months they are free to exhibit that it was inappropriate for the their products as they wish' (III 2(b)); Commission to apply the reasoning contained in the 1975 decision to the interval between Expo Dentals, which though reduced from nine months to six months is in any event proportionately the same if Expo Dentals are held every twelve 'Manufacturers and distributors of dental rather than every eighteen months. products have a reasonable period when they are not required to bear the cost of taking part in other exhibitions and when they are able to concentrate on Expo Dental' (III 4); Ancides' second line of attack concerns the arbitration panel for excluded exhibitors. According to Ancides, the arbitration panel is of minimal relevance but its form rather than its likely effect has beguiled the Commission into omitting to examine 'Organizers of exhibitions other than Expo whether the allegedly pro-competitive Dental can, during nine months out of every effects of the Unidi rules really exist. eighteen, organize exhibitions at which any interested party can exhibit and during the other months they are free to hold exhibitions with the participation of firms who do not take part in Expo At the hearing, Ancides produced Dental... With regard to competition documents relating to the attempted between manufacturers and distributors of exclusion of Ancides from the 1985 and dental products, participation in specialized 1986 Expo Dentals and of one of its exhibitions is . . . only one of the various members from the 1986 Expo Dental and methods of marketing. The fact that during the subsequent litigation between that nine months out of every eighteen they are company and Unidi. It seems that action by obliged to adopt other methods does not Unidi was taken so late that there was no result in the elimination of competition time either to convene the arbitration panel between them.' (Ill 5). or for interim relief to be obtained from the Italian courts, apparently under Article 700 of the Italian Civil Procedure Code. The Court allowed Ancides to lodge these documents and agreed to consider them de bene esse. The Commission raised no Although I thought initially that there was objection to their being considered by the some force in Ancides' argument that, Court, but argued that they were of no assuming that the exhibition was to be held value in deciding whether the contested in June every year, the length of the decision was vitiated by a failure to assess summer holiday period in Italy is such that matters as they stood when exemption was competitors of UNIDI would realistically being considered.

As to the third argument, that conditions in dental trade fairs had changed so much between 1975 and 1984 that the earlier reasoning, incorporated by reference in the contested decision, is no longer applicable, Ancides is, as the Commission argues, in the The Commission's duty when considering same sort of dilemma as when it argues that whether to renew the exemption was to UNIDI has a dominant position. It seems to balance, on the one hand, the requirement follow from Ancides' observation that other that the possibilities for competition should promotional techniques than the large trade not be stifled against, on the other hand, the fair are increasing in importance (such as restrictions necessary to the success of a 'open houses' by producers and exhibitions comprehensive trade fair such as Expo at specialist congresses) and that the Dental with the apparent advantages which practical importance of the exemption given it entails. The Commission finds on all the to the UNIDI rules is decreasing. Manufac- facts that these restrictions are justified turers and distributors of dental equipment because of the benefits obtained from a will have to weigh up (a) the relative large-scale, concentrated, periodic exhi- advantages of total freedom to exhibit how, bition such as that organized by UNIDI. when and where they like outside Expo Ancides has not demonstrated, in these Dental and (b) limited freedom so as to be proceedings, that the Commission was eligible to exhibit at Expo Dental. One of wrong in law, or came to a decision to the factors in that assessment will be the which no reasonable body could come, in attractiveness of competing events managed considering the restrictions as appropriate to by Ancides and by other bodies in the light achieve the claimed benefits; that, subject to of new advancements in science and dental misdirection, illegality or unreasonableness, techniques. is essentially a matter for the Commission