C-66/86

OPINION OF MR LENZ — CASE 66/86

OPINION OF MR ADVOCATE GENERAL LENZ delivered on 28 April 1988 *

* Original language: German.

AHMED SAEED FLUGREISEN AND OTHERS v ZENTRALE ZUR BEKÄMPFUNG UNLAUTEREN WETTBEWERBS

the case of intermediate landings [are] holder to fly from another country via the linked to Lufthansa's prices'. Federal Republic to yet another country.

6. According to the request for a preliminary ruling of 30 January 1986, the main proceedings are concerned both with the sale in the Federal Republic of Germany of air tickets for flights from a German 8. On those grounds the Bundesgerichtshof airport at prices below the approved tariff referred the following questions to the and with the sale of tickets issued outside Court of Justice of the European the Federal Republic which entitle the Communities for a preliminary ruling:

OPINION OF MR LENZ — CASE 66/86

'Are bilateral or multilateral agreements 11. I shall examine in my Opinion the regarding airline tariffs (for example, IATA parties' statements and the content of the resolutions) to which at least one airline documents which the Commission of the with its registered office in a Member State European Communities submitted to the of the European Economic Community is a Court after the first hearing. For the rest, I party void for infringement of Article 85(1) would refer to the Report for the Hearing. of the EEC Treaty as provided for in Article 85(2), even if neither the relevant authority of the Member State concerned (Article 88) nor the Commission (Article 89(2)) has declared them incompatible with Article 85? B — Opinion

Does charging only such tariffs for 12. As I have already mentioned, at the end scheduled flights constitute an abuse of a of 1987 the Council issued a number of dominant position in the common market instruments dealing with international air within the meaning of Article 86 of the EEC transport within the Community. ' In my Treaty? estimation it is appropriate in answering the questions referred for a preliminary ruling by the Bundesgerichtshof to examine the legal situation as regards scheduled air services within the Community separately Is the approval of such tariffs by the from that of scheduled air services to and competent authority of a Member State from non-member countries. incompatible with the second paragraph of Article 5 and Article 90(1) of the EEC Treaty and therefore void, even if the Commission has not objected to such tariff approval (Article 90(3))?' 1. The first question

Anicie 88 of the Treaty or by the tiveness of the finding as to the direct appli­ Commission under Article 89(2). cability of Article 85 have now had their basis removed as a result of the issue of the instruments of 14 December 1987. Since then Article 5 of Regulation No 3975/87 has governed the application of Article 85(3) of the EEC Treaty; furthermore, Article 2 of Regulation No 3976/87 (a) Air transport services within the empowers the Commission to exempt from Community the prohibition laid down in Articie 85(1) certain groups of agreements and concerted practices in the air transport sector. Article 85 has therefore been applicable since 1 January 1988 to intra-Community trans- frontier air services generally. This means that the agreements and decisions referred to in Article 85(1) are void under Article 14. As long ago as 6 April 1962 in its 85(2) unless they have been granted judgment in Case 13/61 2 the Court of exemption under Regulations Nos 3975/87 Justice recognized in principle that Article and 3976/87. 85 of the EEC Treaty has been applicable since the time of entry into force of the Treaty. Then in its judgment of 30 January 1974 in Case 127/73 3the Court expressly held that the competence of the national courts to apply the provisions of Community law derives from the direct effect of those provisions. As the prohibitions of Article 85(1) and Article 86 16. This is not impeded by the fact that of the Treaty tend by their nature to Regulation No 3975/87 contains no transi­ produce direct effects in relations between tional provisions on pre-existing agreements individuals, those articles create direct rights on the lines of Article 5 of Regulation No in respect of the individuals concerned 17. Since the Court has already decided in which the national courts must safeguard. its judgment of 4 April 1974 in Case 167/73 5that, so long as the Council has not decided otherwise, air transport, albeit excluded from the rules on the common transport policy, is however certainly subject to the general rules of the Treaty, it has long been established that the Treaty provisions on competition also apply to air 15. The doubts which induced the Court in transport. Moreover Community airlines the judgment of 6 April 1962 in Case 13/61 could not have remained unaware of that (cited above) and later in the judgment of fact, since the Commission initiated investi­ 30 April 1986 in Joined Cases 209 to gations pursuant to Article 89 of the EEC 213/84 4 to restrict the practical effec­ Treaty in order to check on the compati­ bility of the airlines' conduct with the EEC 2 — Judgment of 6 April 1962 in Case 13/61 Kledmgsverkoop- Treaty. In addition, the legislative procedure bedrijf de Gens en Uitdenbogerd v Robert Bosch GmbH and Others [1962] ECR 45 for issuing implementing regulations in 3 — Judgment of 30 January 1974 in Case 127/73 BRT v Sataro [1974] ECR 51 4 — Judgment of 30 April 1986 in Joined Cases 209 to 213/84 5 — Judgment of 4 April 1974 in Case 167/73 Commission v Ministère public v Asjei and Others [1986] ECR 1457 French Republic [1974] ECR 359

20. Moreover, this prohibition is not restricted only to international flights within the Community; it also applies to agreed tariffs for the international stretches within Even though Article 4 of the regulation the Community of scheduled flights to or from provides that such exemptions are to be non-member countries where on account of retroactive, at present it is impossible to say intermediate landings made at airports what their content will be or whether they within the Community tariffs are given for will be adopted at all. In any event, the individual portions of the route within the Commission is under no duty to adopt Community. In particular its application is them. If, however, they should be issued not precluded by Regulation No 3975/87 they would have to be taken into account. since it can be seen from the legislative background to the regulation, as the Commission has cogently shown, that the sphere of application of Article 85 et seq. in the air transport sector has not been dealt with definitively by that regulation. 18. The question as to the effect of a possible application for exemption under Article 85(3) of the Treaty on the prohibition set out in Article 85(1) during the period when the application was made but no decision had yet been taken on it 21. As I stated in my Opinion of 24 September 1985 in Joined Cases 209 to need not be considered here, since 213/84, 8Community competition law can also be applied to circumstances involving 6 — See the Commission's proposal of 10. 11. 1981, OI 1981, C 291, p. 4. 7 — See the third indent of Article 2(2) of Regulation 8 — In particular in Sections 5 and 6 of Part B [1986] No 3976/87. ECR 1425, at p. 1451 et seq.

25. According to Article 1 of Regulation No 3975/87, the regulation lays down inter alia detailed rules for the application of 23. According to the Court's judgment of Article 86 of the Treaty to international air 30 April 1986 in Joined Cases 209 to transport between Community airports. 213/84, as far as the area of scheduled Consequently if the foregoing observations flights to and from non-member countries is on Article 85 are applied mutatis mutandis it concerned, the peculiarity applies that must be held that Article 86 is to be applied Article 85 cannot apply until an authority in by the national courts as directly applicable a Member State acting under Article 88 has law. ruled, or the Commission acting under Article 89(2) has recorded, that the relevant tariffs are the result of an agreement, a decision by an association of undertakings, or a concerted practice contrary to 26. I would make the following remarks Article 85. with regard to the detailed application of Article 86. It is for the German courts to 9 — Agreements as to the tariffs applicable to the London—New York and Brussels—New York routes or else Copen­ find whether operating licences for foreign hagen—Zurich and Copenhagen—Basel/Mulhouse (with airlines are indeed linked to Lufthansa's one airport in the Community) arc given as theoretical examples- tariffs, in which case Lufthansa alone would

OPINION OF MR LENZ — CASE 66/86

determined. According to the case-law, in making the assessment the possibilities of competition must be judged in the context of the market comprising the totality of the products which, with respect to their characteristics, are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products. The determination of the relevant 31. Next, the national court will have to market is useful in assessing whether the consider whether those routes together undertaking concerned is in a position to constitute a substantial part of the common prevent effective competition from being market. The Commission suggested that this maintained and behave to an appreciable question should be answered in the light of extent independently of its competitors and quantitative criteria, such as the size of, the customers and consumers. 11 number of persons carried from and the economic importance of the States linked by 10 — See the judgment of 16 December 1975 in Joined Cases 40 the routes in question, and the ratio of the to 48, 50, 54 to 56, 111, 113 and 114/73 Coöperatieve Vereniging 'Suiker Unie' and Others v Commission [1975] number of passengers arriving and leaving ECR 1663, at pp. 2011 and 2013. 11 — See the judgment of 9 November 1983 in Case 322/81 NV Nederlandscbe Banden-Industrie Michelin v Commission 12 ·— Domestic air transport services do not come within the [1983] ECR 3461, at p. 3504 et seq. scope of the directive of 14 December 1987.

AHMED SAEED FLUGREISEN AND OTHERS v ZENTRALE ZUR BEKÄMPFUNG UNLAUTEREN WETTBEWERBS

32. If according to the case-law of the 35. Since through their tariff agreements Court even the medium-sized Member the participating airlines substantially States can be regarded as a substantial part eliminate not only competition in the field 3 of the Community, 1 scheduled flights of prices and conditions as such but also, in starting from the Federal Republic of view of the restricted access to the indi­ Germany are probably also to be regarded vidual routes, any other possible compe­ as constituting a substantial part of the tition, to the disadvantage of the market in scheduled air services in the consumer — apart perhaps from a measure Community. of competition as regards the services provided — that in itself can be regarded as constituting an abuse of a dominant situation. Support for this view is forth­ coming from the case-law, since in its judgment of 21 February 1973 in Case 1 6/72 4the Court held that the mere fact 33. It must also be pointed out that the that competition was substantially fettered situation described in the Federal Republic on the relevant market by a dominant of Germany does not exist in isolation; undertaking or dominant undertakings comparable practices are to be found in acting together constituted an abuse, other Member States. From Joined Cases regardless of the means and procedure by 209 to 213/84 this is known to be the case which it was achieved. as far as France is concerned; moreover, it appears from the documents submitted to the Court by the Commission that similar tariff agreements also exist at least in Belgium, Denmark, Greece, Ireland, Italy, the Netherlands and the United Kingdom. 36. If this principle were taken as the basis it would be unnecessary to show the existence of a standard case covered by Article 86, in particular the direct or indirect imposition of unfair purchase or selling prices or other unfair trading conditions 34. To date, in each case, rights to use the within the meaning of subparagraph (a) of aforementioned transfrontier routes have the second paragraph of Article 86. generally been granted to only two carriers, However, if in addition airfares on routes that is to say to one from each of the States within the Community were to be compared concerned; this enables them jointly to with fares on North-Atlantic routes, which dominate the relevant market. Since as a are not based on tariff agreements, this result the airlines act vis-à-vis users of price comparison might also reveal the

41. On the one hand, it must be observed (b) Scheduled air services to and from that, as the Court held in its judgment of 30 16 non-member countries April 1974 in Case 155/73, Article 86 is directly applicable. Direct application is the immediate consequence of contravening the prohibition set out in that article and it is not necessary for there to have been a prior decision. In addition, unlike in Article 85(3) no provision is made in the EEC Treaty for 38. The question now arises as to whether any exemption from the prohibition on the same principles applying to international abuses of dominant provisions 17 nor is any scheduled air services between airports in such exemption conceivable: abuses cannot the Community can also hold good for be approved, or at any rate not in a scheduled air services to and from community which recognizes the rule of law non-member countries. as its highest principle. Even a Council regulation which categorized certain modes of conduct as compatible with Article 86 would have to be assessed against the criterion of Article 86. Consequently, the train of ideas as to the merely partial appli­ cability of Article 85 which the Court 39. The Commission has expressed the view developed in its judgment of 6 April 1962 in that the principles set out in the judgment in Case 13/61 and took up again in its Joined Cases 209 to 213/84 on Article 85 of judgment of 30 April 1986 in Joined Cases the Treaty should also be applied to 209 to 213/84 cannot be applied to Article scheduled air services to and from 86, which is structured differently. non-member countries as regards Article 86, which would mean that Article 86 would be 16 — Judgment of 30 April 1974 in Case 155/73 Giuseppe Sacchi [1974] ECR 409, at p. 431. 15 — Judgment of 14 July 1981 in Case 171/80 Ziichner 17 — Judgment of 21 February 1973 in Case 6/72, cited above, v Bayerische Vereinsbank AG [1981] ECR 2021, at p. 2032. at p. 246 el seg.

'Upon application by the undertakings or associations of undertakings concerned, the Commission may certify that, on the basis of the facts in its possession, there are no 46. Another sector of the competition rules grounds under Article 85(1) or Article 86 of of the EEC Treaty has been constantly the Treaty for action on its part in respect applied in practice even though corre­ of an agreement, decision or concerted sponding implementing regulations have not practice.' been issued: the rules on State aids contained in Article 92 et seq. Although the Council has not issued the appropriate regu­ lations for the application of Articles 92 and 93 referred to in Article 94, Articles 92 and 93 have been applied by the Community institutions, and not only in relations 43. As far as air transport to and from between the Community institutions and the countries outside the Community is Member States but also in relation to concerned, Articles 89 and 155 of the EEC third-party recipients of aid or even their Treaty apply. Under those provisions the business partners, as can be seen from for Commission may, if it considers it instance the judgments of 10 July 1986 in necessary, deliver an opinion on whether a 18 Cases 234/84 and 40/85, which were particular tariff arrangement infringes concerned with the recovery of capital Article 86. subscribed to undertakings contrary to Community law. The rationale is that in a Community the activities of which include 'the institution of a system ensuring that competition in the common market is not 19 distorted' State aids distorting competition 44. Neither a certification under Article 3 cannot be tolerated, at least not 30 years of Regulation No 3975/87 nor an opinion after its establishment. delivered under Articles 155 and 89 of the Treaty is capable of binding the courts, 18 — Judgment of 10 July 1986 in Case 234/84 Kingdom of unlike a declaration of exemption under Belgium v Commission [1986] ECR 2263; judgment of 10 July 1986 in Case 40/85 Kingdom of Belgium v Article 85(3) of the Treaty. Even rules on Commission [1986] ECR 2321 this question with regard to air services to 19 — EEC Treaty, Article 3 (f)

3. The third question

52. According to the judgment of 30 April 1986 in Joined Cases 209 to 213/84, for the period in respect of which no implementing measure has been issued pursuant to Article 50. According to the grounds of the request for a preliminary ruling, in its third question 20 — Judgment of 30 April 1986 in Joined Cases 209 to 213/84, the Bundesgerichtshof essentially wishes to cited above; judgment of 1 October 1987 in Case 311/84 Vereniging van Vlaamse Reisbureaus v Social Dienst van know whether the approval of agreed tariffs de plaatselijke en gewestelijke Overheidsdiensten [1987] for scheduled flights by Member State auth­ ECR3801 .

orities is compatible with the second 21 — Judgment of 16 November 1977 in Case 13/77 GB-īnno-BM v Vereniging van der Kleinhandelaars in paragraph of Article 5 of the Treaty in Tabak [1977] ECR 2115, at p. 2146.

AHMED SAEED FLUGREISEN AND OTHERS v ZENTRALE ZUR BEKÄMPFUNG UNLAUTEREN WETTBEWERBS

53. Where tariffs were approved after 1 55. This finding leads me to the answer to January 1988 for international air services the second half of the Bundesgerichtshofs between airports in the Community, the third question. As soon as it is clear that a instruments adopted by the Council on 14 provision of domestic law infringes Article December 1987 must now be observed, in 5(2) of the Treaty it may no longer be particular the provisions of Directive applied by the national courts. This must 87/601/EEC on fares for scheduled air apply equally to any national legal measures services between Member States. Now, which are based on such a provision of under Article 4 of the directive scheduled domestic law. air fares are to be subject to approval by the aeronautical authorities of the Member States concerned. Under Article 2(a) 'scheduled air fares' means the prices to be paid in the applicable national currency for the carriage of passengers and baggage. Since therefore in each case airfares will as a rule have to be approved in two different currencies, in future Member States will be 56. In my estimation there seems to be no debarred from authorizing binding airfares need to apply Article 90(3) of the Treaty in in their own currency only. this case as, under Article 90(1), the general competition rules apply and according to the case-law which has become established in the mean time Article 90(2) is not capable 22 of direct effect. Article 90(3) merely

22 —: Judgment of 14 July 1971 in Case 10/71 Mimiiére Public of Luxembourg v Hein, nee Muller [1971] ECR 723, at p. 730, 54. The Commission has proposed judgment of 10 March 1983 in Case 172/82 Syndical extending the solution found for Articles 5, national des fabricants raffineuri d'huile de graissage v Groupement d'intérêt économique 'Inler-Huilei ' and Otberi 3(f), 40 and 85 of the Treaty also to the [1983] ECR 555, at p. 567

(i) if they relate to international air transport between airports in the Community,

(ii) if they relate to air transport to and from non-member countries and, in addition, it has been ruled or recorded in the form and according to the procedure laid down in Article 88 or Article 89(2) of the EEC Treaty that those tariffs are the result of agreements between under­ takings, decisions by associations of undertakings or concerted practices contrary to Article 85 of the EEC Treaty.

AHMED SAEED FLUGREISEN AND OTHERS v ZENTRALE ZUR BEKÄMPFUNG UNLAUTEREN WETTBEWERBS

(2) At the same time, charging only such tariffs for international scheduled flights between airports in the Community or to and from non-member countries may, where the conditions of Article 86 of the EEC Treaty are fulfilled, constitute an abuse of a dominant position within the common market; under Article 86 the charging of such tariffs for travel to and from non-member countries is prohibited even if there has been no ruling or recording made in the form and according to the procedure laid down in Article 88 or Article 89(2) of the EEC Treaty.

(3) In so far as approvals relate to scheduled airline tariffs which are contrary to Community law having regard to the answers to Questions 1 and 2, they constitute an infringement of the obligations incumbent upon the Member States under Article 5(2) of the EEC Treaty in conjunction with Articles 3(f), 85, 86 and 90, without the Commission having specifically to record that infringement pursuant to Anicie 90(3) of the Treaty.