C-27/87

ERAUW-JACQUERY v LA HESBIGNONNE

OPINION OF MR ADVOCATE GENERAL MISCHO delivered on 9 D e c e m b e r 1 9 8 7 *

Mr President, the agent, irrespective of the class of seed, Members of the Court, without the prior written authorization of the first-named; 1. Proceedings have been brought before the tribunal de commerce (Commercial Court), Liège, between Louis Erauw- Jacquery SPRL and La Hesbignonne, a (...) cooperative, concerning an 'agreement for the propagation of cereal seed' (hereinafter referred to as 'the Agreement') under the terms of which La Hesbignonne is auth- (i) not to sell certified seed of any of the orized to propagate and sell in Belgium species, varieties and classes in respect of species and varieties of cereals of which which the first-named is the breeder or for Erauw-Jacquery is the breeder or for which which it is the agent below the minimum it is the agent. Both undertakings are estab- selling prices imposed by the first-named'. lished in Belgium.

2. Article 2 of the Agreement includes the 3. The tribunal de commerce, Liège, asks following provisions: the Court whether paragraphs (a) and (i) of Article 2 fall within the scope of Article 85 'The second-named undertakes vis-à-vis the of the Treaty establishing the European first-named to propagate those species and Economic Community or of any other varieties of cereals with a view to sale, on provision of that Treaty. the following terms:

(a) to propagate in Belgium all the E2 basic seed or equivalent provided by the 4. Since Article 2 (f) of the Agreement is first-named and submit it for inspection to also significant from the point of view of the O N D A H in accordance with the regu- Community competition law it seems to me lations in force; Not to sell or assign E2 worthwhile also to comment on that basic seed or equivalents of those varieties provision, on the understanding, of course, to other growers or to any other persons that in the context of a request for a with the exception of the propagating preliminary ruling under Article 177, the grower and not to export it to another Court of Justice may not apply the Treaty country; to a specific case as that task falls within the exclusive jurisdiction of the national court trying the case. (...)

'It is therefore not correct to consider that breeders' rights are a species of commercial 11. Basic seed is to a certain extent or industrial property right with charac- comparable to a manufacturing process teristics of so special a nature as to require, protected by a patent, since certified seed of in relation to the competition rules, a the first and second generation intended for different treatment from other commercial sale to farmers for use in cereal production or industrial property rights' (paragraph 43). is produced from it. The breeder (or his agent) must therefore remain in a position to control the destination and the use of the 8. Finally, it should be recalled that such a basic seed; otherwise he would risk the de right, as a legal entity, does not possess facto loss of the exclusive rights granted to those elements of contract or concerted him in respect of the new varieties which he practice referred to in Article 85 (1) of the has developed. The Commission is right to Treaty, but the exercise of that right might point out that the propagation agreement is fall within the ambit of the prohibitions an agreement where the identity of the contained in the Treaty if it were to other party is essential. manifest itself as the subject, the means or the consequences of an agreement. 2

1 — Case 258/78 [1982] ECR 2015. 12. The situation of a breeder or his agent 2 — Judgment of 8 June 1982 in Case 258/78 Nungesser v therefore resembles in certain respects the Commission citea above, paragraph 28; judgment of 14 September 1982, in Case 144/81 Keurkoop v Nancy Kean Gifts [1982] ECR 2853, paragraphs 27 and 28; judgment of 3 — The expression 'basic seed' means seed which has been 22 June 1976 in Case 119/75 Terrapin v Terranova [1976] produced under the responsibility of the breeder according ECR 1039, paragraph 5; judgment of 8 June 1971 in Case to accepted practices for the maintenance of the variety 78/70 Deutsche Grammophon v Metro [1971] ECR 487, (Article 2 (1) (C) of Directive 66/402/EEC of 14 June paragraph 6. 1966).

Article 85 (1) of the Treaty does not preclude a provision prohibiting a grower 17. We are therefore concerned with a from selling, assigning or exporting basic whole network of agreements with identical seed placed at his disposal by the breeder or content and it is the effect of this cluster of his agent solely for the purpose of propa- agreements on competition in the sector gation. concerned and on trade between Member States which we must take into account. Commission Decision 77/66/EEC of 22 December 1976 relating to a proceeding II — The provisions imposing minimum under Article 85 of the EEC Treaty prices and prohibiting the exportation of (IV/24.510 —Gerofabriek, Official Journal other seed 1977 L 16, p. 8) constitutes an interesting precedent in this respect, although in that case the agreements also bound under- 14. Article 2 (i) of the Agreement requires takings established in other Member States. La Hesbignonne, the defendant in the main A case which is yet closer to the main proceedings, 'not to sell certified seed of proceedings was the subject of the judgment any species, varieties and classes in respect of the Court of 1 October 1987 (in Case of which the first-named (Erauw-Jacquery) 311/85 ASBL Vereniging van Vlaamse Reis- is the breeder or agent below the minimum bureaus v ASBL Sociale Dienst van de Plaat- selling price stipulated by the first-named. selijke and Gewestelijke Overheidsdiensten These minimum prices will be [1987] ECR 3801). communicated in writing . . . '.

15. La Hesbignonne's failure to comply 18. A — Let us now examine whether the with the minimum price as regards seed of object or effect of the minimum price Gerbei multi-row winter barley is at the provision was to prevent, restrict or distort origin of the litigation during which the competition within the common market.

21. As regards horizontal agreements, the 24. Finally, it must be stressed that the Court has stated that a system of imposed prices imposed are applicable to certified selling prices is clearly contrary to that seeds of all species, varieties and classes in provision. 5 respect of which Erauw-Jacquery is the breeder or agent. Consequently the provision covers even seed other than seed which La Hesbignonne propagates under its contract with Erauw-Jacquery. 22. Although Commission Regulation (EEC) N o 2349/84 of 23 July 1984 on the application of Article 85 (3) of the Treaty to certain categories of patent licensing 25. It may therefore be concluded that the agreements (Official Journal 1984, L 219, p. object of a minimum price provision in an 15) does not apply to plant breeders' rights, agreement which is one of a cluster of identical agreements concluded by the same 4 — Case 56/65 [1966] ECR 235. breeder or agent of foreign breeders and 5 — Judgment of 17 October 1972 in Case 8/72 Vereeniging van Cementhandelaren v Commission [1972] ECR 977, which is applicable even to seed not prop- paragraph 19; judgment of 26 November 1975 in Case agated under that agreement is to restrict 73/74 Papier peints v Commission [1975] ECR 1491, paragraph 10. competition.

ERAUW-JACQUERY v LA HESBIGNONNE

30. B — In order to fall within the prohibition set out in Article 85 (1), the 28. However, it is not certain that that agreements must not only restrict compe- provision necessarily falls within the tition but must at the same time be capable prohibition contained in Article 85 (1) of affecting trade between Member States. inasmuch as it prohibits La Hesbignonne from directly exporting the seeds in question. I would point out that in Raymond-Nagoya decision of 9 June 1972 31. In the abovementioned judgment in (IV/26.813—Journal Officiel L 143 of 23 Société technique minière the Court set out June 1972, p. 39) the Commission the following relevant criteria: considered that in view in particular of the characteristics of the products in question the fact that a licensee was prohibited from 'it must be possible to foresee with a exporting those products to Member States sufficient degree of probability on the basis of the EEC could not have a significant of a set of objective factors of law or fact effect on competition within the common that the agreement in question may have an market. In any event, it does not seem to me influence, direct or indirect, actual or to be possible to adopt a position in potential, on the pattern of trade between proceedings brought under Article 177 on Member States [such as to impede] the real- the compatibility of such a clause with ization of the single market between Article 85 (1) in the absence of sufficient Member States. In this respect it is necessary information on the characteristics of the to consider in particular whether the product and the market in question. agreement is capable of bringing about a

32. It remains to be seen whether the 34. It may be considered in this case that minimum prices clause is, for its part, seed for propagation is an intermediate capable of affecting trade between Member product and seed for consumption (in this States. In the judgment of 17 October 1972 case barley) is a finished product which will, (Case 8/72 Vereeniging van Cementhan- very probably, be exported from Belgium. deUren v Commission [1972] ECR 977, at paragraph 29) and the judgment of 26 November 1975 (Case 73/74, Papiers peints v Commission [1975] ECR 1491, paragraph 35. As regards the intermediate product, we 25 et seq.) the Court ruled that have seen that La Hesbignonne had to undertake not to export seed of varieties in respect of which Erauw-Jacquery was the 'the fact that a price-fixing agreement only breeder or agent, irrespective of its class, covers the marketing of products in a single without authorization. However, it might Member State does not rule out the possi- sell such seed in Belgium to a trader who bility that trade between Member States had the intention, whether disclosed or may be affected'. covert, to export the seed to another Member State. (I have in mind here the case Admittedly, in those cases horizontal of a contract of sale concluded in Belgium agreements between producers were through the agreement of the parties on involved but it seems to me that in this case the price and the subject-matter of the the minimum price system applied by contract.) In such an eventuality, the Erauw-Jacquery" s licensees taken as a whole product might perhaps be exported, but not equates in practice to such a horizontal at less than the minimum price. However, agreement even though the network of the level of that price might make such an agreements also includes a vertical element. operation unappealing, and hence intra- Community trade would be affected.

37. Is it also necessary to show that the restriction on competition and the effect on 41. In the light of the features of the main trade between Member States may be proceedings, the second approach seems to described as appreciable? It is plain from the me the more appropriate. However, the judgment requesting the preliminary ruling Court may supply the national court with that it is chiefly those points which have guidance to help it carry out its task. exercised the tribunal de commerce, Liège.

OPINION OF MR MISCHO —CASE 27/87

45. The situation is less clear, as regards the there a need to import seed? If there is such minimum prices provision. It seems to me a need, then may identical seed or seed that certain facts must be clarified before similar to that which is the subject-matter of the main proceedings can be resolved. the agreements concluded by Erauw- Jacquery be offered for sale in Belgium at prices lower than those laid down in the contested agreements? Is Belgium, on the contrary, self-sufficient or a net exporter of 46. The agreements in question do not seed? For what percentage of Belgian seed contain any provision prohibiting the production do Erauw-Jacquery and all its importation of seed for propagation. Does licensees account? What is the situation in Erauw-Jacquery none the less use other those respects as regards barley seed? Does means to make such imports impossible, as barley seed constitute a separate market? La Hesbignonne maintains? Would Belgium's potential output enable it to become an exporter of barley or to increase its exports of barley in the absence of a network of agreements imposing minimum prices for seed? There can be no 47. Is Belgian domestic production doubt that only the national court can shed sufficient to meet the country's needs or is any light on these questions.

Conclusion

48. O n the basis of the foregoing observations I propose that the Court should give the following answer to the tribunal de commerce, Liège:

'(1) Article 85 (1) of the Treaty does not preclude a provision prohibiting a grower from selling, assigning or exporting basic seed placed at his disposal by the breeder or his agent solely for the purposes of propagation.