T-66/89

JUDGMENT OF 9.7. 1992 — CASE T-66/89

8. National judicial practices, even on the at the national level, on the assumption supposition that they are common to all that their existence has been proved, also the Member States, cannot prevail in the extend to intra-Community trade. application of the competition rules set out in the Treaty.

10. Under Article 85(3) of the Treaty, a price maintenance system that restricts compe- 9. Where the refusal to grant an exemption tition within the common market cannot under Article 85(3) of the Treaty in qualify for exemption on the ground that respect of a net price system for books is it must continue to operate in order to not based on the fact that the condition produce beneficial effects inside a national regarding the promotion of technical or market. Such a situation would in itself economic progress is not satisfied, it is not contribute to the partitioning of the com- necessary for the court called upon to mon market and would consequently review the legality of that refusal to exam- tend to thwart the economic interpénétra- ine whether the benefits of such a system tion sought by the Treaty.

J U D G M E N T O F T H E C O U R T O F F I R S T I N S T A N C E (Second C h a m b e r ) 9 July 1992 *

Summary

The facts giving rise to the dispute II - 2001

* Language of the case: English.

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Substance II - 2011

The plea that there is no infringement of Article 85(1) of the Treaty II - 2012

The Decision II - 2012

(b) Plea alleging that the reasoning of the Decision concerning the assessment of the indis- pensability of the restrictions on competition arising from the NBA is incorrect II - 2022

— The broad objections II - 2024

(i) Disregard or misconstruction of the evidence produced II - 2024

(ii) Distinction between the national and the intra-Community effects of the NBA II - 2026

(iii) Parallels between the NBA and the 'Dutch books' case II - 2028

(iv) Absence of any proposed alternative II - 2029

(iv) The need for the standard conditions to be monitored and enforced by the PA II - 2037

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JUDGMENT O F 9.7. 1992 — CASE T-66/89

In Case T-66/89,

Publishers Association, whose head office is in London, represented by Jeremy Lever Q C , of Gray's Inn, Stephen Richards, Barrister, of Gray's Inn, and Robin Griffith, Solicitor of Messrs Clifford Chance, London, with an address for service in Luxembourg at the Chambers of Jean-Claude Wolter, 8 Rue Zithe,

applicant,

Registrar: H . J u n g ,

having regard to the written procedure and further to the hearing on 8 October 1991,

gives the following

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Judgment

4 The agreements, concluded in 1957 under the title ' N e t Book Agreements' (here- inafter 'the NBA'), lay down standard conditions for the sale of books at fixed prices, known as 'net books'. Under those standard conditions of sale, a 'net book' may not be sold, offered for sale or permitted to be sold to the public at less than the net published price. The exceptions to that prohibition (books in stock and second-hand books) are expressly governed by the standard conditions of sale,

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which also allow a 'net book' to be sold at a discount to such libraries, book agents and quantity buyers as have been previously authorized by the Association. The amount and conditions of such discount are laid down in the authorization.

s Those conditions apply to all sales to the public effected in the United Kingdom or Ireland by a wholesaler or retailer when the publisher publishing or distributing the book in question decides to market it at a net retail price. The standard con- ditions of sale do not, however, apply to sales made by a publisher directly to any non-trading client.

6 The agreements further provide for an enforcement mechanism. The undertakings concerned have appointed the Council of the PA to act as their agent in the col- lection of information concerning breaches of contract by booksellers and in gen- eral information about any infringement of the marketing conditions to which 'net books' are subject. The parties agree that they will enforce their contractual rights and their rights under the Restrictive Trade Practices Act 1956 and the Resale Prices Act 1976 (see below) if called upon to do so by the Council, subject to indemni- fication by the Association in respect of costs thereby incurred. In the agreement concluded between publishers who are not members of the Association, the mech- anism is different in that it makes no provision for indemnification by the Asso- ciation in the event of action against infringements.

n In relation to the application of the agreements, the Association published a so-called Code of Allowances concerning the sale of new, revised or cheap editions, books with reduced net prices and remainders. Furthermore, the Association estab- lished regulations for book clubs and rules for the annual national book sale.

i2 The Code of Allowances, published by the PA in the form of a memorandum, reflects the established general trade practice regarding allowances on 'net books'. Reductions, new editions, cheap editions and remainders are customarily announced beforehand by the publisher in the trade press. Reductions or other benefits, in cash or in kind, are frequently granted in accordance with the period during which the books have been held in stock. The Code is applied only in the home market.

i3 Special rules ('Book Club Regulations') apply to book club editions; they apply to book club operations within the United Kingdom. Under the regulations, publish- ers may grant special rights only to book clubs registered with the Association as having signed and agreed to the regulations. They include provisions as to the membership of book clubs, lay down conditions to be satisfied by book clubs in offering and selling books and impose certain restrictions on advertising. Surplus

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stock of a title may not be remaindered by a book club except with the consent of the licensing publisher. According to the PA, the Book Club Regulations apply solely in the United Kingdom.

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40 000, 80% of which are produced by members of the PA; 65% of the titles pub- lished are sold on the British market, the rest being exported; 2 5 % of the exports go to other Member States, 4.5% going to Ireland. As far as imports into Ireland are concerned, it is to be noted that 80% come from the United Kingdom and that those imports represent more than 50% of total book sales there.

is Another statistic undisputed as between the parties is that about 75% of books sold in the United Kingdom or exported by British publishers to Ireland are marketed as 'net books'.

The national court's appraisal of the validity of the NBA

i9 The Restrictive Practices Court (the competent body in the United Kingdom in competition matters) has on several occasions considered the validity of the N B A in the light of British legislation, giving a first favourable ruling in 1962. The court held with regard to the agreement concluded between the members of the PA that (i) the abolition of the NBA would deprive the public of special benefits or advan- tages because it would entail the raising of prices, the reduction of stock-holding book shops and a decline in the number and variety of published titles, (ii) the public would not suffer any appreciable harm from the maintenance of the NBA as compared with the disadvantages which would arise from its abolition, and (iii) the N B A was, accordingly, not contrary to the public interest.

23 In 1978 the PA supplied the Commission with a copy of the book entitled 'Books are Different' (938 pages), containing not only the ruling given by the Restrictive Practices Court in 1962 but also the written pleadings together with relevant doc- uments and a large part of the record made of the hearing.

24 In the same year the PA also provided the Commission with more recent evidence, consisting of two volumes of statistical and explanatory material, evidence given orally at a meeting organized by the Commission on 21 April 1978, and subsequent written statements by the President of the Booksellers Association of Great Britain and Ireland and the President of the PA.

25 In 1985 the PA supplied further evidence to the Commission at its request.

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26 O n 23 September 1986 the PA also notified to the Commission the amendments made in 1985 to some of the rules contained in the Book Club Regulations.

3i Having received the opinion of the Advisory Committee on Restrictive Practices and Dominant Positions, the Commission adopted on 12 December 1988 Decision 89/44/EEC (hereinafter 'the Decision'), published in OJ 1989 L 22, at page 12. The operative part of the Decision is as follows:

'Article 1

The following constitute an infringement of Article 85(1) of the E E C Treaty to the extent that they cover the book trade between Member States:

(a) the Net Book Agreements, 1957, concluded within the framework of the Pub- lishers Association between the undertakings listed in Annexes I and II to this Decision, together with:

(b) the decisions of the Publishers Association concerning discounts to libraries and book agents and quantity discounts;

(c) the so-called code of allowances established and published by the Publishers Association;

An exemption under Article 85(3) of the EEC Treaty for the agreements and imple- menting and related rules as mentioned in Article 1 is hereby refused.

Article 3

The Publishers Association shall take all steps necessary for bringing the infringe- ment as mentioned in Article 1 to an end forthwith.

Article 4

1. The Publishers Association shall inform the undertakings listed in Annexes I and II to this Decision, the book clubs established in the United Kingdom and the booksellers mentioned in the directory of booksellers, in writing of this decision and of the fact that the infringement has been brought to an end, stating the prac- tical effects which this will have on the terms under which trade in books is carried on between the United Kingdom and the other Member States.

2. The Publishers Association shall submit for approval by the Commission a pro- posal for a notice to that effect within two months of receipt of this Decision.

33 By a separate document lodged at the Registry of the Court of Justice, also on 27 February 1989, the applicant, acting pursuant to Articles 185 and 186 of the EEC Treaty and Article 83 of the Rules of Procedure of the Court of Justice in force at that time, applied for an interim measure suspending the operation of the Decision in its entirety until the Court of Justice had given judgment on the application in the main proceedings.

M By order of 13 June 1989 (Case 56/89 R [1989] ECR 1693), the President of the Court of Justice granted a suspension of the operation of Articles 2 to 4 of the Decision and dismissed the remainder of the application.

35 By order of 15 November 1989 the Court of Justice referred the case to the Court of First Instance, pursuant to Article 14 of the Council Decision of 24 October 1988 establishing a Court of First Instance of the European Communities.

36 The written procedure then followed the normal course before the Court of First Instance.

37 Upon hearing the report of the Judge Rapporteur, the Court of First Instance (Sec- ond Chamber) decided to open the oral procedure and, at the same time, to request the Commission to produce certain documents.

38 The parties presented oral argument and replied to questions from the Court at the hearing on 8 October 1991.

— order the Commission to pay the costs.

« The defendant contends that the Court of First Instance should:

— dismiss the application as unfounded;

— order the PA to pay the costs.

Substance

4i In its application the applicant first sets out its pleas and arguments directed against Article 2 of the Decision, concerning the Commission's refusal to grant an exemp- tion for the NBA under Article 85(3) of the EEC Treaty. The PA also concentrates most of its arguments on this issue. In the second place, the applicant presents pleas and arguments in support of its claim for the total, or alternatively partial, annul- ment of Article 1 of the Decision, which deals with the alleged infringement of Article 85(1).

43 Points 44 to 68 of the Decision contain a legal assessment, the conclusion of which is that the agreements and the implementing and related rules in dispute come under the prohibition of Article 85(1) of the Treaty.

44 Before reaching that conclusion the Decision first characterizes the parties to the agreements as undertakings, the PA as an association of undertakings, the NBA as an agreement between associations of undertakings and the related rules as a decision of an association of undertakings. The latter characterization is also applied to the Code of Allowances and the Directory of Booksellers.

45 Secondly, the Decision holds that the conditions governing the application of fixed resale prices, such as those laid down in the agreements and implementing rules, have as their object or effect the restriction of competition within the common market between the various economic operators successively engaged in the vari- ous stages of marketing a book. That is stated to be the case with regard to pub- lishers, who are almost totally prevented from adapting those conditions (and in particular the exceptions thereto) to the 'commercial potential' of the books con- cerned. The freedom for publishers to decide whether to make a book a 'net book'

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or not does not prevent the agreements and implementing rules from being restric- tive, because if a publisher decides to impose a fixed price for a book he is then bound to impose upon resellers almost wholly uniform conditions as to discounts — that is to say, the same conditions as other parties to the agreements are bound to impose. The same is also the case with booksellers, since the conditions in ques- tion curtail their freedom to depart from the fixed resale price by applying an indi- vidual discount policy in order to increase their sales. Thus resellers have less free- dom than they might otherwise have obtained from the individual publishers.

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central role to the Association, which ensures a more efficient surveillance of com- pliance with the agreements and related rules.

47 As regards the impact on competition of the agreements and their implementing and related rules, the Decision states that they have an appreciable effect, due to the adherence to them of many representatives of the United Kingdom publishing industry, whether members of the PA or not, with the result that a very large pro- portion of books sold in the United Kingdom and in Ireland are 'net books'. Indeed, the agreements and rules in question have enhanced (and still do) the trans- parency and certainty for a publisher of the market behaviour of other publishers and of booksellers as to the discounts which may be offered as an exception to the rule of the fixed price and as to the moment from which other editions of 'net books' may be offered on the market or from which the net price will be reduced or removed.

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should its claim regarding Article 2 of the Decision be dismissed, it would be of great practical importance to know what further measures would need to be adopted to ensure that the NBA ceased to 'cover the book trade between Member States'.

so The applicant argues that the assertion made in point 66 of the Decision, that 'the great majority of books imported into the United Kingdom and Ireland from other Member States, where those books were published, are also made net books within the meaning of the agreements' relates to a situation where a book has been pub- lished in another Member State and copies of that book are imported into the United Kingdom by a United Kingdom publisher or exclusive distributer for mar- keting in the United Kingdom. In that situation, the United Kingdom publisher or exclusive distributor is free to publish the book in the United Kingdom as a 'net book', in accordance with the conditions of the NBA, and in practice that option is frequently exercised. In the Association's view, the fact that publishers or exclu- sive importers may choose to apply the standard conditions of sale laid down by the NBA to books which have been imported from other Member States where they have been published does not support the conclusion that the NBA actually or potentially affects trade between Member States. It is only after the trade between Member States has taken place that a book may be made the subject of the NBA. There is no condition in the N B A that requires, either at the time when the book is imported or at all, that its sale should be governed by it. That feature, according to the applicant, distinguishes the present case from the Leclerc case (Case 229/83 Leclerc v Au blé Vert [1985] ECR 1), in which the rules in question required the compulsory setting of minimum prices for imported books on impor- tation.

52 With reference to the PA's specific criticism regarding point 66 of the Decision, the Commission states that once the 'publisher or exclusive distributor' has declared that a book published in another Member State is to be put on the market in the United Kingdom and Ireland as a 'net book', the NBA affects the conditions of any subsequent trade between Member States (particularly with Ireland) in regard to such a book. Secondly, the Commission further states that the application of the N B A to imported books constitutes, on the PA's own admission, 'an optional method of increasing sales that is open to a publisher'; if that claim is right, then the PA cannot at the same time deny the possibility that the application of that system may have an appreciable effect on the volume of trade between Member States. Thirdly, and more generally, the Commission contends that, whatever may be the effects of the N B A on book sales in the United Kingdom, the NBA must produce those effects for imported books as well as for books produced domesti- cally.

Appraisal of the Court

53 The Court notes, as a preliminary point, that both in its reply and at the hearing the applicant stated that it was withdrawing the Code of Allowances and the Direc- tory of Booksellers. That statement cannot alter the scope of the dispute, since, as the Commission rightly pointed out, the PA has neither notified the Commission of its decision to withdraw those two publications nor produced evidence of imple- mentation of that decision (see Case 35/83 BAT v Commission [1985] ECR 363, at paragraph 22).

56 In the present case, the objection raised by the applicant relates only to imports into the United Kingdom and Ireland from other Member States (point 66 of the Decision) whereas the Commission's assessment is based on a whole set of objec- tive factors of law or fact, set out above at paragraph 48 (points (a) to (d)). Those factors, the correctness and validity of which have not been challenged, concern exports and re-imports between the United Kingdom and the other Member States. As regards Ireland in particular, its imports of books from the United Kingdom amount, as already mentioned, to about 80% of total book imports. Around 7 5 % of the books exported to Ireland by British publishers are marketed as 'net books'. The fact that exports to Ireland represent a very small share of total book produc- tion in the United Kingdom, namely 1.2%, is irrelevant inasmuch as only the effects on the Irish market must be taken into account. O n that market, imports of books from the United Kingdom account for more than 50% of total sales. It should be noted that at the hearing the PA claimed that if the application of the N B A were to be confined to the British market alone, the system would not col- lapse but all the attendant disadvantages would be felt in Ireland. That statement by the applicant association corroborates the finding contained in the Decision as to the scale of the effects of the N B A scheme on the book market in Ireland.

57 It should be recalled in this regard that anti-competitive conduct confined to the territory of a single Member State is capable of having repercussions on patterns of trade and competition in the common market (see Case 322/81 Michelin v Com- mission [1983] ECR 3461, at page 3522, and Case 246/86 Belasco and Others v Commission [1989] ECR 2117, at page 2191). That being so, and in view of the other undisputed findings reproduced above, in particular at paragraph 48, the

60 The applicant relies on two pleas in challenging Article 2 of the Decision: first, it claims that an essential procedural requirement was infringed; second, that the rea- soning of the Decision was inadequate and defective, and, more generally, that the Commission misapplied Article 85(3) of the Treaty with regard to the indispens- ability of the restrictions imposed by the NBA and its related rules.

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(a) Plea alleging a discrepancy between the objections notified and those contained in the Decision

Arguments of the parties

ei The applicant claims that the Commission infringed an essential procedural requirement inasmuch as the arguments cited in the Decision for refusing an exemption were not those raised in the statement of objections. In the statement of objections the Commission had relied mainly on the assertion that the N B A elim- inated competition between booksellers in respect of a large share of total book sales (point 66), whereas in the Decision it argued that the N B A was not indis- pensable to the achievement of the benefits it sought.

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of the provisions for the purpose of the administrative proceedings, and claims that the point is confirmed in particular by the fact that, at the hearing, its counsel set out in detail the four arguments considered by the PA to establish the indispens- ability of the restrictions imposed by the NBA.

Appraisal of the Court

64 I t is clear f r o m Articles 6 a n d 19(1) of R e g u l a t i o n N o 17 read t o g e t h e r w i t h A r t i - cles 2 and 4 of R e g u l a t i o n N o 99 t h a t t h e C o m m i s s i o n ' s obligation t o i n f o r m the u n d e r t a k i n g s a n d associations of u n d e r t a k i n g s c o n c e r n e d of t h e objections w h i c h it raises against t h e m a n d t o u p h o l d i n its decisions o n l y the objections in respect of w h i c h t h o s e u n d e r t a k i n g s o r associations of u n d e r t a k i n g s have h a d the o p p o r t u - n i t y of expressing their views also exists w h e r e a decision is a d o p t e d following a r e q u e s t for t h e application of Article 85(3). N e v e r t h e l e s s , the C o m m i s s i o n ' s obli- g a t i o n t o i n f o r m an u n d e r t a k i n g of the objections it is raising against it a n d t o m a i n t a i n in its decision o n l y those objections essentially concerns the stating of t h e r e a s o n s w h i c h lead it t o a p p l y Article 85(1), either b y o r d e r i n g t h a t an infringement b e t e r m i n a t e d o r i m p o s i n g a fine u p o n the u n d e r t a k i n g s , o r b y refusing t o give t h e m negative clearance o r t h e benefit of p a r a g r a p h 3 of t h e same p r o v i s i o n (see Case 17/74 Transocean Marine Paint Association v Commission [1974] ECR 1063, at paragraphs 11 to 13).

67 Those points of the statement of objections read as follows:

'Finally, as to the condition that the agreements must be indispensable for realizing the improvements, [the] parties set out that without a common application of the Standard Conditions by publishers who choose to issue any particular book at a net price (...) there could be no guarantee that the booksellers would be protected, as they are in the case of net books, and the public would consequently suffer. [The] parties, however, did not specify and it is not clear to the Commission either, why the improvements claimed result from the application of the agreements and the related rules and regulations on (re-) imports and exports, nor why such applica- tion is indispensable to that end.'

68 In those circumstances it must be accepted that the Commission made it clear, in its statement of objections, that the PA was required to show that the restrictions laid down by the N B A and related rules were indispensable in so far as they con- cerned (re-)imports and (re-)exports. Thus the PA, which had the burden in the first place of submitting to the Commission all the evidence to substantiate the economic justification for the exemption sought (Joined Cases 43/82 and 63/82 VBVB and VBBB v Commission [1984] ECR 19 and in Remia v Commission, cited above), thereby enabling the Commission to conclude that the agreements in ques- tion met each of the four conditions laid down by Article 85(3) of the Treaty, had

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a proper opportunity for making known its views on the indispensability of the restrictions on competition arising from those agreements. That finding is borne out by the fact that the PA had the chance to give its views specifically on that point in its written observations in reply to the statement of objections and, at the sub- sequent hearing, to set out in detail the four arguments snowing, in its view, that the restrictions imposed by the NBA were indispensable.

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purported aims of the applicant association. Although referring to the aims pursued by the N B A scheme, namely to avoid the decline in stock levels which would result from shorter print runs and to prevent an increase in book prices and the disap- pearance of titles printed in short runs, the Commission takes no position on the question whether such aims are attained in practice and whether the distribution system is the one best suited to their attainment in the national context. The Decision emphasizes, however, that this case concerns the appraisal of a price-fixing system which, in covering exports to other Member States, in particular to Ireland, as well as to imports and re-imports from other Member States, including Ireland, precludes price competition resulting from intra-Community trade (point 75). The Decision also finds that, in the interests of achieving the aims mentioned above, the PA has established a collective system imposing the same price for any given book on all booksellers, so as to ensure that there is no price competition as to the same title (point 73, third paragraph). At that stage, it is apparent from the Decision that it has regard to the extent of the restrictions under the NBA system, as they are set out in points 50 to 59. In view of the nature of the restrictions under the NBA sys- tem and their impact on intra-Community trade, the Decision considers that the PA is required to demonstrate that the achievement of the aims of the agreements calls for a collective scheme rather than an individual vertical resale price mainte- nance system (point 71).

75 Moreover, it has been established in previous cases that, although under Article 190 of the Treaty the Commission is required to state the reasons for its decisions by setting out the elements of fact and law and the considerations which have prompted it to adopt a decision pursuant to the rules on competition, that article does not require the Commission to discuss all the matters of fact and of law which have been raised by the parties during the administrative proceedings. The state- ment of the reasons on which a decision adversely affecting a person is based must allow the Court to exercise its power of review as to its legality and must provide the person concerned with the information necessary to enable him to decide whether or not the decision is well founded (see IAZ and Others v Commission, at paragraph 37, Michelin v Commission, at paragraph 14, VBVB and VBBB v Com- mission, at paragraph 22, and Remia v Commission, at paragraph 26, all of which are cited above).

76 It is in the light of those principles, laid down in the case-law, that it must be determined whether or not the Decision is based on an incorrect material fact or vitiated by an error of law or a manifest error of assessment. In order to determine those questions, this Court considers it appropriate to examine first of all the broad objections formulated by the applicant, then to deal with the objection concerning the misstatement of the PA's arguments, and, thirdly and lastly, to appraise the legality of the reasons given for the Commission's replies to the four specific argu- ments put forward by the PA at the hearing.

78 The Commission does not deny that the PA had supplied a considerable body of evidence even before the statement of objections was issued. As regards the ques- tion whether the judgment of the national court was to be taken into account, the Commission contends that its independence in the exercise of its powers and the discharge of its duties under the Treaty would be undermined if the mere existence of a ruling of a national court or tribunal were to have the effect of binding it to the findings of fact contained therein, or, as the PA contends, of requiring it to explain and prove a 'relevant change of circumstances' subsequent to the date of that ruling. It points out that similar arguments were rejected by the Court of Jus- tice in its judgment in VBVB and VBBB v Commission (cited above, at paragraph 40). The Commission further contends that the judgment delivered by the Restric- tive Practices Court in 1962 does not even address the particular point at issue here, namely the justifiability of the NBA's restrictions as far as imports and exports between Member States are concerned. In so far as it did briefly consider the ques- tion of exports, the judgment had rejected the argument regarding the public inter- est, pleaded by the PA as justification for the restrictions laid down. Lastly, as to the other evidence provided, the Commission argues that it deals mainly with the application of the N B A merely to the domestic sales of books published in the United Kingdom.

79 As regards this objection, it should first be noted that, as is clear from point 43 of the Decision, the Commission did not ignore the ruling of the British court. H o w - ever, as the Commission rightly observed, the national court, which was of course giving judgment prior to the accession of the United Kingdom and Ireland to the European Communities, did not directly express any view as to the indispensabil- ity of the restrictions on competition within the common market arising from the NBA. In so far as that court did indirectly touch on the question of external trade, it found that the PA had not proved that the abolition of the NBA would lead to

so Following a remark made by the Commission in its defence, to the effect that the Decision does not cast doubt on the validity of the N B A scheme in the national context, the parties exchanged argument on the point whether it is possible to dis- tinguish between the beneficial effects of the application of the system in the domestic markets of the United Kingdom and Ireland, on the one hand, and its effects on trade within the Community, on the other. The PA maintains that the Commission's attempt to draw a distinction between the effects due to the appli- cation of the N B A to national sales and the effects on exports and imports consti- tutes an error of law. It submits that it has always maintained that the NBA, with its standard conditions of sale, secures benefits for all books which publishers choose to publish as 'net books' (whether produced nationally or imported and sold in the United Kingdom or Ireland) and that the application of that agreement is indispensable for the attainment of those benefits. The PA further argues that the evidence produced in the course of the administrative proceedings related to imports and exports as well as to national sales of books produced nationally.

si The Commission replies that the points raised by the PA in its reply relate to a question on which it did not take a position in the Decision and which does not arise in this case. The Commission explains that in its statement of defence it was seeking to draw attention to the fact that the PA drew no distinction between the

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84 As regards the applicant's argument that the N B A system would collapse if its application were confined to a national market, the Court finds this argument irrel- evant too. Under Article 85(3) of the Treaty, a price maintenance system that restricts competition within the common market cannot qualify for exemption on the ground that it must continue to operate in order to produce beneficial effects inside a national market. As the Court indicated above (at paragraph 57 of this

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judgment), such a situation would in itself contribute to the partitioning of the common market and would consequently tend to thwart the economic interpéné- tration sought by the Treaty. It should further be noted that the PA, which is an association consisting of publishers established in the United Kingdom, is not enti- tled to rely on any negative effects which might be felt on the Irish market, even though that market belongs to the same language area.

(iii) Parallels between the N B A and the 'Dutch books' case

85 The applicant complains that the Commission failed to consider the N B A on its own merits and that it limited its statement of the reasons for its decision to ref- erences to the decision which it had adopted in case IV/428 — VBBB/VBVB (Decision 82/123/EEC of 25 November 1981, OJ 1982 L 54, p. 36), in which the collective system of resale price maintenance for the sale of books was different. The drawing of parallels between the NBA and the 'Dutch books' case is regarded by the PA as a serious defect of reasoning, on account of the difference between the two agreements involved.

(iv) Absence of any proposed alternative

88 The applicant states that, although the Commission refers to the possibility of indi- vidual resale price maintenance as a less restrictive alternative to the NBA, it does not commit itself on the question whether it would permit such an alternative. The Commission is likewise totally silent, according to the applicant, on the question whether individual resale price maintenance could provide the same benefits as those arising from the NBA.

89 The Commission rejects this objection. It maintains that it was not the object of the Decision to give any ruling on distribution systems that had not been notified by the PA, such as individual resale price maintenance arrangements: its decision addressed only the issue whether, on the assumption that systems like the NBA did produce the beneficial effects attributed to them by those participating, such sys- tems needed to be collective in nature rather than individual.

90 The Court of First Instance considers the objection to be ill founded on two grounds. First, the Decision expresses no view as to whether individual resale price maintenance systems are compatible with the Community rules on competition but deals with the question whether, on the assumption that the NBA system affords the advantages which the PA says it does, such a system should be collective in nature rather than individual. Secondly, as the Court has already pointed out (at paragraph 74 above), the Commission was under no obligation to suggest to the applicant an alternative system affording the same advantages as the NBA.

93 The Court notes first of all, with regard to the applicant's arguments which are reproduced in point 71 of the Decision that, contrary to the PA's contention, the Decision does not state that the PA did not put forward arguments concerning the need for the application of a collective system. In this regard, the Decision contains

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the following passage: 'The arguments ... however concerned not so much the necessity of a common application of standard conditions in case of fixed book prices but much more the question whether fixed book prices as such are indis- pensable in order to attain their alleged objectives.' The Court considers, however, that it is clear from point 71 of the Decision that although the Commission con- sidered that the arguments put forward by the applicant concerned above all the question whether fixed prices for books were indispensable as such in order to achieve the objectives pursued by the PA, it did not in the least exclude the pos- sibility that some of the PA's arguments related to the need for a common appli- cation of standard conditions in a system of fixed prices for books. The complaint that the Decision, in point 71, altered the meaning of the PA's argument therefore lacks foundation in fact.

94 Secondly, as regards the statements reproduced in point 72 of the Decision and the applicant's argument based on the Commission's omission to mention in the Decision the introductory statement relating to the national court's ruling made by counsel for the PA at the hearing, the Court considers that such an omission can- not be regarded as significant. In any event, according to the case-law of the Court of Justice cited above (see paragraph 75), the Commission, which, moreover, took into consideration the judgment of the Restrictive Practices Court, was not obliged to discuss in its Decision all the points of fact and of law which had been raised by the PA during the administrative procedure.

96 At the hearing, the PA put forward four specific arguments to prove the indispens- ability of the agreements. The first argument, as initially put forward by counsel for the PA, was that in practice it is not possible for publishers individually to give notice of their standard conditions to each bookseller. It would be necessary to give such notice to each contracting party and, moreover, in the United Kingdom the giving of such notice would allow legal proceedings to be brought against a sub- buyer, that is to say a buyer who has no direct contractual relationship with the publisher, since the Resale Prices Act 1976 affords this right to publishers who have notified their conditions of sale to their sub-buyers. During the written and oral procedure before the Court, the applicant raised another aspect of this argument, namely the administrative burden which would fall on publishers if they had to draw up their own standard conditions of sale and then give notice of them to each bookseller. In performing those functions the organization set up by the N B A assumes a task which would otherwise be unmanageable for individual publishers.

98 The Court finds that the rejection in the Decision of that argument, as it was orig- inally cast, on the ground that it was irrelevant, is well founded. Although a com- mon system of giving notice may alleviate the administrative burden on publishers, that fact does not justify the establishment of a system which, as is pointed out in the Decision (point 78), in imposing uniform conditions of sale that restrict com- petition on the common market, goes beyond what is strictly necessary for imple- menting such a system. The practical convenience afforded by a common system of giving notice may not be allowed to justify the establishment of a common sys- tem of net prices. Moreover, in so far as the argument refers to the legal effects of the Resale Prices Act 1976, it must be observed that the view is rightly taken in the Decision that the applicant may not rely on the national legislation of a Member State in order to prove the indispensability of an agreement at the intra- Community level (see, most recently, Case T-30/89 Hilti v Commission [1991] ECR 11-1439).

99 As regards the other aspect of the argument, emphasizing the burden which would be placed on every publisher if he were individually obliged to draw up his own standard conditions, that point cannot be regarded as relevant either. As the Com- mission pointed out in its written observations, publishers could refer to standard conditions of sale proposed by their association in so far as, far from applying such conditions uniformly, they would adapt them to their commercial interests and to their own individual situation so that each trader preserves his decision-making autonomy.

103 The Commission, which first makes the point that it is normally for the party seek- ing the benefit of an exemption under Article 85(3) to submit arguments and evi- dence proving that its application satisfies the conditions laid down, states, with regard to stock-holding booksellers, that the evidence which it has does not sug- gest that the additional work involved would be excessive, having regard to the administrative infrastructure which those booksellers have. As the Fishwick Report confirms, twelve publishers account for two thirds of all national sales and for two thirds of all exports.

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104 As regards the various exceptional categories of sale, which are governed by special conditions, the Commission observes that while it is true that these conditions might vary between publishers, it is not apparent that the administrative burden, for those booksellers who effect significant volumes of such sales, would be unmanageable.

106 It must also be observed that the applicant's argument would be particularly valid, as the applicant indeed accepts, in so far as it refers to the uniform conditions gov- erning discounts, having regard to the fact that the retail price, whether under a common system or individual system of fixing prices, is almost always different for each title. Without its being necessary to rule on the legality, under the Commu- nity rules on competition, of a system of uniform conditions of discount, the Court should point out that the applicant has not in any event explained why publishers could not apply uniform conditions of discount, irrespective of the existence of any system, collective or individual, of imposed prices. Finally, it should be observed that the specific categories of buyers (book clubs, libraries, book agents, quantity buyers) which, under the system in question, are the only ones able to receive a discount, are too limited in number for the determination of the discounts granted to them to be such as to impose an unmanageable burden of work on booksellers.

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It follows from the reasons mentioned above that the Commission was entitled to consider the second specific argument put forward by the applicant to be unfounded.

(iii) Booksellers' confidence regarding their competitors' conduct

107 The PA's third argument concerns the confidence which the NBA gives booksell- ers as regards the conduct of their competitors. The applicant has stressed the importance for booksellers to be confident that their competitors will not buy or sell the same title at a price lower than the net price. Such confidence could not exist in an individual system of fixed prices because it would be impracticable for an individual publisher to monitor, let alone to enforce, strict adherence to his con- ditions by all the booksellers in the country.

m The Court observes that this argument is rejected in point 84 of the Decision as unconvincing on the ground that it 'comes down to the statement that the Asso- ciation considers that booksellers cannot have the same confidence vis-à-vis its individual members when they operate through individual resale price maintenance agreements as when they operate through a collective agreement. The Commission does not in any way understand on what basis the Association so distrusts the individual publishers' behaviour vis-à-vis booksellers ... even more so now that most publishers are members of the Association ...'.

in The Court considers that that reply is reasoned to the requisite legal standard since, under a collective agreement as well as under an individual agreement on net prices, it is the same person, the publisher, who will have the responsibility of granting the same conditions of sale to booksellers and enforcing those conditions upon retail sale. O n the assumption that a collective system of fixed prices may subjec- tively reinforce booksellers' confidence, this circumstance is not capable on its own of justifying an agreement which, by imposing uniform selling prices for books, excessively restricts the free play of competition on the common market. It must therefore be considered that the Commission's reply to the applicant's third argu- ment is not vitiated by any error of reasoning.

(iv) The need for the standard conditions to be monitored and enforced by the PA

m The applicant association considers that in practice only it is capable of monitoring and ensuring compliance with standard pricing conditions and observes that the Commission does not deny the correctness of its proposition but seeks merely to

us The Court considers that, as far as this specific argument of the PA is concerned, to the effect that an association acting for all publishers needs to be made respon­ sible for monitoring and enforcing standard conditions, the Commission was right to consider it not relevant on the ground that it did not explain the need for a col­ lective agreement on standard conditions of sale (point 85 of the Decision). With­ out there being any need to rule on the legality, under the Community rules on competition, of a system which makes an association responsible for monitoring the uniform application of standard conditions of sale, it must be pointed out that the applicant has not put forward any reason to show that such a monitoring sys­ tem could not be set up irrespective of the existence of an agreement, whether col­ lective or individual, fixing net prices. Moreover, the Commission was right to maintain that even under a collective agreement on fixed prices the monitoring of compliance with the terms of the agreement depends, above all, on complaints from booksellers or findings made by the sales representatives of the publishers con­ cerned (see paragraph 110 above).

ne It follows from all the foregoing considerations that the applicant has not estab­ lished that the restrictions of competition arising from the N B A did not go beyond what is strictly necessary and consequently that it is not justified in maintaining

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that the Commission was wrong to dismiss its application for an exemption in the contested decision (see, in particular, Case 258/78 Nungesser v Commission [1982] ECR 2015, paragraph 77, and Case 45/85 Verband der Sachversicherer v Commis- sion [1987] ECR 405, paragraph 58). Accordingly, it must be concluded that in the application of Article 85(3) of the Treaty the Commission did not rely on incorrect facts or commit any error of law; nor did it make any manifest error of assessment. This submission must therefore be dismissed.

JUDGMENT OF 9.7. 1992 — CASE T-66/89

T H E C O U R T O F FIRST INSTANCE (Second Chamber)

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs, including those incurred in the pro- ceedings before the Court of Justice for the adoption of interim measures.

Cruz Vilaça Barrington