T-5/93

represented by Jean-Claude Fourgoux, of the Paris and Brussels Bars, with an address for service in Luxembourg at the Chambers of Pierrot Schiltz, 4 Rue Beatrix de Bourbon,

applicants,

supported by

Syndicat des Exploitants de Lieux de Loisirs (SELL), an association governed by the French Code du Travail, whose head office is in Paris, represented by

* Language of the case: French.

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APPLICATION for the annulment of the Commission Decision of 12 November 1992 rejecting the applications made by the applicants under Article 3(2) of Coun­ cil Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-62, p. 87), concerning the conduct of the Société des Auteurs, Compositeurs et Editeurs de Musique,

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Second Chamber),

composed of: J. L. Cruz Vilaça, President of the Chamber, C. P. Briët, A. Kalogeropoulos, D . P. M. Barrington and A. Saggio, Judges,

Registrar: H . Jung,

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— the societies which manage copyright in the various Member States share the market amongst themselves by concluding reciprocal representation contracts under which copyright societies are prohibited from dealing directly with users established on the territory of another Member State;

— the royalty of 8.25% of turnover charged by SACEM is excessive by compari­ son with the rates of royalty paid by discothèques in the other Member States;

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that rate, which the applicants claim is abusive and discriminatory, is not used to pay the management societies represented, in particular foreign societies, but accrues exclusively to SACEM, which passes on derisory sums to those whom it represents;

— SACEM refuses to allow use of its foreign repertoire alone, every user being required to acquire its entire repertoire, both French and foreign.

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charged in other Member States, the rates being compared on a consistent basis. That would not be the case if the copyright-management society in question were able to justify such a difference by reference to objective and relevant dissimi­ larities between copyright management in the Member State concerned and copyright management in the other Member States.'

5 Following those judgments, the Commission resumed its investigations, more par­ ticularly with regard to the differences in the levels of royalties charged by the vari­ ous copyright-management societies in the Community. With a view to establish­ ing a consistent basis of comparison, it devised five notional standard categories of discothèque. It then sent requests for information under Article 11 of Regulation No 17 to the copyright-management societies in the various Member States regard­ ing the royalties that would be payable by those different types of discothèque on the basis of the tariffs applied by them before and after the abovementioned judg­ ments of the Court of Justice.

9 The Commission states inter alia, in the part of its letter of 20 January 1992 en­ titled 'Legal Assessment', that 'at the present stage, the investigation provides no basis for concluding that the conditions for the application of Article 86 are fulfilled with regard to the level of the tariffs at present applied by SACEM'. The part of the letter of 20 January 1992 entitled 'Conclusions' reads as follows:

'In conclusion, pursuant to Article 6 of Commission Regulation No 17 No 99/63, I have the honour hereby to inform you that, having regard to the principles of subsidiarity and decentralization and in view of the fact that, because the practices criticized in your complaint are essentially national, there is no Community inter­ est involved and the fact that the matter is at present before a number of French courts, the Commission does not consider that the information contained in your complaint is such as to enable it to respond favourably thereto.

The Commission will forward to the French judicial and administrative authorities which have asked it to do so a copy of the report prepared by its staff comparing the rates of royalties charged in the Community and considering the question of discrimination between different users within the French market.'

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10 On 20 March 1992, counsel for the the applicants submitted observations in response to the communication of 20 January 1992, in which he asked the Com­ mission to pursue the investigation and to send a statement of objections to SACEM.

13 In paragraphs 6 to 13 of its letter the Commission responds to the main arguments put forward by the applicants in their observations on the letter of 20 January 1992. After stating that the matter is not of any particular importance to the functioning of the common market and therefore that there is no sufficient Community inter­ est in further investigation of it, the Commission points out, referring in particular to the judgment of the Court of First Instance in Case T-24/90 Automec v Com- mission [1992] ECR II-2223 (hereinafter 'Automec II'), paragraph 88, that the com­ mencement of proceedings before national courts may be a factor to be taken into consideration in order to justify a decision not to proceed with a case. In response to the applicants' argument that the position taken by the Commission amounts to inappropriate recourse to the principle of subsidiarity, the Commission emphasizes that the course followed represents not the abandonment of all and any official action but rather a choice, as between the competent authorities, of those which are best placed to deal with the issues involved. It states that only the national courts have jurisdiction to award damages and that, in its report of 7 November 1991, it provided them with the information needed to compare the tariffs of the various national copyright-management societies. In that regard, the Commission considers that the use of that report by the national courts as evidence is not restricted by its obligation to safeguard business secrets since the requests which it sent to the various national copyright-management societies were concerned not

Procedure before the Court and forms of order sought

15 Those were the circumstances in which, by application received at the Registry of the Court of First Instance on 11 January 1993, the applicants brought the present action.

16 By order of the President of the Second Chamber of the Court of First Instance of 20 May 1993, Syndicat des Exploitants de Lieux de Loisirs (SELL) was granted leave to intervene in support of the applicants.

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17 The written procedure followed the normal course and was concluded on 4 August 1993.

— dismiss the application;

— order the applicants to pay the costs.

22 The intervener claims that the Court should:

— annul the Commission decision.

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25 The applicants claim that the contested decision does not state the reasons for which it rejects the allegation of concertation between the collective copyright- management societies in the various Member States. The applicants consider that the reasons given for the rejection of the other allegations contained in their com­ plaints are contradictory. They claim that the statement made by the Commission in its communication of 20 January 1992 under Article 6 of Regulation No 99/63 (hereinafter 'the Article 6 letter') to the effect that 'at the present stage, the inves­ tigation provides no basis for concluding that the conditions for the application of Article 86 are fulfilled with regard to the level of the tariffs at present applied by SACEM' conflicts, first, with the terms of the contested decision which, referring to that letter, states that the Commission does not intend adopting a position regarding the points of law raised and, secondly, with the content of a letter of 17 December 1992, addressed to SACEM, in which the Commission stated that 'it

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wishes ... to leave to the national courts to which the complaint is referred the widest possible freedom of appraisal'. There is also a contradiction, they maintain, in paragraph 9 of the contested decision, between the statement that the Com­ mission made a comparison of the tariffs applied by the various copyright- management societies in the Community and the statement that the requests for information sent to those societies were concerned not with the level of the tariffs themselves but with the practical results of applying them, based on a comparison of five standard examples of discotheques.

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Findings of the Court

29 It has been consistently held that the statement of reasons on which a decision adversely affecting a person is based must, first, be such as to enable the person concerned to ascertain the matters justifying the measure adopted so that, if nec­ essary, he can defend his rights and verify whether the decision is well founded and, secondly, enable the Community judicature to exercise its power of review as to the legality of the decision (judgments of the Court of Justice in La Cinq, cited above, paragraph 42, and Case T-7/92 Asia Motor France and Others v Commis- sion [1993] ECR II-669, paragraph 30). In that connection, the Commission is not obliged, in stating the reasons for the decisions which it takes to ensure the appli­ cation of the competition rules, to adopt a position on all the arguments relied on by the persons concerned but need only set out the facts and legal considerations which are of decisive importance in the context of the decision (judgments of the Court of Justice in Case 55/69 Cassella v Commission [1972] ECR 887, paragraph 22, Case 56/69 Hoechst v Commission [1972] ECR 927, paragraph 22, VBVB and VBBB, cited above, paragraph 22, and of the Court of First Instance in La Cinq, cited above, paragraph 41, and Asia Motor France, cited above, paragraph 31).

33 It should be observed that the decision of 12 November 1992 essentially rejects the complaint on the grounds given in the Article 6 letter. Paragraph 5 of the contested decision states 'The Commission considers that, for the reasons set out in its letter of 20 January 1992, there are insufficient grounds for acting on your application for a finding of an infringement. The observations submitted by BEMIM and by you on 20 March 1992 contain no new factual or legal information such as to change the Commission's judgment and conclusions as set out in its letter of 20 January 1992'.

34 The Court considers, therefore, that in order to establish whether the contested decision contains a sufficient statement of the reasons on which it is based, both the grounds mentioned in the letter of 12 November 1992 and those mentioned in the Article 6 letter must be considered.

35 The Court finds that neither the Article 6 letter nor the report of 7 November 1991 annexed thereto contains anything to indicate that the Commission examined the applicants' allegation of an infringement of Article 85(1); on the contrary, they show that the Commission considered only the allegations concerning an

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36 In its letter of 12 November 1992 the Commission reiterates, in paragraph 6, the finding already made in its Article 6 letter that 'the centre of gravity of the alleged infringement is in France; its effects in the other Member States can be only very limited; consequently this case is not of particular importance to the functioning of the common market; the Community interest does not therefore require the Com­ mission to deal with these complaints but requires that they be referred to the French national courts and administrative authorities'. In order to justify the refer­ ral to the national courts, it alludes, in paragraph 7 of the decision, to the Opinion of Judge Edward, acting as Advocate General, in the Automec II and Asia Motor France cases cited above, and to the judgment in Automec II. It then considers the applicants' observations in response to its Article 6 letter, before concluding that they are not such as to undermine its finding in paragraph 6 of the contested de­ cision (paragraphs 8 to 13).

37 The Court considers that paragraph 6 of the letter of 12 November 1992, which contains the essential reasons for the final rejection of the complaint, cannot reas­ onably be said to deal with the applicants' allegation as to the existence of a

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restrictive agreement between the copyright-management societies in the various Member States. Indeed, it is only in the light of the allegations in the complaint concerning infringement of Article 86 of the EC Treaty — in particular the abusive and discriminatory nature of the level of the royalties charged by SACEM and SACEM's refusal to grant access to its foreign repertoire alone — that any reason­ able meaning can be attributed to the Commission's finding that the centre of grav­ ity of the infringement is in France.

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authorities the power to apply the Community competition rules, only the latter authorities have the right to award damages. Moreover, it should be borne in mind that no views expressed by the Commission regarding that agreement can in any way limit the freedom of appraisal of the national courts.'

39 The Court considers that paragraphs 12 and 13 of the contested decision contain the reasons for the rejection of two allegations made by the applicants in their observations on the Article 6 letter. Those allegations concerned the existence of a restrictive agreement concluded between, on the one hand, the national copyright- management societies represented within GESAC with a view to standardizing their royalties at the highest possible rate and, on the other, SACEM and certain French syndicates of discothèque operators. The Court considers that paragraphs 12 and 13 of the contested decision do not, however, contain any statement of the reasons for which the part of the applicants's complaint alleging partitioning of the market was rejected.

40 In those circumstances, the statement of the reasons for the contested decision does not apprise the applicants of the grounds for rejecting their complaints in so far as the latter was concerned with an alleged partitioning of the market as a result of the reciprocal representation contracts concluded between the copyright- management societies in the various Member States. It follows that, on this point, the Commission did not comply with its obligation under Article 190 of the Treaty to state the reasons for its decision. The first limb of the present plea in law is therefore well founded.

44 As regards the existence, alleged by the applicants, of contradictions between the grounds of the Article 6 letter and those of the contested decision, the Court finds that it is apparent from the part of the Article 6 letter headed 'Conclusions' (see paragraph 9 above) that the Commission was minded to reject the complaints received by it on the sole ground that they did not disclose a sufficient Commu­ nity interest and that that insufficiency of interest derived, first, from the essentially national effect of the practices criticized and, secondly, from the fact that the mat­ ter was pending before a number of French courts. The finding in the Article 6 let­ ter that 'at the present stage, the investigation provides no basis for concluding that the conditions for the application of Article 86 are fulfilled with regard to the level of the tariffs at present applied by SACEM' does not therefore constitute a ground on which the decision to reject the complaints is based.

45 Similarly, it is clear from paragraphs 12 to 14 of the letter of 12 November 1992, summarized above, that the final decision to reject the complaints was also based on the sole ground of lack of a sufficient Community interest in further investi­ gation of the case, resulting, first, from the limited effects that the alleged infringe­ ments were capable of producing in the other Member States and, secondly, from

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the fact that proceedings had been brought before several national courts and the French Conseil de la Concurrence (Competition Council) raising the same issues as the complaints.

The plea in law alleging an error of law and a manifest error of appraisal

Summary of the parties' arguments

so The applicants consider that the contested decision contains an error of law and manifest errors of appraisal such as to render it void.

51 First, the applicants consider that the Commission committed an error of law in rejecting their complaints for lack of a Community interest. They maintain that, by virtue of the judgment in Automec II, the Commission is entitled to take account of the Community interest displayed by a case only in order to determine the order of priority to be adopted by its staff in dealing with the complaint, not to justify rejection of the complaint.

52 Secondly, the applicants submit that the Commission committed a manifest error of appraisal in invoking the principle of subsidiarity to justify referring the com­ plaints to the national courts, when it had in its possession all the information which it needed to enable it to enable it to make a determination regarding the contested practices.

53 Thirdly, the applicants, who consider, with respect to their allegation of sharing of the market and the resultant total partitioning of it, that the Commission commit­ ted a manifest error of appraisal in stating, in paragraph 6 of the contested de­ cision, that the alleged infringements mainly concerned France and had only very limited effects in the other Member States, submit that the Commission, in any event, committed a manifest error of appraisal in evaluating the Community inter­ est in the matter. They consider that in the present case the Commission was not entitled, in undertaking that evaluation, to rely on the fact that proceedings had been brought before several national courts in relation to the legal issues raised in their complaints. In that connection, they emphasize that in Automec II there was

55 The Commission also rejects the argument that it can take account of the fact that cases have been brought before national courts as a relevant factor in evaluating the Community interest in further investigation of a case only where a single action is pending between the same parties. As regards the allegation that the French courts are not capable of dealing with that litigation, the Commission points out that it does not have exclusive powers to apply Articles 85(1) and 86, provisions which directly confer on individuals rights which the national courts must safeguard. In its view, the risk of discrepancies between court decisions on the application of those articles of the Treaty is inherent in the right of individuals to rely on those provisions before the national courts. It adds that it is for the superior courts of the Member States to ensure unity and consistency of the case-law on the pro­ visions concerned, if necessary by seeking preliminary rulings from the Court of Justice under Article 177 of the EC Treaty.

56 In response to the applicants' criticism of the method adopted for comparing tar­ iffs, the Commission states that it included a detailed explanation of the choice of that method in its report, which the Court implicitly accepted in its judgments in

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Tournier and Lucazeau, and that the applicants themselves conceded that the report was conducive to recognition of the alleged infringements.

The findings of the Court

59 It must be borne in mind at the outset that it has been consistently held by the Court of Justice and the Court of First Instance that Articles 85(1) and 86 of the Treaty produce direct effects in relations between individuals and create direct rights for individuals which the national courts must safeguard (judgments of the Court of Justice in Case 127/73 BRT v SABAM [1974] ECR 51, paragraph 16, Case 37/79 Lauder v Marty [1980] ECR 2481, paragraph 13, Case C-234/89 Delimitis v Henninger Bräu [1991] ECR 1-935, paragraph 45, and of the Court of First Instance in Tetra-Pak, cited above, paragraph 42). In view of the division of that power between the Commission and the national courts and of the resulting pro­ tection available to individuals before the national courts, it has been consistently held by the Court of Justice and the Court of First Instance that Article 3 of Regu­ lation No 17 does not confer upon a person who lodges an application under that article the right to obtain from the Commission a decision, within the meaning of Article 189 of the EC Treaty, regarding the existence or otherwise of an

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infringement of Article 85 or Article 86 of the Treaty or of both (judgment of the Court of Justice in Case 125/78 GEMA v Commission [1979] ECR 3173, paragraph 17, and judgments of Court of First Instance in Rendo and Others v Commission, cited above, paragraph 98, and Automec II, cited above, paragraphs 75 and 76). The position is different only if the complaint falls within the exclusive purview of the Commission, as in the case of the withdrawal of an exemption granted under Article 85(3) of the Treaty (judgments in Automec II, paragraph 75, and Rendo v Commission, paragraph 99).

61 As regards the second limb, alleging that the Commission committed a manifest error of appraisal in relying on the principle of subsidiarity in order to justify refer­ ral of the complaint to the national courts, the Court finds that it is apparent from paragraphs 6 to 8 of the contested decision that the Commission based its rejection of the applicants' complaints not on the principle of subsidiarity but solely on the ground of lack of a sufficient Community interest. The Court therefore considers that the applicants are seeking, by tins limb of their plea in law, to show that the contested decision is unlawful because the Commission, in the circumstances of the present case, should, instead of referring the case to the national courts, have taken a decision to the effect that SACEM's tariff practices constituted an infringement of Article 86 of the Treaty. However, it is apparent from settled case-law, as cited above in paragraph 59, that the applicants had no right to obtain such a decision from the Commission, even if the latter had become persuaded that the practices concerned constituted an infringement of Article 86 of the Treaty. It follows that this limb of the plea must also be rejected.

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63 The Court finds that , in paragraphs 6 to 8 of the contested decision, the Commis­ sion bases its view that there was not a sufficient Community interest on , first, the limited nature of the effects that the alleged infringements would have in Member States other than France and, secondly, the fact that cases raising the same issues as the complaints were pending before several French courts and the French Conseil de la Concurrence .

64 Since it is common ground, first, that the applicants do not contest the essentially national effect of the practices criticized in their complaints as constituting infringe­ ments of Article 86 of the Treaty and, secondly, that several French courts, in pro­ ceedings between SACEM and the applicants, and the French Conseil de la Con­ currence have been called on to consider whether those practices are in conformity with the competition provisions of the Treaty, it is necessary to consider whether,

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in the present case, the Commission, on the basis of that factual information, has committed a manifest error of appraisal regarding the Community interest in fur­ ther investigation of the case.

65 The Court considers that where the effects of the infringements alleged in a com­ plaint are essentially confined to the territory of one Member State and where pro­ ceedings have been brought before the courts and competent administrative auth­ orities of that Member State by the complainant against the body against which the complaint was made, the Commission is entitled to reject the complaint through lack of any sufficient Community interest in further investigation of the case, pro­ vided however that the rights of the complainant or of its members can be ade­ quately safeguarded, in particular by the national courts (Automec II, paragraphs 89 to 96).

69 In the present case, with regard to the allegation that the rate of royalties charged by SACEM is abusive, the Court notes that the Commission sent to the copyright- management societies of the various Member States requests for information under Article 11 of Regulation No 17 and that it thereafter drew up a report dated 7 November 1991 in which it compared, on a uniform basis, the levels of royalties charged by the copyright-management societies concerned. The Court observes that the only individual indications concerning the copyright-management so­ cieties in the Member States which were included in the report, in particular the level of royalties charged by those societies, constitute information which is in the public domain. In those circumstances, the Court considers that there is nothing in the documents before it to show that the disclosure of that report to the national courts and the use of it by them are restricted by requirements concerning observance of the rights of the defence and of business secrets.

70 The Court considers, having regard to the operative part of the judgments in Tournier and Lucazeau, that in view of the factual information set out in the report of 7 November 1991, which contains a comparison on a uniform basis of the levels of royalties charged by copyright-management societies in the various Member States, the French courts are certainly in a position to determine whether the level of royalties charged by SACEM is such that it constitutes an abuse of a dominant position within the meaning of Article 86 of the Treaty.

74 The Court considers, in view of the foregoing, that the applicants have adduced no specific evidence from which it might be inferred that their rights cannot be satis­ factorily safeguarded by the French courts. In the circumstances of this case, the Commission could therefore properly reject the applicants's complaint on the ground of lack of a Community interest, solely because it had determined that the centre of gravity of the alleged infringements was in France and that the matter had already been brought before the French courts. It follows that, without its being necessary in this case to consider whether the referral of the matter to the French Conseil de Concurrence would in itself have been a sufficient reason for the Com­ mission to reject the complaint, the third limb of the plea, alleging a manifest error of appraisal in the evaluation of the Community interest involved, is unfounded.

75 It follows from the foregoing that the Court's examination of the contested de­ cision has disclosed neither an error of law nor any manifest errors of appraisal. The present plea in law must therefore be rejected.

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The plea in law as to infringement of various general principles of Community law

76 The applicants claim that, by referring the case to the national courts after 14 years of investigation during which it has never raised the issue of lack of a sufficient Community interest, the Commission infringed the principle of the protection of legitimate expectations. They assert that, by acting as it did, the Commission encouraged them to entertain a legitimate expectation that it would itself deal with the issues of law raised in their complaints.

80 It follows that the argument as to breach of the principle of the protection of legit­ imate expectations must be rejected.

81 As regards the claim that, in view of the divergent national case-law on Articles 85 and 86, the Commission breached the principle of legal certainty and its duty of sincere cooperation with the national courts by refusing to adopt a decision, the Court considers that the upshot of that argument is that the Commission is under an obligation, even in areas in which its powers are not exclusive, to adopt a de­ cision on alleged infringements in order to ensure uniformity of national decisions on the application of Community competition law. However, that view is not only contrary to the settled case-law cited above in paragraph 78, according to which the Commission is not obliged to adopt a decision as to the existence or otherwise of infringements alleged in a complaint but is also based on a misconception as to the division of responsibility between the Commission and the national courts. It falls first to the national courts, which to that end may seek preliminary rulings from the Court of Justice under Article 177 of the Treaty, to ensure the uniform application of Community law.

82 It follows that that argument must also be rejected.

83 As regards the alleged breach of the principle of sound administration, the Court considers that that argument, as formulated by the applicants, does not enable it to

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85 The applicants consider that, by the manner in which it dealt with their complaints, the Commission misused its powers. They criticize, from the procedural point of view, the length of the investigation and the inadequacy of the investigative meas­ ures undertaken. They consider that the Commission deliberately delayed adopt­ ing a decision in order to maintain the uncertainty as to the anti-competitive nature of SACEM's practices. The applicants also claim that the Commission possessed sufficient evidence to make a determination regarding SACEM's practices in the light of Articles 85 and 86 of the Treaty but, as a result of political pressure, decided not to do so. To demonstrate such pressure, the applicants draw the attention of the Court to certain statements made by an official in the Directorate-General for the Internal Market (DG III) and by a representative of SACEM at a conference on copyright held in Madrid on 16 and 17 March 1992.

86 The Commission observes that the Court of Justice and the Court of First Instance have consistently held that an allegation of misuse of powers can be considered

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only if the applicant puts forward objective, relevant and consistent factors such as to demonstrate its occurrence. In the present case, the Commission considers that the applicants have merely made vague allegations and have adduced no specific evidence to support the conclusion that the aim which it actually pursued was to avoid application of the competition rules to SACEM. Moreover, the criticism of the Commission is hardly appropriate, in view of its conduct throughout its inves­ tigation and the views put forward by it in the preliminary-ruling proceedings, cited above.

and Lucazeau following references to the Court of Justice for preliminary rulings in December 1987 and August 1988. Following those judgments, the Commission endeavoured to establish a uniform basis for the comparison of tariffs and sent requests for information to the various copyright societies. It then drew up its report, dated 7 November 1991, sent the Article 6 letter on 20 January 1992 and adopted the contested decision on 12 November 1992.

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Regulation No 17, either to undertake a complete investigation in every case or to adopt a decision as to the existence of the alleged infringement (judgment in Automec II, paragraphs 75 to 85).

92 Finally, in support of their argument that the decision resulted from political press­ ure brought to bear on the Commission, the applicants draw the attention of the Court to certain extracts from the record of the proceedings of a conference on copyright held in Madrid on 16 and 17 March 1992 (Annex 21 to the application). Those extracts concern, in particular, a comment on the Article 6 letter by a Com­ mission official in the Directorate-General for the Internal Market and the obser­ vations of a SACEM representative on the policy adopted by that Directorate- General regarding copyright. The Court is unable to find in those extracts the evidence required to justify an inference that there was any misuse of powers.

93 It follows from all the foregoing that the plea as to misuse of powers must be rejected.

Costs

1) Annuls the Commission decision of 12 November 1992 in so far as it rejects the applicants' allegation that the market has been partitioned as a result of an alleged agreement between Société des Auteurs, Compositeurs et Editeurs de Musique and the copyright-management societies in the other Member States;

2) Dismisses the remainder of the application;

3) Orders the Commission to bear its own costs and to pay one half of the applicant's costs, the applicants to bear the other half of their costs; the inter- vener shall bear its own costs.

Cruz Vilaça Briet Kalogeropoulos

Barrington Saggio

Delivered in open court in Luxembourg on 24 January 1995.