T-548/93

JUDGMENT OF 18. 9. 1995 — CASE T-548/93

JUDGMENT OF THE COURT OF FIRST INSTANCE (First Chamber, Extended Composition) 18 September 1995*

In Case T-548/93,

Ladbroke Racing Limited, a company incorporated under English law, repre- sented by Jeremy Lever QC and Christopher Vajda, of the Bar of England and Wales, and Stephen Kon, Solicitor, with an address for service in Luxembourg at the Chambers of Winandy & Err, 60 Avenue Gaston Diderich,

applicant,

v

French Republic, represented by Edwige Belliard, Deputy Director of the Legal Affairs Directorate of the Ministry for Foreign Affairs, Catherine de Salins, Head of Section in that directorate, and Jean-Marc Belorgey, Special Adviser to that directorate, acting as Agents, with an address for service in Luxembourg at the French Embassy, 9 Boulevard Prince Henri,

intervener,

APPLICATION for annulment of the Commission's Decision of 29 July 1993 rejecting a complaint relating to a proceeding under Articles 85 and 86 of the EEC Treaty and for immediate re-examination of the complaint (IV/33.374),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (First Chamber, Extended Composition),

composed of: J. L. Cruz Vilaça, President, A. Saggio, H. Kirschner, A. Kalo- geropoulos and V. Tiili, Judges,

Registrar: H. Jung,

1 The applicant, Ladbroke Racing Limited (hereinafter 'Ladbroke'), is a company incorporated under the law of England and Wales, controlled by Ladbroke Group pic, one of whose activities is the organization and provision of betting services for horse-races, which it carries on through its branches and subsidiaries in the United Kingdom and in other countries of the European Community.

2 O n 24 November 1989 Ladbroke, acting in its own name and in the name of its subsidiaries and associated companies, lodged a complaint (IV/33.374) with the Commission against: (a) the French Republic; (b) the ten main racing companies ('sociétés de courses') in France, which are the only bodies permitted under French legislation to organize totalizator betting on horse-races, initially on their race- courses (Article 5 of the French Law of 2 June 1891 governing the authorization and operation of horse-races) and subsequently off-course (Article 186 of the French Finance Law of 16 April 1930), the other sociétés de courses being autho- rized to accept only on-course bets o n races organized by them and (c) the Pari Mutuel Urbain (hereinafter 'PMU').

4 The essential feature of totalizator betting, the only system of betting authorized in France, is that the stakes constitute a common pool which, after various levies, is distributed to the winners. The betters bet against each other, the return by way of winnings depends on the total stakes and the number of winners, and the oper- ator of the betting is not remunerated out of the gamblers' lost stakes but by levies imposed on the pool of stakes.

6 Secondly, in its complaint Ladbroke requested the Commission to find and order the termination of infringements of Article 86 of the E E C Treaty arising from, first, the grant to the P M U of the exclusive rights to manage and organize off-course betting and, secondly, the securing b y the P M U of illegal State aid and the use of advantages procured by that aid to meet competition. The applicant also requested the Commission to order the PMU t o repay the illegal State aid which it had thus received together with interest at the market rate. Furthermore, Ladbroke notified the Commission of other abuses of dominant position by the PMU, consisting in the exploitation of betters, the users of its services, owing to the lack of organized betting on races run on courses not belonging to the main sociétés de courses and from the restricted availability of betting on races run on courses belonging to them, because the number of races on which bets are taken are fewer than in other Member States, there is restricted cover of foreign races by the P M U and its agen- cies and the quality of the services offered by the P M U and its agencies is poor. Finally, Ladbroke alleges that competition is prevented, restricted or distorted by reason of the close links between the PMU and its principal suppliers.

8 By letter of 11 August 1992, Ladbroke formally requested the Commission, pur- suant to Article 175 of the E E C Treaty, to define its position within two months with regard to Ladbroke's complaint of 24 November 1989. In particular, it requested the Commission to send it a letter under Article 6 of Regulation N o 99/63/EEC of the Commission of 25 July 1963 on the hearings provided for in Article 19(1) and (2) of Council Regulation N o 17 (OJ, English Special Edition 1963-1964, p. 47) if the Commission considered that there were insufficient grounds for allowing the complaint in so far as it was based on Article 90(3) of the Treaty. Finally, in the event that the Commission wished to avoid following the procedure under Article 6 of Regulation N o 99/63, Ladbroke invited it to define its position on the complaint under Articles 85, 86 and 90(3) by a reasoned decision which could be challenged under Article 173 of the E E C Treaty.

9 By letter of 12 October 1992, the Deputy Director-General for Competition informed Ladbroke that his department was still actively considering the complaint but that because of the complexity and the specific characteristics of the sector in question that examination required considerable time. H e added that the complain- ant would be informed of the results as soon as possible.

u With regard to the alleged infringements of Article 85(1) of the Treaty due to the exclusivity granted to the P M U in the management of totalizator betting in France, which, according to Ladbroke, was the result of the agreements or concerted prac- tices between the main sociétés de courses, the Commission considered that that article was inapplicable. Since 2 July 1891 French legislation had abolished all com- petition in taking bets on horse-races except between the sociétés de courses. H o w - ever, the legislation adopted in 1930, in particular the decree of 11 July 1930, which required the sociétés de courses to act jointly in organizing totalizator betting, also required them jointly to designate an operator for pooling their bets. Consequently, Decree N o 74-954 of 14 November 1974, which granted the P M U exclusive rights in that field, cannot, in the Commission's view, be regarded as having legitimized agreements or concerted practices on the part of the sociétés de courses.

is Furthermore, in the Commission's view, Article 85(1) of the Treaty is inapplicable to the agreements referred to by Ladbroke, the object of which is allegedly to extend the PMU's activities outside France. First, the isolation of the French

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market by the national legislation makes it impossible for inter-State trade to be affected. Secondly, by extending their actions outside France through a company called 'Pari Mutuel International', responsible for marketing their services abroad, the authorized sociétés de courses in reality did nothing more than exercise abroad their intellectual property rights in the same way as they exercise them in France, so that not only is Article 85(1) inapplicable but competition is even enhanced in that there is a greater choice of bets available to betters. Although certain of the PMU's activities examined in the context of other complaints by Ladbroke (IV/33.375, IV/33.699) may, according to the Commission, affect trade between Member States, such effects could not be the direct consequence of the joint des- ignation by the sociétés de courses of the PMU as common operator, which is the only issue in this case.

i9 Finally, the Commission considered that, even on the assumption that the relation- ships between the sociétés de courses themselves and between those bodies and the PMU are within the scope of Articles 85 and 86, a finding that they restricted com- petition could be made only in so far as the restrictions occurred in the period between 1962 — when Regulation No 17 was adopted — and 1974 — when the designation of the PMU as sole operator ceased to be a contractual matter and became a legal obligation on the sociétés de courses by virtue of the abovementioned decree of 14 November 1974. In those circumstances, there is no Community inter- est in finding any infringement since such a finding could serve only to facilitate a claim for damages by Ladbroke for possible harm suffered during the period between 1962 and 1974.

20 Those are the circumstances in which, by application lodged on 19 October 1993, Ladbroke brought this action.

2i By a document lodged at the Registry of the Court of First Instance on 18 Feb- ruary 1994, the French Republic sought leave to intervene pursuant to Article 115 of the Rules of Procedure in support of the Commission.

22 By order of the President of the Second Chamber of the Court of First Instance of 25 April 1994, the French Republic was granted leave to intervene in the case.

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— order the Commission to re-examine forthwith the French Monopolies Com- plaint (IV/33.374) pursuant to Article 176 of the EEC Treaty;

— order the Commission to pay the costs.

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27 The Commission contends that the Court should:

— dismiss the application under Article 173 as unrounded;

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First plea: breach by the Commission of its duty to investigate the complaint with the requisite care, application and diligence

— Summary of the parties' arguments

so The applicant submits that the Commission failed to fulfil its obligation to inves- tigate the facts and arguments set out in its complaint with the requisite care, appli- cation and diligence (Case T-7/92 Asia Motor France and Others v Commission [1993] ECR 11-669, paragraphs 34 to 36); in its view, this is demonstrated by the fact that the Commission, blaming the complexity and difficulty of the case, took more than three and a half years to reach a conclusion on the complaint, rejecting it, finally, on the basis of very simple factors.

3i Moreover, the Commission's inadequate investigation of the complaint is shown by the fact that a number of facts on which the Decision is based are inaccurate or not mentioned at all in the Decision.

33 The applicant submits that giving such legal sanction to existing agreements which were contrary to Article 85 of the Treaty did not however take those agree- ments outside the scope of that article (Case 123/83 BNIC [1985] E C R 391, para- graphs 23 to 25; Case 311/85 VVR v Sociale Dienst van de Plaatselijke en Gewes- telijke Overheidsdiensten [1987] ECR 3801, paragraphs 21 to 23; Case 136/86 BNIC v Aubert [1987] E C R 4789 and in particular the Opinion of Advocate General Sir Gordon Slynn, p . 4805; and Case 267/86 Van Eycke v ASPA [1988] E C R 4769, paragraph 16). At most, it demonstrated the necessity for the Commis- sion to examine the compatibility of the French legislation with the Treaty in order to ascertain whether Decree N o 74-954 had unlawfully sanctioned pre-existing restrictive agreements and whether it was a mere legal cloak for concerted action between the sociétés P M U members and the P M U itself. The applicant stresses that its complaint was also brought against the French Republic under Article 90 of the Treaty and that it had requested appropriate declarations from the Commission in accordance with Regulation N o 17 and Article 90(3) of the Treaty and decisions enjoining the French Republic to put an end to the alleged infringements.

34 Secondly, according to the applicant, the Commission's inadequate examination of the complaint led to an error as to the facts to be taken into consideration in exam- ining the effects on trade between Member States. That error consists in disregard- ing the facts that, first, pursuant to an agreement between the French PMU and the Belgian PMU, French betters may bet on Belgian races, secondly the French leg- islation does not prohibit bets on French races from being accepted outside France and, finally, in an interim decision adopted on 11 June 1991 following another com- plaint by the applicant, the Commission accepted that the State aid granted to the P M U was liable to affect trade between Member States.

37 With regard to the priority to be given to the different aspects of the complaint, the Commission explains that its choice was dictated by the consideration that, even on the assumption that the agreements and conduct of the sociétés de courses and the PMU constituted, as alleged by Ladbroke, infringements of Articles 85 and 86 of the Treaty, a finding of those infringements would concern only the period between 1962 and 1974 and would serve only to facilitate a possible claim by the applicant for damages. Consequently, the most appropriate method of resolving the problem of competition raised by the complaint is not, according to the Commis- sion, finding such infringements, committed before 1974, which would not elimi- nate obstacles to access to the market at issue put in place by the French legislation adopted in 1974, but the assessment of the compatibility of the PMU's statutory monopoly with the competition rules of the Treaty, which would have held, muta- tis mutandis, for any agreement, past or future, between the sociétés de courses on the market in providing off-course totalizator betting services in France.

38 The Commission thus considers that, faced with the applicant's request concerning the current situation of the French market and calling for it to intervene if need be against the French State, and with the applicant's request essentially concerning past conduct of the sociétés de courses and the PMU in the light of Articles 85 and

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86 of the E E C Treaty, it was entitled, in accordance with Case T-24/90 Automec v Commission [1992] ECR 11-2223, to devote most of its time and resources to the first rather than the second of those requests. It was thus only after receiving the applicant's letter of 11 August 1992, in which the applicant insisted that the Com- mission formally define its position with regard to that part of the complaint relat- ing to Articles 85 and 86, and in the light of threatened action under Article 175 of the Treaty, that the Commission decided to concentrate its efforts on that part of the complaint concerning State measures and moreover to reject that complaint on the ground of lack of Community interest.

40 With regard to the facts which, according to the applicant, should have been taken into consideration in examining the effects on trade between Member States of the conduct referred to in the complaint, the Commission considers, first, that that conduct, directly due to the law, cannot have effects on trade between Member States within the meaning of Article 85 of the Treaty and that an agreement between the sociétés de courses which entrusted to a sole operator the taking of bets on horse-races in the national context has by itself no effects on inter-State trade. Furthermore, according to the Commission, although trade between Member States may, at most, be affected by the grant to the P M U by the French State of exclusive rights concerning the taking of bets on foreign races, the applicant has not given any specific information as to the volume of those bets. Finally, the position taken in its decision of 11 June 1991 concerning another complaint by the appli- cant relating to State aid reflects the need to assess the effects on trade case by case and does not contradict its conclusions on that point in this case.

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— Findings of the Court

43 It is appropriate first to examine the objection to the treatment of the two aspects of the complaint concerning the alleged infringements of Articles 85 and 86 and of

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Article 90 of the Treaty, since that issue calls in question the general way in which the Commission dealt with the complaint. In particular, the question whether the Commission was bound to assess the compatibility of the French legislation with the Treaty before adopting the contested decision under Articles 85 and 86 of the Treaty must be considered.

44 When the Commission receives a complaint lodged under Article 3 of Regulation N o 17, it is at liberty to determine the priority to be given to that complaint in the light of the Community interest (see Automec v Commission, cited above, para- graph 85 and Case T-74/92 Ladbroke Racing v Commission [1995] ECR 11-115, paragraph 58) and to decide to initiate and pursue the investigation of the case on the basis of the various provisions of the Treaty invoked in a complaint if that appears to be in the Community interest (judgment of 24 January 1995 in Case T-74/92 Ladbroke Racing v Commission, cited above, paragraph 60).

48 If the Commission were to find that the relevant national legislation was consistent with the provisions of the Treaty, then the fact of the conduct of the sociétés de courses and the PMU being in compliance with that national legislation would mean that their conduct would also have to be regarded as not falling foul of Arti- cles 85 and 86 of the Treaty, whereas if their conduct was not in compliance with the national legislation, this could lead to a finding that the conduct itself infringed those provisions of the Treaty.

49 If, however, the Commission were to find that the national legislation was not con- sistent with the provisions of the Treaty, it would then have to consider whether or not compliance by the sociétés and the P M U with national legislation which was contrary to the Treaty could lead to the adoption of measures against them in order to bring infringements of Articles 85 and 86 of the Treaty to an end.

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52 The contested decision must therefore be annulled, without its being necessary for the Court to consider the applicant's other objections to the contested decision.

The claim for an order requiring the Commission to re-examine the complaint

53 The applicant requests the Court to order the Commission forthwith to re-examine the complaint pursuant to Article 176 of the Treaty.

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54 It is settled law that it is not for the Community judicature to address instructions to institutions or to substitute itself for them when exercising its power of judicial review (Case T-19/90 Von Hoessle v Court of Auditors [1991] ECR 11-615, para- graph 30) and that, according to Article 176 of the Treaty, it is for the institution concerned to take the necessary measures to comply with a judgment given in an action for annulment (see Case 53/85 AKZO Chemie v Commission [1986] ECR 1965, Case T-43/92 Dunlop Slazenger v Commission [1994] ECR 11-441, paragraph 18, and Joined Cases T-432/93 to 434/93 Socurte and Others v Commission [1995] ECR 11-503, paragraph 54).

JUDGMENT OF 18. 9. 1995 — CASE T-548/93

THE COURT O F FIRST INSTANCE (First Chamber, Extended Composition)

hereby:

1. Annuls the Commission's decision contained in the letter dated 29 July 1993 rejecting the applicant's complaint of 24 November 1989 (IV/33.374);

2. Dismisses the remainder of the application;

3. Orders the Commission to pay the costs of the proceedings with the excep- tion of those of the intervener, which are to be borne by the intervener.