C-279/95

LANGNESE-IGLO v COMMISSION

OPINION OF ADVOCATE GENERAL RUIZ-JARABO COLOMER delivered on 13 November 1997 *

1. This is an appeal by the company Langnese- 3. The German undertaking Schöller Lebens- Iglo G m b H (hereinafter 'Langnese-Iglo') mittel G m b H & Co. KG (hereinafter 'Schöl- against the judgment of the Court of First ler') notified to the Commission by letter of Instance of 8 June 1995 in Langnese-Iglo v 7 May 1985 a form of 'supply agreement' Commission 1 (hereinafter 'the contested judg- governing its relations with its retail distribu- ment'). That judgment dismissed an applica- tors. On 20 September 1985, the Commission tion for the annulment of Decision Directorate-General for Competition sent a 93/406/EEC 2 (hereinafter 'the contested deci- comfort letter to Schöller's lawyer, which sion'), in which the Commission declared that included the following paragraphs: the exclusive purchasing agreements for ice- cream concluded by Langnese-Iglo with retailers in Germany were contrary to Article 85(1) of the E C Treaty.

O n 2 May 1985, you applied on behalf of Schöller Lebensmittel G m b H & Co. KG, pur- suant to Article 2 of Regulation N o 17, for a negative clearance for an "ice-cream supply agreement". Facts and procedure

Pursuant to Article 4 of that regulation, you also notified the agreement in advance. Sub- sequently, by letter of 25 June 1985, you pro- vided a standard agreement to serve as a ref- erence for the agreements which Schöller will conclude in the future. 2. The events giving rise to these proceedings were described in paragraphs 1 to 6 of the contested judgment.

The Commission nevertheless reserves the right to re-open the procedure if there is any It appears from the information available to appreciable change affecting certain matters the Commission, which is essentially based of law or of fact on which the present assess- on that given in your application, that the ment is based. fixed duration of the agreements to be con- cluded in the future will not exceed two years. The average duration of all your client's "ice- cream supply agreements" will therefore fall well short of the period of five years laid down in Commission Regulation (EEC) N o We also wish to inform your client that the 1984/83 3 as a precondition for a block exemp- existing ice-cream supply agreements are the tion to be available in respect of exclusive subject of a similar assessment and that it is purchasing agreements. therefore unnecessary to notify them if the fixed duration of those agreements does not exceed two years after 31 December 1986 and they can thereafter be cancelled by giving notice of a maximum of six months at the end of each year. Those facts clearly show that, even if account is taken of the number of agreements of the same nature, the "ice-cream supply agree- ments" concluded by Schöller do not have the effect, in particular, of eliminating com- ' petition for a substantial part of the products concerned. Access for third-party undertak- ings to the retail sector remains guaranteed.

4. O n 18 September 1991, Mars G m b H (here- inafter 'Mars') lodged a complaint with the Schöller's "ice-cream supply agreements" Commission against Langnese-Iglo and which were notified are therefore compatible against Schöller for infringement of Articles with the competition rules of the E E C Treaty. 85 and 86 of the Treaty and asked that pro- tective measures be taken in order to forestall the serious and irreparable damage which, in its opinion, would be caused by the fact that 3 — Commission Regulation (EEC) No 1984/83 of 22 June 1983 the sale of its ice-creams would be severely on the application of Article 85(3) of the Treaty to categories of exclusive purchasing agreements (OJ 1983 L 173, p. 5). hampered in Germany by the implementa-

The agreements concluded by Langnese-Iglo G m b H requiring retailers established in Ger- many to purchase single-item ice-cream for resale only from that undertaking infringe Langnese-Iglo G m b H may not conclude Article 85(1) of the EEC Treaty. agreements of the kind referred to in Article 1 until after 31 December 1997.

4 — Commission Decision of 25 March 1992 relating to a pro- ceeding under Article 85 of the EEC Treaty (IV/34.072 — Mars/Langnese and Schöller — Interim measures). 5 — Commission Decision of 23 December 1992 relating to a pro- ceeding pursuant to Article 85 of the EEC Treaty against Scholler Lebensmittel GmbH 4c Co. KG (Cases IV/31.533 and IV/34.072 — OJ 1993 L 183, p. 1).

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11. Langnese-Iglo puts forward three grounds of appeal:

9. In accordance with the second paragraph of Article 93(3) and Article 118 of the Rules of Procedure, Langnese-Iglo requested that certain information in its appeal be treated as — breach of the principle of the protection confidential. That request was granted by of legitimate expectations;

6 — Case T-9/93 Schöller v Commission [1995] ECR II-1611. 7 — Footnote not relevant to the English translation.

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— infringement of Article 85(1) of the E C must not depart from the comfort letter and Treaty; prohibit Langnese-Iglo's exclusive purchasing agreements without demonstrating that a sig- nificant change had occurred in the factual and legal circumstances prevailing in the German ice-cream market. By confirming the contested decision without checking to see — breach of the principle of proportionality whether there had been any changes in the and the principle of equal treatment. relevant market, the Court of First Instance, in Langnese-Iglo's opinion, infringed the prin- ciple of the protection of legitimate expecta- tions.

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of by the Commission as a result of Mars's 15. The Commission and Mars have expressed complaint, of additional barriers to access to serious doubts as to the compatibility of the the market, particularly in the grocery trade. arguments advanced by Langnese-Iglo in sup- port of this ground of appeal with the criteria laid down by the Court of Justice for appeals in competition matters to be admissible.

Finally, the appellant objects to the fact that, Moreover, the Court of Justice has held that in paragraph 38 of the contested judgment, an appeal may rely only on grounds relating the Court of First Instance accepted the pro- to infringement of rules of law, to the exclu- visional nature of the analysis of the market sion of any appraisal of the facts. In conse- undertaken by the Commission in order to quence, the Court of Justice considers that draw up the comfort letter as an argument in the appraisal by the Court of First Instance favour of the lawfulness of the contested of the evidence put before it does not consti- decision. In its opinion, the principle of the protection of legitimate expectations is infringed if the Commission uses the provi- 8 — See inter alia the orders in Case C-244/92 P Kupka-Floridi v ESC [1993] ECR I-2041, Case C-26/94 P X v Commission sional nature of its market analysis as a reason [1994] ECR I-4379, Case C-62/94 P Turner v Commission for departing from the content of the comfort [1995] ECR I-3177, and the judgment in Case C-73/95 P Viho v Commission [1996] ECR I-5457, paragraphs 25 and letter when new facts become known. 26.

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17. In my view this ground of appeal does not meet the requirements of the abovemen- tioned decisions of the Court of Justice and 18. In any event, I consider that the Court of must be declared inadmissible. The arguments First Instance was right to decide, in the con- put forward by Langnese-Iglo to demonstrate tested judgment, that there was no breach of contravention of the principle of the protec- the principle of the protection of legitimate tion of legitimate expectations coincide with expectations: there are a number of arguments those it relied on before the Court of First which justify the conclusion that it reached. Instance, including those based on facts rejected by that Court. By this ground of appeal the appellant seeks a re-examination of the application submitted to the Court of First Instance but does not clearly identify how the Court of First Instance might pos- sibly have erred in law in applying the prin- ciple of the protection of legitimate expecta- tions to the facts of the dispute, as established by it. First, the comfort letter drawn up by the Commission in 1985 was addressed to Schöller and referred to the latter's notification of its 9 — Case C-53/92 P Hilti v Commission [1994] ECR 1-667, para- graph 42, Joined Cases C-241/91 P and C-242/91 P RTE and 'ice-cream supply agreements'. The protec- ITP v Commission [1995] ECR I-743, paragraph 67, and the tion of legitimate expectations is available order of 17 September 1996 in Case C-19/95 P Son Marco v Commission [1996] ECR I-4435, paragraphs 39 and 40. only, if at all, to the undertaking receiving the

20. Langnese-Iglo considers that the conclu- sion reached by the Court of First Instance in paragraphs 94 to 114 of the contested judg- ment in relation to the effect on competition Secondly, the Commission may reopen the of the exclusive purchasing agreements is procedure and depart from the analysis incompatible with Article 85(1). The Court adopted in a comfort letter when it learns of of First Instance took the view that the net- new restrictions of competition or when work of exclusive purchasing agreements changes occur in the structure of the relevant between Langnese-Iglo and its retailers appre- market. The Commission had expressly ciably restricted competition in the relevant reserved the right to do so by including a market and was therefore incompatible with rebus sic stantibus clause in the comfort letter Article 85(1), as the Commission concluded sent to Schöller. If the Commission is not in the contested decision. bound by a negative clearance decision 12 or by a decision to apply Article 85(3) 13 in the event of a substantial change taking place in the relevant market, then a fortiori it is entitled to depart from an assessment made in a com- fort letter. 21. According to the appellant, the Court of First Instance's conclusion is based on various findings that were not based on the docu- 10 — The Court of First Instance judgment in Schöller v Com- ments before it and derive from an incorrect mission, which has become res judicata, found that the Com- mission did not contravene the principle of the protection legal appraisal of the factual situation. of legitimate expectations by adopting Decision 93/405, according to which the network of exclusive purchase con- Langnese-Iglo states, first, that the existence tracts concluded by Schöller with its retailers was contrary to Article 85(1). of tying-in exceeding in the aggregate 30%, 11 — See inter alia Case 31/80 L'Oréal [1980] ECR 3775, para- which the Court of First Instance accepts as graph 12. proved in paragraph 105 of the contested 12 — Case T-116/89 Prodifarma and Others v Commission [1990] ECR II-843, paragraph 70. judgment, cannot be inferred from the docu- 13 — Article 8(3) of Council Regulation N o 17 of 6 February ments before the Court, which show tying-in 1962, First regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959—62, p. 87). of less than 30%, the latter being the limit

Finally, Langnese-Iglo considers that the Court of First Instance was wrong to con- clude, in paragraph 113 of the contested judg- ment, that its network of exclusive purchasing agreements and that of Schöller gave rise to 24. The appellant's objection to the contested an appreciable restriction of competition on judgment in this ground of appeal is based on the relevant market because overall tying-in its view that the Court of First Instance did somewhat in excess of 30% does not impede not properly apply the principle of propor- access to a market or convert it into a closed tionality, according to which measures adopted market, particularly if the market is expanding, by the Commission must not exceed what is as the German ice-cream market was. appropriate and necessary to attain the objec-

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The Court of First Instance did not agree to 25. The Court of First Instance approved, in that option because it considered, in para- the first place, the withdrawal of the block graphs 129 and 193 of the contested judg- exemption and the prohibition of the entire ment, that it was arbitrary to consider sepa- Langnese-Iglo network of agreements. In the rately, within Langnese-Iglo's network of second place, the Court of First Instance agreements, those which did not significantly states in paragraphs 207 and 208 of the con- contribute to the possible cumulative effect tested judgment that Article 85(1) does not, on the market produced by similar agree- as a general rule, preclude the conclusion of ments. exclusive purchasing agreements, provided that they do not contribute significantly to any partitioning of the market, and that the Commission is not empowered, by means of an individual decision, to restrict or limit the legal effects of Regulation N o 1984/83 if that 27. The arguments relied on by the appellant regulation does not expressly provide a legal in support of this ground of appeal display a basis for that purpose. The appellant con- considerable misapprehension, as has been siders that the two conclusions reached by pointed out by Mars and the Commission. the Court of First Instance are clearly con- The appellant refers without distinction to tradictory. the statements made by the Court of First Instance regarding the network of existing exclusive purchasing agreements (paragraphs 188 to 196) and to those concerning the pro- hibition of concluding exclusive purchasing agreements in the future, contained in Article 4 of the contested decision (paragraphs 197 to 26. Langnese-Iglo submits that the Commis- 210). The Court of First Instance draws a sion did not need to withdraw the benefit of clear distinction between the application of the block exemption and prohibit all its exclu- Article 85(1) to the existing agreements and the scope of Article 3 of Regulation N o 17 regarding any exclusive purchasing agree- ments which Langnese-Iglo might conclude 14 — Case 15/83 Denkavit Nederland [1984] ECR 2171 and RTE and ITP v Commission, cited above, paragraph 93. in the future. Thus, the alleged contradiction

30. In my opinion, when the cumulative- effect test is applied for the purposes of an overall analysis of a network of exclusive pur- chasing agreements, the resultant sanction 29. The appellant does not dispute the Com- must also be of an overall nature 17 and it is mission's competence to withdraw the benefit not possible to draw distinctions between the of the block exemption under Article 14 of various agreements making up the network Regulation N o 1984/83, the legal basis of for the purpose of not applying Article 85(1) which is Article 7 of Regulation N o to some of them and enabling the Commis- 19/65/EEC. 15 Nor does it question the Court sion to grant them an individual exemption. of First Instance's application of the It would, as the Court of First Instance made cumulative-effect test, developed by the Court clear, be arbitrary to distinguish between dif- of Justice in the Brasserie de Haecht and ferent types of agreement within the network Delimitis judgments, 16 in order to determine established by Langnese-Iglo. If account is whether the network of Langnese-Iglo's exclu- taken of the network of agreements in its sive purchasing agreements was compatible entirety in order to establish an infringement with Article 85. of Article 85, it is not possible to distinguish within that network between different types of agreement for the purpose of imposing a penalty or possibly granting an individual exemption, which must likewise affect the entirety of the network. 18 The appellant merely considers that the con- sequence of the withdrawal of the block exemption for its network of agreements cannot be the prohibition of the totality of 17 — See L. Idot and C. Momège, 'L'Affaire des Barres Glacées Mars: une vague de froid sur les contrats d'exclusivité', La Semaine Juridique — Édition Entreprise, Supplement N o 6, p. 7. 18 — In Brasserie de Haecht, cited above, at p. 415 the Court of 15 — Regulation N o 19/65/EEC of the Council of 2 March 1965 on the application of Article 85(3) of the Treaty to certain J ustice stated in relation to exclusive supply agreements for leer that 'it would be pointless to consider an agreement, decision or practice by reason of its effects if those effects categories of agreements and concerted practices (OJ, English were to be taken distinct from the market in which they are Special Edition 1965—66, p. 35). seen to operate and could only be examined apart from the 16 — Case 23/67 Brasserie de Haecht v Wiikin [1967] ECR 407 body of effects, whether convergent or not, surrounding and Case C-234/89 Delimitis [1991] ECR I-935. their implementation'.

32. In my opinion, this part of the ground of appeal must be rejected for three reasons. In the first place, the appellant again seeks to apply the Court of First Instance's reasoning concerning future agreements to the existing 34. The Commission, supported by Mars, has agreements. In the second place, Decision brought a cross-appeal against the contested 93/405, which is largely upheld in the Court judgment to the extent to which it annulled of First Instance judgment in Schöller v Com- Article 4 of the contested decision. In its view, mission, also prohibited the entire network of the Court of First Instance erred in law in exclusive purchasing agreements which considering, in paragraph 205 of that judg- Schöller had established with its retailers. In ment, that Article 3 of Regulation N o 17 '... the third place, according to paragraph 39 of confers on the Commission only the power the judgment, it is clear that Mars offered to prohibit existing exclusive agreements only a limited range of products and that its which are incompatible with the competition commercial strategy was different from that rules'.

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— It would be contrary to the principle of equal treatment to prevent an undertaking from concluding exclusive purchasing agreements and not prevent its competi- tors from doing so.

36. The Court of First Instance rejected the Commission's argument and upheld 37. In my opinion, the course taken by the Langnese-Iglo's contention, declaring Article Court of First Instance regarding Article 4 of 4 to be void because it exceeded the penal- the contested decision, having regard to the ising powers conferred on the Commission way in which the Commission itself inter- by Article 3 of Regulation N o 17. In para- preted the scope of that article at first instance, graphs 205 to 210 of the contested judgment, seems to me to be perfectly valid and com-

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19 — See inter alia Joined Cases 6/73 and 7/73 Commercial Sol- venis v Commission [1974] ECR 223, paragraph 45; RTE 20 — See, to that effect, M. Waelbroeck and A. Frignani, Concur- and ITP v Commission, cited above, paragraph 90, and Case rence. Commentaire J. Mégret. Le droit de ta CEE, Vol. 4, T-24/90 Automec v Commission [1992] ECR II-2223, para- Editions de l'Université de Bruxelles, Brussels, 1997, pp. 410 graphs 50 to 54. to 412.

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any kind of exclusive purchasing agreement those prohibited by the decision. 21 Article 4 until 31 December 1997, whether or not prohibits the appellant from concluding any similar to those prohibited in the contested new exclusive purchasing agreement, regard- decision and whether or not they form part less of its characteristics and the cumulative of a network similar to the appellant's pre- effect on competition in the relevant market vious one, the Commission's cross-appeal, as of the new network of contracts of that kind the Commission itself recognises, must fail of 'which it might form part. for the reasons set out by the Court of First Instance in the contested judgment.

Secondly, the Commission states in point 154 of the contested decision that 'the order ... would serve no purpose if L-I were permitted immediately to replace the current agreements by new ones. L-I must therefore, be prohib- 40. In my opinion, the scope of Article 4 can ited from concluding fresh agreements of their be interpreted only as it was by the Court of kind for a period sufficient to allow a sub- First Instance in the contested judgment, that stantial change in market structures'. That is to say as preventing Langnese-Iglo from point of the contested decision, which is the concluding any kind of new exclusive pur- basis for Article 4, makes it clear that the chasing agreement with retailers until 31 latter article prohibits the appellant from con- December 1997. There are several reasons for cluding any new exclusive purchasing agree- this conclusion. ments whatsoever.

Conclusion

4 3 . H a v i n g regard t o the foregoing considerations, I consider t h a t the C o u r t of J u s - tice s h o u l d :

(1) declare t h e appeal partially inadmissible a n d dismiss t h e admissible g r o u n d s of appeal;

(2) dismiss t h e cross-appeal.

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