C-359/95

COMMISSION A N D FRANCE y LADBROKE RACING

OPINION OF ADVOCATE GENERAL COSMAS delivered on 13 May 1997

In this case the Court of Justice is called Instance adopted an interpretative approach upon to deliver judgment on the appeals to Articles 85 and 86 with particularly inter- brought by the Commission and the French esting repercussions, the correctness of Republic, pursuant to Article 49 of the EEC which the Court of Justice is called upon to Statute of the Court of Justice, against the determine. decision of the Court of First Instance of the European Communities of 18 September 1995. * The judgment under appeal upheld the action brought by the English company Ladbroke Racing Limited pursuant to Article 173 of the EC Treaty (hereinafter 'the Treaty') for the annulment of the Commis- I — Facts and procedure sion's decision of 29 July 1993. By that decision the Commission had rejected Lad- broke's complaint of 24 November 1989 (IV/33.374), concerning the way in which pari mutuel (totalizator) 2 horse-race betting was organized in France, and the exclusive rights given by the French legislation to Pari Mutuel Urbain (hereinafter the 'PMU'), that is to say to a national (French) association of 1. The facts of the case to be examined are companies. described at length in paragraphs 1 to 25 of the judgment under appeal, to which I would refer the Court. In this appeal it is sufficient to recall as follows:

At the outset it is worth pointing out that in the judgment under appeal the Court of First

PMU. * In so far as its complaint was Secondly, to find and order the termination directed against the P M U and its member of infringements of Article 86 of the EEC sociétés, Ladbroke requested the Commis- Treaty arising from, first, the grant to the sion on the basis of Article 3 of Regulation PMU of the exclusive rights to manage and N o 17 of the Council of 6 February 1962 5 organize off-course betting and, secondly, (hereinafter 'Regulation N o 17') as follows: the securing by the PMU of illegal State aid. The applicant also requested the Commis- sion to order the PMU to repay the illegal State aid which it had thus received together with interest at the market rate. Further- more, Ladbroke notified the Commission of other abuses of its dominant position by the PMU. 6 Finally, Ladbroke alleged that com- petition was affected by reason of the close links between the PMU and its principal suppliers. First, to find and order the termination of infringements of Article 85(1) of the Treaty arising from agreements or concerted prac- tices on the part of the sociétés de courses authorized in France inter se and with the P M U . The alleged objective of those agree- ments or concerted practices was first to grant the PMU exclusive rights in the man- agement and organization of off-course 3. In so far as its complaint was directed totalizator betting on races organized or against the French Republic, Ladbroke controlled by those sociétés, secondly to sup- requested the Commission to take a decision port a request for State aid to the PMU, and pursuant to Article 90(3) of the Treaty with a thirdly to authorize the PMU to extend its view to bringing to an end the infringement activities to Member States other than the by the French Republic of the following French Republic. provisions:

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courses inter se and with the PMU. Ladbroke 21 December 1992 Ladbroke brought an complains that that legislation grants the lat- action under Article 175 of the Treaty for ter exclusive rights to take off-course bets failure to act, seeking a declaration that the and prohibits anybody from placing or Commission had failed to take a decision on accepting off-course bets on horse-races the aspects of its complaint concerning organized in France otherwise than through Article 90. That action was held inadmissible the PMU; by the Court of First Instance in a judgment of 27 October 1994. 7

5. With regard to the limbs of Ladbroke's secondly, Articles 3(f), 52, 53, 59, 62, 85, 86 complaint concerning the alleged infringe- and 90(1) of the Treaty, as a result of the ments of Articles 85 and 86 of the Treaty by enactment and maintenance of the above- the French soaétés de courses and the PMU, mentioned legislation prohibiting the unfet- by letter of 9 February 1993 the Commission tered placing in France of bets on races orga- informed Ladbroke in accordance with nized abroad; Article 6 of Regulation N o 99/63 that it envisaged dismissing those limbs of the com- plaint. By decision contained in a letter of 29 July 1993, the Commission in fact rejected Ladbroke's complaint for reasons set out both in that letter and in the letter of 9 Feb- ruary 1993.

thirdly, Articles 90(1), 92 and 93 of the Treaty, as a result of the grant to the PMU of illegal aid.

8. The relevant grounds supporting the operative part of the judgment of the Court of First Instance are contained in paragraphs 43 and 46 to 51 thereof, which read as fol- 7. The Commission asks that the contested lows: judgment be quashed in so far as it annuls the decision rejecting the complaint, that the application brought by Ladbroke before the Court of First Instance be dismissed as unfounded and that Ladbroke be ordered to pay all the costs. '(Paragraph 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 Article 90 of the Treaty, since that issue calls in question the general way in which the Commission dealt with the com- plaint. In particular, the question whether the Commission was bound to assess the The French Republic asks the Court to compatibility of the French legislation with quash the contested judgment in so far as it the Treaty before adopting the contested annuls the decision rejecting the complaint; it decision under Articles 85 and 86 of the also asks that the Commission's claims Treaty must be considered. (...) before the Court of First Instance be upheld.

(Paragraph 46) In this case, the Commission initiated the procedure for examining the applicant's complaint under Article 90 of the Ladbroke asks the Court to dismiss the Treaty in order to assess the compatibility of above appeals, to order the Commission and the French legislation with the other Treaty the French Republic to pay the costs and, provisions; that procedure is still in progress. alternatively, if the Court allows the appeals, Consequently, the question to be considered to retain the case and give judgment on the is whether the Commission could defini- outstanding issues in Ladbroke's action, or tively reject the applicant's complaint under to remit the case back to the Court of First Articles 85 and 86 of the Treaty and Regu- Instance for judgment on those issues. lation N o 17 without having previously

(Paragraph 49) If, however, the Commission (Paragraph 47) The Commission has submit- were to find that the national legislation was ted, both in its pleadings and at the hearing, not consistent with the provisions of the that the competition issue raised by the Treaty, it would then have to consider applicant's complaint could be resolved only •whether or not compliance by the sociétés by examining the compatibility of the and the PMU with national legislation which French legislation concerning the PMU's was contrary to the Treaty could lead to the statutory monopoly with the Treaty rules adoption of measures against them in order and by taking action, if appropriate, under to bring infringements of Articles 85 and 86 Article 90 of the Treaty and that, accord- of the Treaty to an end. ingly, that examination was a priority, since the result of it would hold good for any prior or future agreements between the soci- étés de courses (defence, point 46). Conse- quently, the Court considers that the con- duct of the sociétés de courses and the PMU, impugned by Ladbroke in its complaint, could not have been fully assessed under Articles 85 and 86 of the Treaty without a (Paragraph 50) Consequently, by deciding to prior evaluation of the national legislation in definitively reject the applicant's complaint the light of the provisions of the Treaty. under Articles 85 and 86 of the Treaty with- out first completing its examination of the compatibility of the French legislation with the provisions of the Treaty, the Commission cannot be regarded as having carried out its duty to examine carefully the factual and legal issues brought to its attention by the complainants (see Automec v Commission, paragraph 79), so as to satisfy the require- (Paragraph 48) If the Commission were to ment of certainty which a final decision find that the relevant national legislation was determining whether or not an infringement consistent with the provisions of the Treaty, exists must have (see Case T-44/90 La Cinq then the fact of the conduct of the sociétés de v Commission [1992] ECR II-1, paragraph courses and the PMU being in compliance 61). It was not therefore entided to conclude with that national legislation would mean at that stage that the abovementioned provi- that their conduct would also have to be sions of the Treaty were inapplicable to the regarded as not falling foul of Articles 85 and conduct of the main sociétés de courses and 86 of the Treaty, whereas if their conduct the PMU to which the applicant had was not in compliance with the national objected and then that there was no Com- legislation, this could lead to a finding that munity interest in finding that the matters

1. First ground of appeal

(b) Second limb of the first ground of appeal

9. The Commission maintains that the Court of First Instance erred in law in hold- ing that where both Article 90 and Articles 85 and 86 may be relevant to a case, the 11. According to the appellant, in conclud- Commission must complete its investigation ing that the Commission should have under Article 90 before ruling on the appli- completed its investigation under Article 90

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12. The respondent considers that the appel- lant's argument derived from the Rendo judgment is irrelevant, since the Commission did not in fact give priority to the part of the (a) First limb of the second ground of appeal complaint based on Article 90, but ignored it until Ladbroke threatened to avail itself of the Article 175 procedure. According to the respondent, the sole aim of the Commission in the present case was to avoid giving a reply on the question whether the French measures infringed the Treaty, even though 14. The Commission refers to points 6 to 10, that question was essential for the proper 13 and 14 of its Decision providing the processing of the complaint submitted by explanation for the rejection of Ladbroke's Ladbroke. The Commission's intentions can complaint, in which reference is made to the be deduced, in the respondent's view, from following: first, there was no agreement or the fact that as yet there has been no Com- evidence of any concerted practice that the mission decision concerning the compatibil- principal sociétés de courses granted exclusive ity or otherwise of the French legislation in rights to the PMU prior to the 1974 legisla- question with Community law. tion. Secondly, there was no evidence to sup- port Ladbroke's allegations that those com- panies took action vis-à-vis the French 9 — Judgment in Case C-19/93 Rendo [1995] ECR 1-3319. authorities to obtain State aid for the PMU;

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either way, even if such action had been (c) Third limb of the second ground of demonstrated, it did not constitute concerted appeal action under the Community rules on com- petition. Thirdly, there was no evidence of the extension of the PMU's activities outside France. Fourthly, at all events, the above did not affect trade between Member States, since the French legislation had in any event wholly isolated the French market.

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3. Third ground of appeal to take into account the case-law of the Court of Justice in connection with the application of Articles 85 and 86 of the Treaty in cases where the conduct of the undertakings in question is dictated b y 18. The Commission maintains that the national legislation which leaves them n o judgment under appeal lacks a sufficient choice in the matter. statement of reasons. First, it does not explain why the Commission should have examined the French legislation in the light of Article 90 before rejecting the aspects of the complaint which were based on Articles 85 and 86. Secondly, it does not explain why the Commission was not entitled to take the Community interest into account when The French Government maintains in par- determining the priority to be given to dif- ticular that when undertakings retain ferent aspects of the complaint; nor at any autonomy of conduct, Articles 85 and 86 point does the contested judgment indicate may be applied to them, regardless of the the reason why the Commission's appraisal content of national measures. n Neverthe- was erroneous as regards the lack of Com- less, when national measures leave no free- munity interest in the present case. dom of conduct to undertakings, Articles 85 and 86 of the Treaty cannot be applied as long as those national measures remain in force. 12 According to the appellant, in that situation examination of the compatibility of 19. The respondent replies that the above national legislation with the Treaty would issues are adequately explained in paragraphs serve no purpose unless the Commission 42 to 47 of the judgment under appeal. could require the undertakings, pursuant t o Articles 85 and 86, not to comply with those national rules since they were contrary t o Community law. Neither the Court of Jus- B — Case C-379/95 P tice nor the Court of First Instance have held as yet, however, that undertakings are bound to breach the laws applicable to them if such laws require them to act in a manner which is contrary to Community law. The French The French Government puts forward three Government refers to case-law in which the grounds of appeal. Court of Justice refused to accept that direc- tives have horizontal effect.13

21. In its response, the Commission main­ tains that, for the purposes of Community law, a distinction must be drawn between State measures which oblige undertakings t o engage in conduct contrary to Articles 85 22. For its part, the respondent does not and 86 of the Treaty and those which, while accept that Articles 85 and 86 of the Treaty not requiring conduct contrary to those do not apply where the conduct of an under­ articles, create a legal framework which itself taking is mandated by a State measure while restricts competition. In the latter case, that measure remains in force. It also rejects Article 85 of the Treaty may, in some cir­ the view that pre-existing agreements which cumstances, be inapplicable to agreements subsequently become compulsory under between undertakings where there is n o national law should be treated differently appreciable effect on competition or on trade from agreements that are compulsory from between Member States. Conversely, in the their inception. At all events, taking into former case, adds the Commission, that account the interpretative approach to the article applies in spite of the fact that the relevant Community provisions followed by conduct of the undertakings is governed the French Government, it should be wholly by the national legislation, irrespec­ accepted, Ladbroke maintains, that in the tive of the treatment which those State pro­ case under examination a margin of visions will receive under Community law. I 4 autonomy was left to the sociétés de courses The Commission submits that an undertak­ under which they concluded the relevant ing n o t only can but must, by virtue of the agreements before 1974. The autonomy both primacy of Community law and the direct of the sociétés membres of the P M U and the effect of Articles 85(1) and 86 of the Treaty, P M U itself was not completely removed, refuse to comply with a State measure which according to Ladbroke's contentions, until requires conduct contrary to the Commu­ the enactment of the decree of 1974. nity competition rules.

23. According to the French Government, 25. According to Ladbroke's arguments, the the Court of First Instance erred in not tak- Court of First Instance did not hold that the ing into account settled case-law to the effect Commission was not entitled to reject a that a person who submits a complaint pur- complaint on the ground of lack of Commu- suant to Regulation N o 17 is not entitled to nity interest. In reality it annulled the Com- demand a definitive decision as to the exist- mission's decision on the ground that Lad- ence of a breach of Articles 85 and 86 of the broke's complaint was rejected because of Treaty. 16 the consequences of the French legislation on the French market in bet-taking but with- out the compatibility of that legislation with the Community rules of competition having been examined. (b) Second limb of the second ground of appeal

3. Third ground of appeal

24. The French Government states that the Commission is always entided to reject a complaint concerning conduct of an under- taking which infringes the rules of compe- 26. The French Government contends that in the judgment under appeal the Court of First Instance de facto throws into question 16 — To reinforce its arguments, the appellant relies on the judg- the Commission's discretion as to -whether ments in Case 125/78 GEMA v Commission [1979] ECR to take action against a Member State which 3173 and Case T-24/90 Aulomcc v Commission [1992] ECR II-2223. maintains national legislation contrary to the

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27. The respondent considers that the rea- soning of the French Government might deprive the complainant of the right con- A — Alleged omission on the part of the ferred by Regulation N o 17 to have the Court of First Instance to examine the other Commission adopt a decision on the grounds of the compkint substance of the complaint. The Commission is not bound, under Article 90, w to take

28. (1) In the first and second limbs of the 17 — Sec Case T-32/93 Ladbrokc, referred to in footnote 7. second ground of appeal, the Commission

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The Com- mission cites points 6 to 14 of its decision, by which it considers that it has adequately justified the non-existence of infringements 29. The Commission's decision, as described of Articles 85 and 86 without any mention of in paragraphs 14 to 18 of the judgment under the French legislation in question needing to appeal, apart from the reference to the fact be made. that the French legislation had exempted the market in bet-taking from the rules of free competition, does contain alternative grounds consistent with the absence of infringement of Articles 85 and 86.

They do not, the PMU as a whole, not solely in part. If, however, concern the alleged infringements, conversely, those grounds refer only to some as a whole, of Article 85(1) due to the exclu- of the claims in the complaint, they cannot, sivity granted to the PMU in the manage- by their nature, even if considered well ment of totalizator betting in France which, founded, justify the final rejection of the according to the complaint, was the result of complaint on the basis of Articles 85 and 86 agreements or practices between the main of the Treaty.

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claims (points 6 to 8 of the decision, as set off-course bets ... and there could therefore out in paragraphs 14 of the judgment under be no competition between them as to the appeal) are, principally, based on the reason- choice of the operator to which they ing that the provisions of Article 85 in ques- entrusted the organization of their bet- tion are not applicable, since the French leg- ting.' ' 9 islation in force had abolished all competition and fully isolated the French market in bet-taking. N o fully argued alter- native ground is put forward in support of the Commission's decision of rejection as regards that head of Ladbroke's complaint.

18 — Point 6 of the contested Commission Decision, properly taken into account by the Court of First Instance and 19 — Third paragraph of point 6 of the contested Commission referred to in paragraph 14 of the judgment under appeal. Decision.

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munity interest. However, in this case the Commission's position as regards the lack of 35. (2) The third limb of the second ground Community interest in respect of examina of the Commission's appeal and the second tion of Ladbroke's complaint is based on its limb of the second ground of the French logically prior assessment as to the non Government's appeal allege that the Court of existence of competition and inter-State trade First Instance failed to examine the question in the bet-taking sector in France after the whether the subsidiary reasoning contained French Decree of 14 November 1974 entered in the Commission's rejection decision, into force. described in paragraph 19 of the judgment

The Commis sion's mistake (according to the construction of Article 85 well, on its position that there was n o accepted by the Court of First Instance) hes in the way in infringement of Articles 85 and 86 where the which it rejected the first head of Ladbroke's complaint, i. e. the head referring to agreements and concerted prac- effects on competition and inter-State trade Ďces by means of which the sociétés de counes granted the privilege of exclusivity to the PMU in the management of flowed exclusively and necessarily from the totalizator betting in France. That clarification is, in my national legislation in force. Accordingly, in

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that that interpretation of Articles 85 and 86 The above argument is therefore unfounded. was not compatible with the Treaty, it prop- erly did not take into account the reasoning concerning the lack of Community interest; that, of course, presupposes that the inter- pretation of the provisions at issue followed by the Court of First Instance accords with . 39. (2) The Commission and the French Community law, a question which will next Government maintain that in the judgment be examined. under appeal the Court of First Instance undermines the Commission's discretion to decide the order in which it will examine the legal bases of a complaint. According to the appellants, the Court of First Instance applied a de jure or de facto order of priority as between the Articles 85 and 86 procedure, B — Restriction of the Commission's discre- set out in Regulation N o 17, and the Article tion under Articles 85 and 86 in conjunction 90 procedure. with Article 90 of the Treaty

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42. First of all, it is doubtful whether the the French legislation with Community Commission's investigations on the basis of competition law in general. Article 90 can, on the facts, replace or at least suffice as the reply to be given to the totality of the claims put forward by Ladbroke pur- suant to Articles 85 and 86. As stated above, 23 one of the points of special interest in the examination of the present appeal lies in the first head of Ladbroke's complaint, where reference is made to agreements and concerted practices between the sociétés de 43. In amplification of that last consider- courses authorized in France and the PMU. ation, I believe that the way in which the As regards the assessment of the conduct of appellants have presented the judgment the French sociétés de courses from the Com- under appeal does not reflect its true sense. munity law point of view, it is not clear In the present case, the Court of First whether investigation on the basis of Article Instance did not attempt to compare the pro- 90 will provide an answer to the issues of visions of Articles 85, 86 and 90 of the law, inasmuch as that article does not con- Treaty and allocate an order of priority to cern monitoring of the compatibility of the procedures of Article 90 on the one hand national legislation in general with Commu- and Articles 85 and 86 on the other, 24 ulti- nity law, but solely of legislation concerning mately, restricting the Commission's discre- undertakings to which special and exclusive tion to choose the manner in which it would rights have been granted. Consequently, in act, that discretion being expressly recog- nized in the abovementioned paragraph 44 of the judgment under appeal. Its primary aim is not to require the Commission to examine 22 — If that approach were correct, the judgment of the Court of the claims relating to infringements of First Instance would, in my view, have to be set aside.

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complied with the requirements of Commu- examination evolved 26 since, if the State nity law; it found that it had not fulfilled its measures are contrary to Community law, obligation to examine with the necessary the Commission will have to examine care and thoroughness the factual and legal whether the companies' 'compliance ... with issues raised by the complaint in question, so national legislation which was contrary to as to ensure that the final rejection of that the Treaty could lead to the adoption of complaint did not give rise to doubt as to its measures against them in order to bring correctness. infringements of Articles 85 and 86 of the Treaty to an end.' 2 7 Examination of the compatibility of national legislation is, from that point of view, necessary, regardless of whether, for that purpose, the Article 90(3) Consequently, the view taken by the Court procedure will be set in motion or whether a of First Instance and challenged by the complaint against that legislation has been appellants is founded solely on its interpreta- submitted to the Commission. tion of Articles 85 and 86 and not on the relationship between the latter and Article 90.

mission. In other words, the Commission's obligation t o that examination of the activity of the undertakings con- examine the French legislation before reaching a final cerned alone has shown that tne latter have not put into decision to reject the heads of complaint based on Articles effect any agreement, concerted practice or abuse of a 85 and 86 does not result from the fact that the complaint dominant position. As in this case, the Commission need of infringement of Article 90 is still pending. The obligation not, however, base its analysis on the conduct of those in question flows directly from Articles 85 and 86, as the undertakings but on the fact that that conduct could not m formulation of Articles 50 and 51 of the judgment under any case affect competition or inter-State trade, because of appeal makes clear, in m y opinion. In the case in point it the existence of national legislation which has wholly and happened simply that the Article 90 procedure had already necessarily brought about that result. Then what the Court

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correct interpretation and application of those processing of which the Commission has provisions requires that a final decision as to already set in motion, was still pending. whether there is an infringement of Articles 85 and 86 should not he given unta it has been established whether that national legis- lation is compatible with Community law because, in the case of a negative reply, it must be held that the companies which have complied with that national legtsUtion have infringed the provisions of the said articles. Thirdly, the Commission itself recognized that the question of the investigation of the compatibility of the French legislation with Community law is crucial as regards resolv- ing the questions concerning the competition regime which governs, or ought to govern, the French market in bet-taking. 29

46. In taking that position, the Court of First Instance took account of the following:

47. In the light of the foregoing, the Court of First Instance came to the conclusion that First, the Commission's final rejection of the the final Commission decision on Lad- complaint concerning Articles 85 and 86 was broke's complaint did not demonstrate the based 2S on the existence of national legisla- requisite certainty and thoroughness because tion which impedes competition and leaves the Commission had not 'carried out its duty the companies with no freedom of action. to examine carefully the factual and legal issues brought to its attention by the com- plainants'. 30 Consequently, in the context of the complaint in question, the crucial factor

49. In its first ground of appeal, the French Government alleges that the solution reached by the Court of First Instance in its judg­ ment is contrary to that found in settled case-law on the question whether it is pos­ sible to apply Articles 85 and 86 of the Treaty in circumstances where the conduct of the undertakings concerned is dictated by national legislation. It observes further that 48. Of course, even on that construction, the until now no duty binding national under­ solution given by the Court of First Instance takings not to comply with a national meas­ results de facto in restricting the Commis­ ure imposing obligations contrary to Com­ sion's discretion as to when and how to ini­ munity law has been recognized. tiate, in the context of the complaint in ques­ tion, the procedure under Article 90 for investigating the compatibility of the French legislation with Community law. The ques­ tion, however, whether that practical conse­ quence is based on a correct application of Community law forms part of the general 50. The Commission takes a different view issue whether the above interpretation of from that of the French Government, in so Articles 85 and 86 followed in this case is in far as it distinguishes between two situations, accordance with Community law, which I according to whether the national legislation will examine forthwith. imposes obligations on undertakings con­ trary to Articles 85 and 86 or whether the State measures themselves create a regulatory framework which restricts competition, 31 — According to the reasoning of the Court of First Instance, the Commission is directly obliged by Articles 85 and 86 where there is no conduct on the part of the and by the provisions of Article 155 of the Treaty to inves­ undertakings (in the sense of Articles 85 and tigate the compatibility of national legislation with the Community competition rules. Contrary, therefore, to the 86) which could effect competition and inter- contentions of the French Government in its third ground of appeal, the Commission cannot evade that duty by State trade. According to the Commission, announcing at the ūme the claim is submitted that it docs only in the second situation are Articles 85 not intend to examine the national legislation in the light of Article 90 so as to preserve its discretion. and 86 inapplicable.

51. The position taken by the Court of First 53. It is true that, in the judgments that fol- Instance 3 2 in the judgment under appeal lowed, the Court of Justice sought to miti- does not in fact appear to be consistent with gate the consequences of that case-law. 34 To existing case-law, at least as regards two important issues: first, as regards the ques- tion whether there is an infringement of 33 — In that judgment of the Court of Justice of 16 December 1975 (cited in footnote 12), concerning undertakings mar- Articles 85 and 86 on the part of those keting sugar, the following reasoning was followed (para- undertakings whose conduct contrary to graphs 65 to 72):

. . Further the object and effect of Italian regulations and regards the conditions in which national leg- the way in which they have been implemented was t o match supply exactly with demand and thereby remove a islation of an economic nature may be exam- vital element of normal competition. ined in the light of Articles 5 and 85 of the Furthermore the system described above has substantially reduced the opportunities available to the parties concerned Treaty. to negotiate a price which would have resulted from t h e free market forces of supply and demand. In addition, the Italian regulations impeded, indirectly b u t fundamentally, the buyer's freedom to choose his supplier

There were many the judgment under appeal, did not follow the derogations from the common organization of the market in that product in respect of the Iulian market, which ulti- result originally accepted in the Suiker Unie mately allowed the Italian legislature to restrict free compe- judgment, which has not as yet been directly tition to a minimum. Even though there was no direct allu- sion to the compatibility of the Italian legislation with Community law in the text of the judgment, I consider that the Court of Justice ultimately took that tacitly into account before deciding on the inapplicability of Arricies 85 and 86 of the Treaty to undertakings operating on the Ital- 32 — Relating to the Commission's duty in certain circumstances ian market. It is not, in my view, certain whether the final to evaluate first the compatibility of national legislation judgment would have the same content if the national leg- with Community competition law before reaching a final islation hampering the application of Articles 85 and 86 had been direcdy contrary to the Community rules. decision on a complaint pursuant to Articles 85 and 86.

The two statements are perfecdy consistent with each other. Whilst it is true that Articles 85 and 86 deal with anti-competitive conduct on the part of undertakings, it is also true that the Member States must not allow such undertakings to evade the prohibitions that '... the Court has always held that national they impose by offering them a legislative rules governing the economic activity of "shield". If that were not the case, Articles undertakings fall outside the scope of 85 and 86 would be deprived of their effec- Articles 85 and 86. Those articles are tiveness: the Member States are therefore addressed (ratione personae) to undertakings, under an obligation not to undermine the effectiveness of the competition rules addressed to undertakings.' 35 — A typical example is to be found in Case 240/82 Stichting Sigarettenindustrie (cited in footnote 12). 36 — See Case 229/83 Leclerc [1985] ECR 1 and Case 231/83 Cullet [1985] ECR 305. 38 — See, most recently, Case C-332/89 Marchandise and Others 37 — Cited in footnote 15. [1991] ECR 1-1027, paragraph 22.

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40 — In the abovementioned Meng judgment, the Court of Jus- tice was called upon to assess German insurance legislation which prohibited the grant of commission to clients. The position it adopted on the question was based on the fol- A contrario, where national legislation does lowing grounds. '... it must be observed that the rules them- selves prohibit the grant of special advantages to policy- not relate to agreements or concerted prac- holders and do not delegate to private traders responsibility for taking decisions affecting the economic sphere. It fol- tices of undertakings but itself lays down lows that rules like those at issue in the main proceedings do not fall within the categories of State rules which, rules governing the market, the impairment according to the case-law of the Court of Justice, under- mine the effectiveness of Article 3(f), the second paragraph of Article 5 and Article 85 of the Treaty. Accordingly, it must be stated in reply to the question submitted by the national court that Article 3(f), the second paragraph of 39 — Sec the above-cited judgments of the Court of Justice in Article 5 and Article 85 of the EEC Treaty do not, in the INNO v ATAS, BMC v Clair, BNIC v Aubert, Ahmed absence of any link with conduct on the part of undertak- Sated, Meng and in Case 209/84 Asjes (Nouvelles Fron- ings of the kind referred to m Article 85(1) of the Treaty, tières) [1986] ECR 1425; Case 311/85 Vlaamse Reisbureaus preclude State rules which prohibit insurance intermediaries [1987] ECR 3801; Case 231/83 Ledere [1985] ECR 305; from transferring to their clients all or part of the commis- Case 267/86 Van Eycke [1988] ECR 4769. sion paid by insurance companies' (paragraphs 20 to 22).

57. (i) At the outset I consider it particularly useful to repeat that Articles 85 and 86 set out complete rules of law with full (vertical and horizontal) direct effect. 41 Also, as pro- visions of the Treaty, they take precedence 59. (ii) At this juncture, it is worth empha- over national rules. Inasmuch, therefore, as sizing the consequences which would ensue the said provisions are higher in the hierar- if the case-law hitherto was overturned. I chy of rules of law than national provisions, consider it appropriate to draw a distinction it should, in principle, be regarded as incon- between the repercussions which the inter- ceivable that the latter should interfere with pretative approach to Articles 85 and 86 their application. The obligation to comply adopted in the judgment under appeal would with a rule having superior legal force, even have, were it to prevail, on the legal treat- if there is a measure of lesser force with a ment of undertakings, on the one hand, and contrary content, is, moreover, a feature on the economic legislation of the Member common to all systems of law. The logical States on the other. consequence should therefore be that that obligation extends to individuals subject to Community law, even if that requires them ultimately not to comply with contrary national legislation in force. In the contrary

60. (aa) With regard to undertakings, it will 41 — It suffices to recall the development of the case-law of the henceforth have to be accepted that any time Court of Justice from its judgment in Case 13/61 Bosch conduct is found which falls within the [1962] ECR 45 to Case 127/73 BRT v SABAM [1974] ECR 51 and Casc 37/79 Marty [1980] ECR 2481. prohibitions of Articles 85 and 86, those

undertakings which have so conducted regarded as hable in Community law will themselves should suffer the consequences certainly cause surprise. That is, however, the provided for in the above Treaty articles, outcome of the principle of the primacy of a without being able to rely on the existence of Community rule as against the correspond- binding national legislation with a contrary ing national rule. Moreover, it is particularly content to absolve them from the illegality of important that a distinction be drawn their conduct. Conversely, in order not to between recognition of the existence of an incur the sanctions laid down in Articles 85 infringement of Community law and the and 86, they are bound not to comply with imputation of responsibility to the perpetra- the national measures concerning them. tor of the infringement.

sible. Secondly, it is possible to object to the prohibit the continuation of that unlawful above interpretation of Articles 85 and 86 on conduct, but will not impose a fine, or may the ground that it safeguards the Commu- limit the fine.43 In that light I do not nity legal order to the detriment of the inter- ests of individuals, requiring the latter to suf- fer the consequences of their subjection to the national legislation and to become, in a manner of speaking, 'martyrs' in the defence of Community law. 42 — Ac this point reference could be made to the more general issue for which national legal systems have to find a solu- tion both in criminal and disciplinary law as regards whether superior orders or ignorance of the law expunge the unlawful character of an act or simply preclude or restrict liability. 43 — For example, if those undertakings show that they have complied with national rules either because they justifiably considered them to be in accordance with the correspond-

On that point, see the Opinion of Advocate General Jacobs of 27 February 1997 in Case C-90/94 Haahr Petroleum v 63. First of all, the formulation of a general Åbenrå Havn and Others, Joined Cases C-114/95 and C-115/95 Texaco v Middelfart Havn and Others and Olie- principle according to which individuals who selskabet Danmark v Trafikministeriet and Others and Case comply with national rules are likely to be C-242/95 GT-Link v DSB [1997] ECR 1-4449.

65. From all the foregoing, I conclude that the interpretation adopted by the Court of First Instance in the judgment under appeal involving, indirectly, divergence from the 64. As regards the situation where undertak- path set out in Suiker Unie is deserving of ings are required to act contrary to their support and is more consistent with the fun- national legislation and suffer the expected damental principle of the primacy of Com- repercussions of that conduct, the following munity law. points should be made: the Community legal order has made available to individuals the appropriate legal means to defend their rec- ognized rights when they are challenged or impaired by a national measure. O n that issue, the contribution of the Court of Jus- tice is known to be particularly important by way of the answers which it gives to ques- 66. (bb) Nevertheless, as remarked previ- tions referred to it for a preliminary ruling. ously, that position also entails a change in In that regard, suffice it to recall the position case-law as regards another fundamental taken by the Court in Factortame I, ** when issue, that of the possibility of relying on it held that Community law gives the indi- Articles 85 and 86 in conjunction with vidual adequate legal protection even in the Article 5 of the Treaty when the compatibil- national legal systems, in circumstances ity of national rules with those provisions is where a State measure affects the rights con- being examined. In accordance with the fore- ferred upon the individual by the Commu- going, 45 that issue, in my view, embodies the nity legal order. In the case before the Court, essence of the problem of the correctness of the undertaking which would incur sanctions the judgment under appeal, rather than the on the ground of non-compliance with issue relied upon by the appellants of the de national legislation contrary to Community facto restriction of the Commission's discre- competition law has the possibility of bring- tion as regards whether a complaint should ing an action before the national courts be examined first from the Article 90 angle which not only must disapply the said legis- or from the Articles 85 and 86 angle. The lation but are obliged to provide adequate specific restriction of the Commission's interlocutory legal protection. Consequently, discretion is but one — perhaps not the most the claim referred to above cannot be important — legal consequence of the accepted without direct recognition that the reasoning followed by the Court of First

Instance in paragraph 49 of the judgment special or exclusive rights have been granted under appeal. are concerned); secondly, it may fall within the scope of Articles 85 and 86 in conjunc- tion with Article 5 (when those provisions are rendered ineffective47); thirdly, it may avoid application of the Community rules on competition as contained in the provisions of Articles 85 to 94 of the Treaty. The above 67. In particular, if the interpretative categorization would be overturned if the approach to Articles 85 and 86 suggested by position introduced by the Court of First the Court of First Instance were accepted, in Instance in the judgment under appeal were any case where the conduct of the undertak- accepted. National rules affecting or restrict- ings under investigation were contrary to the ing competition may, in certain circum- Community competition rules but had been stances, be examined in their entirety as imposed by binding national measures laying regards their compatibility with Articles 85 down the mandatory framework for the and 86; that examination is carried out in exercise of a specific economic activity, the limine, before the competent Community compatibility of those national measures institutions reach a decision on the conduct with the Community legal order should be of undertakings which have complied with examined. 46 Thus there is established in the said rules. those cases a duty to examine the national measures from the point of view of Commu- nity law in the framework solely of the application of Articles 85 and 86 of the Treaty. That obligation concerns principally the Commission in the exercise of the pow- ers conferred upon it as regards compliance with the rules of the Treaty, and in particular as regards supervision of compliance by indi- viduals with the provisions of Articles 85 69. The above interpretative approach to and 86. Articles 85 and 86 requires a distinction to be drawn between national rules which also fall under Article 90 and those which are unrelated to that article. In the first case, the Commission has, theoretically, three options. First, it may pursue a complaint which has been brought before it, in reliance on Article 68. According to the settled case-law of the 90, concerning the compatibility of the Court of Justice, national legislation which national legislation in question with the restricts competition, with the exception of Community rules (this is the situation which State aid, may, first, fall within the scope of most resembles the facts of this case). Sec- application of Article 90 (where public ondly, it may commence proceedings under undertakings or undertakings to which Article 169 et seq. or undertake, on its own initiative, a review of the national legislation, pursuant to Article 90, setting in motion the

necessary procedure. 48 Thirdly, it may carry to more difficulties from the point of view of out an incidental review of the national leg- Community institutional law. It is not obvi- islation in the framework of Articles 5, 85 ous whether the conferral of such a discre- and 86. tion is in keeping with the structure of the Treaty. According to the case-law, where the Commission finds that national legislation is not in conformity with the Community legal order, it must take the matter up with the Member State concerned. For that purpose

71. The incidental examination method has cial procedure of Article 90(3); pursuant to the advantage of being simpler, but gives rise that latter provision, the Commission itself reaches a decision on the compatibility of State measures with Community law. 50 At 48 — From the case-law of the Court of Justice as regards appli- all events, however, it would be contrary to cation to national legislation of Article 90 on the one nand and Articles 85 and 86 in conjunction with Article 5 on the the accepted logic of primary Community other, it can be concluded that the cumulation of those legal law if the Commission could challenge bases is not, in principle, possible. In particular, the basic criterion for considering that, exceptionally, national legisla- national measures without taking a direct tion falls within the scope of Articles 85 and 86, consists in a finding that the legislation in question has deprived it of position, that is to say without addressing its 'official character', precisely because it either requires, 'appropriate directives or decisions to facilitates or reinforces individual conduct which impairs competition or delegates to individuals responsibility for Member States' within the meaning of taking economic decisions affecting the economic sphere (see the judgment in Meng cited in footnote 15).

States). Or course, where national legislation extends both Salengro [1981] ECR 1413. to undertakings in the sense of Article 90 and to companies which do not fall into that category, its compatibility with 50 — It should be noted that, where there is an issue of the com- Community law will be examined, in part from the Article patibility with Community law of State measures granting 90 angle and in part from the Articles 5, 85 and 86 angle. undertakings special or exclusive rights, Article 90 is the lex (See tne judgment in Ahmed Sated cited in footnote 10 specialis which should by implication be applied. (On the above.) A thorough analysis of the French legislation on special character of Article 90 see the Opinion of Advocate betting might well reveal that the said legislation falls under General Reischl in Joined Cases 188/80 to 190/80 France, both those legal bases. Italy and the United Kingdom v Commission [1982] ECR

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Article 90 51 and without formulating obser- procedures under Article 90 and Article 169 vations and a reasoned opinion under the et seq. The Court of Justice has hitherto rec- Article 169 procedure; 5 2 5 3 nevertheless, the ognized that the Commission has a wide dis- solution of incidental examination is, in my cretion as regards the setting in motion and view, the most innovative. progress of those procedures and generally as regards its dealings which may lead it into a dispute with a Member State. 54 In other words it is not possible to derive from Articles 85 and 86 a direct or even indirect obligation on the part of the Commission to take action against national legislation pursu- ant to Article 90 and Article 169 et seq.

First of 86 procedure in conjunction with that of Article 5 of the all, I consider that it would be contrary to Treaty may not lead to the adoption of a Commission decision addressed to Member States rather than to under- the strict logic which should govern the takings. See the order in Case C-229/86 Brother Industries [1987] ECR 3757 and in particular the judgment in Case Community legal order, as a system of law, if T-113/89 Nef arma [1990] ECR 11-797. the solution to be given to such an important 52 — It may be doubted, moreover, whether such a perspective category of disputes were to depend on the does not, in addition, affect the rights of defence of the

expanded as regards only one of the areas of the Commu- General La Pergola in Case C-107/95 P Bundesverband der nity legal order is not sufficient reason to reject that per- Bilanzbuchhalten v Commission leans in that direction, and spective; it has been shown in practice that European inte- although it was not followed by the Court in its judgment gration cannot progress in the same manner on all of 20 February 1997, nevertheless suggests that the legal questions. question in question cannot be regarded as settled.

complete freedom of choice as regards the ever great an effort is made to describe the order in 'which to examine two complaints, changes which the position of the Court of based in the one case on Article 90 and in the First Instance, as set out in paragraph 49 of other on Articles 85 and 86 of the Treaty. the judgment under appeal, might entail, it is certain that not all those changes are foresee- able or desirable. At all events, however, I consider that the interpretative approach to Articles 85 and 86 in question ensures the

I con- the particular framework of the specific cir- sider it useful to refer, for the sake of cumstances of this case and the 'pseudo comparison, to the finding in the Factortame dilemma' of the choice between the Article III judgment 5 6 on the question of the pro- 90 procedure and the Articles 85 and 86 pro- tection of the rights of individuals recog- cedure. The question that requires an answer nized by Community law in cases where from the Court of Justice at the present stage those rights are infringed by the Member is simply that set out at the beginning of this States. section: is the interpretation of Articles 85 and 86 contained in paragraph 49 of the judgment under appeal, according to which, in certain circumstances, an assessment of the compatibility of national legislation with the Community competition rules is necessary 'In addition, to make the reparation of loss before a final decision is given on the ques- or damage conditional upon the requirement tion whether certain undertakings have that there must have been a prior finding by infringed the provisions of Articles 85 and the Court of an infringement of Community 86, in keeping with the letter and the spirit of law attributable to a Member State would be Community law? contrary to the principle of the effectiveness of Community law, since it would preclude any right to reparation so long as the pre- sumed infringement had not been the subject of an action brought by the Commission under Article 169 of the Treaty and of a find- 75. (iii) From the foregoing analysis, the ing of an infringement by the Court.

How- 56 — Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR 1-1029, on the question of the conditions governing the liability of a Member State for damage caused to individuals by breaches of Community 55 — See above, points 48 and 66. law attributable to ÍL

77. For the sake of completeness, I consider it expedient to examine the judgment under appeal again on the hypothesis that the above approach to the interpretation of Articles 85 and 86 is not adopted. I consider 79. I would point out here that that French that the operative part is correct, even with legislation might theoretically be of concern

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O n the other hand, in so far as it horse-race bet-taking, without sufficient applies to undertakings other than those explanation of the relationship of that legis- referred to in Article 90, it falls within the lation to the conduct of the undertakings scope of application of Articles 85 and 86 if under investigation; moreover the legislation it renders those provisions ineffective, in is not examined in the light of Articles 85 accordance with what was held in the above- and 86 in conjunction with Article 5 of the cited judgment in Meng. 57 Treaty, and it is not made clear whether or not that legislation falls into the category of legislation rendering those provisions inef- fective. 60 The Commission's contention that, because of the particular difficulties of assess- ing the legislation in question, it was unable for so many years to reach a decision, on the legal basis of Article 90, on the compatibility of those State measures with Community competition law, but was able adequately to assess the same legislation from the Articles 85 and 86 angle, taking refuge in the succinct findings of the contested decision, is logically inconsistent. 6I In consequence, the Commis-

That finding should have been clearly apparent and duly rea- soned in the contested decision, by way of a special exami- nation of the domestic regulatory framework in the light of Articles 85 and 86. In other words the contested decision does not deal, in the necessary depth, with that legal issue, 57 — See footnote 15 above. the importance and difficulty of which, however, were 58 — See footnote 15 above. expressly recognized when the Commission was called 59 — See point 21 above. upon to study the same legislation in the light of Article 90.

82. Even on that reasoning, of course, the 65 — It should be noted that those criteria in the case-law, as reproduced in the above-cited judgment in Meng, have solution reached in the judgment under been formulated by the Court in the context of replies t o appeal is not fully consistent with the case- references for a preliminary ruling; in other words, these were cases where review of the national legislation on t h e law or, at least, with the usual interpretation basis of Articles 85 and 86 would be earned out by t h e national court and not by the Commission.

that case-law. 66 — The balance is now towards stricter application of Articles 85 and 86 of the Treaty, at the expense of national legisla tion. See Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 Metropole Television and Others [1996] ECR 62 — See Case T-24/90 Atttomec, cited in footnote 16, and Case II-649, concerning the conditions in which an activity m a y T-l 14/92 BEMĪM [1995] E C R II-147, paragraphs 47 to 57. be exempted from the scope of application of Article 85 as 63 — See paragraph 50 of the judgment under appeal, where fur constituting 'a special service of public interest'.

a Member State

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