C-39/96

KVBBB v FREE R E C O R D S H O P

OPINION OF ADVOCATE GENERAL LENZ delivered on 6 February 1997

A — The facts 'KVB') is — as its name indicates — an asso- ciation for the promotion of the interests of the book trade in the Netherlands. Its mem- bers consist of, in particular, publishers, booksellers and book importers established in the Netherlands. 3 In 1961 — when it was then called the Vereeniging ter Bevordering 1. The question raised in these proceedings van de Belangen des Boekhandels — it concerns the validity of anti-competitive adopted rules concerning the book trade in agreements already in existence on 13 March the Netherlands, the Reglement voor het 1962, the date of entry into force of Council Handelsverkeer van Boeken in Nederland Regulation N o 17 of 6 February 1962, First (Rules governing commercial trade in books Regulation implementing Articles 85 and 86 in the Netherlands, hereinafter 'the Rules'). 4 of the Treaty ' (hereinafter 'old agreements'). The Rules oblige KVB members to maintain the vertical price-fixing system for which it provides, and to do so even with regard to non-members.

2. Under Article 5(1) of that regulation, 2 agreements, decisions and concerted prac- tices of the kind described in Article 85(1) of the Treaty existing at the date of entry into 4. The Rules were notified to the Commis- force of the regulation and in respect of sion on 30 October 1962. which the parties sought application of Article 85(3) had to be notified to the Com- mission before 1 November 1962.

10. On 19 December 1995, the Amsterdam court upheld the KVB's claim for an interim order. It came to the conclusion, however, 7. O n 14 December 1995, Free Record Shop that in order to deal with the case further, it advertised in various Dutch newspapers, needed replies to various questions of Com- offering for sale a number of books at prices munity law. In its view, those replies were 25% lower than those chargeable under the not likely to be provided by the Reiber case. Rules. It consequently asked the Court, by decision of 1 February 1996, to give a preliminary ruling on the following questions: 6

8. The KVB then sought an interim order from the Amsterdam District Court requir- ing Free Record Shop to observe the price- fixing rules laid down by the Rules. Free Record Shop contended in those proceedings '1. If an agreement between undertakings that the Rules were contrary to Article 85 of or a decision by an association of under- the E C Treaty. takings to regulate competition came into existence prior to the entry into force of Regulation N o 17/62 and was notified to the Commission in good time pursuant to the provisions of that

9. As the District Court points out, the 5 — Sec footnote 4 above. question of the compatibility of the Rules 6 — The Arrondissementsrechtbank points out that the wording with Article 85 of the Treaty has also been of the preliminary questions is Dascd on the wording pro- posed by Advocate General Koopmans in the Reiber case raised in another case pending before the pending before the Hoge Raad.

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3. Does the "provisional validity" apply solely to the agreement or decision, as 'As the Court has consistently held, national referred to in Question 1, in the form in courts may not, where the Commission has which it was notified, or does it also given no decision under Regulation N o 17, apply to agreements or decisions which declare automatically void under Article have since come into existence, and 85(2) agreements which were in existence which prolong the same restrictive prior to 13 March 1962, when that regulation agreements in an amended form, in so came into force, and have been duly notified far as they do not involve any extension (judgment in Case 48/72 Brasserie De or reinforcement of the restrictive Haecht v Wilkin Jansen [1973] ECR 77; and agreements having regard to the func- judgment in Case 59/77 De Bloos v Bouyer tioning and realization of the Commu- [1977] ECR 2359). Those agreements in fact nity market?' enjoy provisional validity until the Commis- sion has given a decision (judgment in Case 99/79 Lancôme v Etos [1980] ECR 2511).' 7

B — Opinion

13. Article 9(1) of Regulation N o 17 gives The first two questions the Commission sole power to grant exemp- tions, under Article 85(3), in the field of application of that regulation. The Court has

11. The first two questions are closely linked. Consequently, like the Commis- 7 — Case C-234/89 Delimitis [1991] ECR 1-935, paragraph 48.

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16. Since notification of that agreement now 14. According to the case-law cited, provi- goes back 34 years, Free Record Shop's argu- sional validity of an agreement comes to an ment that there can no longer be any ques- end when the Commission 'takes a tion of it having 'provisional validity' after decision'. n That is certainly the case when such a long period does not, on the face of it, the Commission adopts a decision rejecting appear to be without merit. However, it an application for exemption of an old agree- must be remembered that the theory of pro- ment. In 1980 in Lancôme, the Court held visional validity developed by the Court is that the provisional validity also comes to an meant to maintain legal certainty in contrac- end when the Commission notifies the par- tual matters and thus to protect the interests ties, by administrative letter, that it does not of parties to old agreements. As KVB rightly explains, the weight to be attached to main- tenance of legal certainty tends, if anything, to increase with time. In PorteUnge, the 8 — Case 10/69 Portelange [1969] ECR 309, paragraph 15. Court itself emphasized that the fact that it 9 — Article 7 of Regulation N o 17 enacts a special rule for old agreements which were notified in time but do not satisfy was not possible for the persons who had the conditions for exemption under Article 85(3). If, for example, the parties concerned subsequently amend the notified an agreement to the Commission to agreement so that it fulfils the conditions for grant of an exemption, the prohibition in Article 85(1) applies only for the period determined by the Commission. 10 — Case 99/79 Lancôme [1980] ECR 2511, paragraph 16. 11 — Lancôme, paragraph 12, at the end. 12 — Lancôme, paragraph 17.

20. Consequently, I propose that the answer to be given to the first two questions should be that the provisional validity of an old agreement which was notified to the Com- mission before 1 November 1962 expires

18. The fact that the doctrine of 'provisional validity' is not to be regarded as outdated as the result of the passage of time is indeed 14 — If the Commission, upon application (or on its own initia- tive), finds that there is an infringement of Article 85 or Article 86 of the EC Treaty, it may, under Article 3(1) of the regulation, order the infringement to be brought to an end. Under Article 3(2) of the regulation, such an applica- tion may be made not only by the Member Sutes but also 13 — PorteUnge, paragraph 15. by natural or legal persons who claim a 'legitimate interest'.

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only when the Commission takes a decision Government adopts a position which is in (positive or negative) on that agreement. essence the same. In so far as the Rules were Such a decision is also taken where the Com- radically altered — as the Arrondisse- mission states in an administrative letter that mentsrechtbank stated — in 1978 as well as it has terminated the procedure without from 1 January 1993, the agreement becomes adopting any formal decision. a 'new' restrictive agreement.

The third question

25. The Commission considers that three cases must be distinguished. 15 The first case is where an amendment is made which goes 22. However, it must be pointed out that the to the substance of an agreement. In this court which made this reference does not ask case, there is in reality a new agreement. The in general how amendments made to the old old agreement ceases to exist and conse- agreement affect its provisional validity. quently there can be no question of provi- Rather, the question relates only to amend- sional validity. If, on the other hand, an ments not entailing any extension or rein- amendment does not go to the substance of forcement of restrictive agreements. an old agreement, the provisional validity of that agreement is maintained. The amend- ment itself is covered by the agreement's provisional validity only if the anti- competitive restrictions in the agreement are not 'appreciably' increased in relation to the restrictions which existed at the time of noti- fication of the old agreement. If, on the other 23. Free Record Shop takes the view that the doctrine of provisional validity developed by the Court is meant to provide a transitional rule: any amendment of a notified old agree- 15 — The Commission here refers to its observations in Case ment would consequently bring its provi- 106/79 Eldi Records [1980] ECR 1137. It did in fact adopt the same position in those proceedings (see, more particu- sional validity to an end. The French larly, p. 1143).

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hand, the amendment makes the agreement temporarily excluded from application of the appreciably more restrictive, the old agree- Rules. The Court held that this did not affect ment retains its provisional validity but this the provisional validity of'the Rules: does not cover the amendment.

28. In my view, that conclusion may be transposed to this case. If an amendment of a notified agreement led to loss of provisional 27. The judgment in Eldi Records I 8 deliv- validity even where the amendment entails a ered in 1980 requires particular attention relaxation of the restrictions, the persons because it concerned the same Rules as those concerned would no longer be encouraged to involved in these proceedings. According to make such pro-competitive amendments. the information provided by the national The 'counter productive consequence would court, which was, as in this case, the then be that they would decide not to make Arrondissementsrechtbank, Amsterdam, the them'. 2° As the Court put it in Eldi Records, Rules notified in 1962 also covered strip- this would hardly be compatible with the cartoon books. But, according to the infor- 'spirit of competition law' of the Commu- mation provided, such products had been

19 — Eldi Records, paragraph 16. 20 — This point is made, quite rightly, by Glciss/Hirsch (Martin 16 — Case 1/70 Rochas [1970] ECR 515. Hirsch and Thomas O . J. Burkert), Kommentar zum 17 — Rochas, paragraph 6. EG-Kartellrecht, Vol. I, 4th Edition, Heidelberg 1993, para- 18 — Cited in footnote 15 above. graph 1741, on Article 85.

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'The exemption provided for in paragraph 1 shall also apply where in a particular agree­ ment the parties undertake obligations of the 31. Free Record Shop argues that the Com­ types referred to in that paragraph but with a mission still has sole power to check that an more limited scope than is permitted by that amendment of an old agreement has not paragraph.' sharpened the restrictions of competition which it contains. If the Commission finds time to carry out that examination, it may just as well assess the conformity of the entire notified old agreement with Article 85 of the Treaty. In my view, that objection is based on a false premiss. It is not the Com­ mission, but the national court before which 30. I am not convinced by the objections the question of provisional validity of an old raised against this view. It is true that the agreement is raised, which is competent to French Government points out, quite rightly, that it is a question of taking account 'of the need to ensure effective supervision and to 22 — The words of the second recital to the preamble of Regu­ lation N o 17. 23 — Opinion of 28 February 1980 in Case 106/79 Eldi Records [1980] ECR 1151, at p. 1156. However, the German version of that Opinion contains an error in the passage concerned 21 — OJ 1996 L 31, p. 2. since the word 'nicht' is missing.

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settle the question. In order to do this, that this case that the amendments of the Rules court may, if necessary — in so far as domes- did not entail any 'extension or reinforce- tic procedural law does not preclude this — ment of the agreements'. Some evidence does turn to the Commission to obtain infor- indeed suggest this. KVB maintains that the mation on the state of the administrative Rules have been liberalized by the amend- procedure. 24 The national court also has the ments. However, I must emphasize once possibility of submitting questions of Com- again that the decision on this matter is for munity law to the Court for a preliminary the national court. Consequently the Court ruling under Article 177 of the EC Treaty, as need not address it in these proceedings. has been done in this case.

24 — Sec the notice on cooperation between national courts and the Commission in applying Articles 85 and 86 of the EEC Treaty (OJ 1993 C 39, p. 6). 25 — See paragraph 13 above.

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have demonstrated this — is consistent with basis of that standard contract unless the the spirit and aim of the relevant provisions agreements are a replica of it. 27 The Court in this case. again confirmed this restrictive approach in Delimitis. 2S This approach also seems right to me. If the parties to an old agreement sub- sequently decide to alter its terms so as to make the agreement more restrictive, there is no reason to confer provisional validity on those amendments. But I would go a step further: in my view, such amendments 35. Although the preliminary question sub- destroy the provisional validity of the old mitted by the Arrondissementsrechtbank can agreement as a whole. N o one is compelled now be answered on the basis of the forego- to increase the restrictions contained in an ing considerations, I consider it appropriate old agreement. Whoever does this, however, to briefly examine the view taken by the does so at his own risk. Legal certainty does Commission. I, too, consider that the provi- not, in my view, require that the old agree- sional validity of an old agreement comes to ment should also be allowed to maintain its an end when its substance is altered. This provisional validity in such a case. result is also produced by the proposition for which I contend. But I cannot agree with the Commission when it states that other amendments do not affect the provisional validity of an old agreement. The argument that amendments which do not make an old agreement 'appreciably' more restrictive are themselves covered by its provisional valid- ity is, I believe, a dubious argument, in view of the interpretation which the Commission has given to this concept. 26

C — Conclusion

38. I accordingly p r o p o s e that the C o u r t should reply to the preliminary question submitted b y the A r r o n d i s s e m e n t s r e c h t b a n k , A m s t e r d a m , as follows:

(1) T h e provisional validity of an old agreement notified before 1 N o v e m b e r 1962 t o t h e C o m m i s s i o n expires o n l y w h e n t h e C o m m i s s i o n takes a decision (posi- tive or negative) o n that agreement. Such a decision is also t a k e n w h e n the C o m m i s s i o n states in an administrative letter that it has t e r m i n a t e d t h e p r o - c e d u r e w i t h o u t a d o p t i n g a formal decision.

(2) T h e provisional validity also covers a m e n d m e n t s t o the old a g r e e m e n t origi- nally notified in so far as t h o s e a m e n d m e n t s entail n o extension o r reinforce- m e n t of the anti-competitive restrictions.

29 — Eldi Records, cited above in footnote 23, p. 1156.

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