C-222/98

I — The legal and factual background 3. The Law of 24 December 1927 govern- ing collective labour agreements ('CCT- Law'), 3as amended, provides that repre- sentatives of employees and employers may collectively agree upon terms of employ- 2. Mr Van der Woude is employed as head ment. Article 14 of the CCT-Law provides of its technical service by Stichting Beatrix- that an employer which is bound by such oord, a foundation which runs a health- an agreement must respect its provisions care institution. He is not a member of a even in respect of employees who are themselves not bound by it. * Original language: English. 1 — Case C-67/96 Albany International v Stichting Bedrijfspen- sioenfonds Textielindustrie [1999] ECR I-5751 (hereinafter 2 — Although the national court refers to the agreement at issue 'Albany'), Joined Cases C-115/97 to C-117/97 Brentjens' in the present proceedings simply as the CAO, it would Handelsonderneming v Stichting Bedrijfspensioenfonds seem, from the written observations of the Commission, voor de Handel in Bouwmaterialen [1999] ECR I-6025 more precisely t o be known as the CCT-H. To avoid and Case C-219/97 Maatschappij Drijvende Bokken v confusion, I shall, however, employ the terminology used by Stichting Pensioenfonds voor de Vervoer- en Havenbedrij- the national court. The CAO remained in force at least until ven [1999] ECR I-6121. For convenience, these cases will, 31 March 1998. hereinafter, be referred to collectively as 'the Albany cases'. 3 — Staatsblad 415.

I - 7113

OPINION OF MR FENNELLY — CASE C-222/98

The conditions relating to their member- The IZZ may arrange for its activities to be ship and that of any associate member(s) carried out, wholly or in part, by one or and the scope of the benefits provided more non-profit-making medical expenses thereunder shall be governed by the Regle- insurance organisations. ment Ziektekostenregeling van de Stichting IZZ [Rules on the Medical Expenses Scheme of the IZZ Institute, hereinafter "the Rules"]. 3. Following consultation with the parties to this CAO, the total premium payable per member in relation to the (former) employ- ee's membership of the IZZ Medical Expenses Scheme shall be fixed by the Those Rules shall also govern the premium IZZ and shall, save as may be otherwise payable. Following consultation with the provided by the Rules, be paid into the parties to this CAO, the Rules shall be laid Medical Expenses Fund managed by the down and may be amended by the board of IZZ.' management of the institution referred to in paragraph 2.

5. Articles 1(4) and 10(1) of the Rules effectively require the employer only to The amount of any contribution(s) to be pay monthly contributions in respect of paid by the employer towards the premium employees (or former employees) who are in respect of the medical expenses affiliated to the IZZ scheme.

I - 7114

VAN DER WOUDE

6. Article 11(G) of the CAO, which sets out is, none the less, binding, as the order its scope, provides: specifies that 'Beatrixoord is in principle bound by the medical insurance provisions laid down in Article 32 of the CAO'.

10. In the Netherlands, it appears that the Algemene Wet Bijzondere Ziekenkosten (General Law on Exceptional Medical Costs, hereinafter 'the AWBZ'), which applies to all residents, provides for free 8. The provisions of compulsory labour basic health care. The Ziekenfondswet agreements can, in the Netherlands, be (Health Fund Law) provides a right to rendered obligatory for a whole sector or benefit from health-care services in so far as part of the country by the Minister for they are not covered by the AWBZ. It Social Affairs acting pursuant to the Law of would appear to be a compulsory health- 25 May 1937 on declaring obligatory or insurance scheme that applies to employees non-obligatory certain provisions of collec- e a r n i n g less t h a n N L G 6 2 2 0 0 per tive labour agreements. 4Although it is not annum. 5In general, the employer's contri- stated in the order for reference whether bution is fixed at 5 0 % . such a declaration has been made in respect of the CAO, it would appear that the CAO 5 — Those who earned more than NLG 62 200 were not at the material time bound by the Health Fund Law and could choose whether to insure themselves against the risks covered by that Law. It would appear that M r Van der 4 — Staatsblad 8 0 1 . Woude's income did not exceed this threshold.

I - 7115

OPINION OF MR FENNELLY — CASE C-222/98

'Are Article 11(G) of the CAO (which 12. The plaintiff claimed before the Kan- prohibits any departure from the terms of tongerecht (Cantonal Court), Groningen that collective labour agreement) and Arti- (hereinafter 'the national court') that Bea- cle 32 thereof (which lays down the med- trixoord should contribute to the cost of his ical expenses insurance rules), read in supplementary medical insurance even if he conjunction with each other, contrary to switched from the IZZ to RZG. The parties Articles 85 and 86 of the EC Treaty?' to the CAO scheme may be regarded as being undertakings within the meaning of Article 85(1) of the EC Treaty (now Arti- cle 81(1) EC). Article 32 of the CAO restricts competition between insurers offering medical expenses cover for indivi- duals, or, at any rate, places a specified 14. Following the delivery, subsequent to undertaking (IZZ/VGZ) at an advantage the making of the order for reference, of the compared with its competitors. IZZ/VGZ's judgments in the Albany cases, the national

I - 7116

VAN DER WOUDE

III — Analysis

16. The plaintiff alone submits that the CAO should be considered to be subject to Article 85 of the EC Treaty. In his view, the exception from the application of that 18. The plaintiff complains, in essence, that article recognised by the Court in the the scheme of the CAO, as applied by the Albany cases should be narrowly construed I Z Z and VGZ, does not permit Beatrixoord and does not apply to health insurance. to pay the employer's contributions t o While pensions form part of the direct another insurance company of the plain- remuneration for work, the provision of a tiff's choice. The latter is, of course, free t o contribution towards health insurance does go to another insurer, but cannot then

I - 7117

OPINION OF MR FENNELLY — CASE C-222/98

benefit from the employer's contribution. 20. The Court's approach to this claim was What is more, an employee who has first to consider whether a collective deci- exercised this right is not accepted back sion to establish a compulsory pension fund into the IZZ scheme. fell within the scope of Article 85 of the EC Treaty. Recalling the first two paragraphs of that article, the Court proceeded to enunciate a very important exception to the material scope of the agreements covered by those provisions. The reasoning of the Court proceeds from a broad schematic analysis of the Treaty as a whole. The core paragraphs of that reasoning merit full citation, as they are central to the decision in the present case: 7 A — Article 85 of the EC Treaty

I - 7118

VAN DER WOUDE

sion is to promote close cooperation the procedures and practices specific to between Member States in the social field, management and labour and the Member particularly in matters relating to the right States, or, at the joint request of the of association and collective bargaining signatory parties, by a Council decision between employers and workers. on a proposal from the Commission.

56 Article 118b of the EC Treaty (Arti- 59 It is beyond question that certain cles 117 to 120 of the EC Treaty having restrictions of competition are inherent in been replaced by Articles 136 EC to 143 collective agreements between organisa- EC) adds that the Commission is to endea- tions representing employers and workers. vour to develop the dialogue between However, the social policy objectives pur- management and labour at European level sued by such agreements would be seriously which could, if the two sides consider it undermined if management and labour desirable, lead to relations based on agree- were subject to Article 85(1) of the Treaty ment. when seeking jointly to adopt measures t o improve conditions of work and employ- ment.

57 Moreover, Article 1 of the Agreement on social policy (OJ 1992 C 191, p. 91) 60 It therefore follows from an interpreta- states that the objectives to be pursued by tion of the provisions of the Treaty as a the Community and the Member States whole which is both effective and consis- include improved living and working con- tent that agreements concluded in the ditions, proper social protection, dialogue context of collective negotiations between between management and labour, the management and labour in pursuit of such development of human resources with a objectives must, by virtue of their nature view to lasting high employment and the and purpose, be regarded as falling outside combating of exclusion. the scope of Article 85(1) of the Treaty.'

Firstly, it held that: 9 The agreement, therefore, also satisfied the second condition. Consequently, the Court was satisfied that '[it did] not, by reason of its nature and purpose, fall within the scope of Article 85(1) of the Treaty'. 11 '... like the category of agreements referred to above which derive from social dialogue, the agreement at issue in the main proceed- ings was concluded in the form of a collective agreement and is the outcome of collective negotiations between organi- sations representing employers and work- 24. It is common case that the CAO is a ers.' collective agreement; it is so described in the order for reference. 12 In form and nature, it therefore clearly satisfies the first requirement for the application of the exception. It is also necessary to verify that its purpose is such that it satisfies the second condition laid down by the Court in Thus, the agreement satisfied the first condition. 10 — Paragraph 63. 11 — Paragraph 64. 12 — The Netherlands points out that the parties to the CAO 8 — Paragraph 61. are, on the one hand, six employer organisations and, on 9 — Paragraph 62. the other, 28 organisations representing workers.

I - 7120

VAN DER WOUDE

13 — The United Kingdom asked the Court at the hearing to 28. The plaintiff submits that the exception clarify whether the same exception to the application of established in the Albany cases must be Article 85 of the EC Treaty would apply in respect of agreements between management and labour concluded at narrowly construed and, in particular, must enterprise, as opposed to sectoral, level. Although no such issue is raised in the present proceedings, i would, respect the principle of proportionality. provisionally, see no reason, in principle, why such agreements, which the Court is informed are widespread in the United Kingdom, would not also benefit from the Albany exception, provided they result from genuine collective bargaining between employer and employee 14 — See, in particular, paragraph 182 of the Opinion. representatives and concern only working conditions. 15 — Ibid., paragraph 178.

I - 7121

O P I N I O N OF MR FENNELLY — CASE C-222/98

I - 7122

VAN DER WOUDE

principle would be an agreement benefiting based on the need to ensure the efficacy of from the Albany exception. genuine labour-related collective agree- ments, is broad enough to encompass agreements such as the C A O . In this respect, it is noteworthy that the Court, when defining in the Albany cases the scope of the exception from the scope of applica- tion of Article 85 of the EC Treaty, did not, at least not explicitly, accept the third condition suggested by Advocate General 31. It appears that the plaintiff's essential Jacobs, namely that the relevant collective complaint (which was made clearly at the agreement should not 'directly affect [...] oral hearing) is not so much that the CAO relations between employers and third required a fixed contribution of employers parties, such as clients, suppliers, compet- towards supplementary health insurance ing employers or consumers'. 19 That is not but, rather, of the obligation imposed on to say that collective agreements which employers to pay that contribution to a appreciably affect competition will be specified insurer, to wit the IZZ or its immune from 'antitrust scrutiny by the nominee. The plaintiff is thus, in reality, Commission or other competent authori- seeking to enjoy both the benefit of the ties', 2 0 since, as an exception to the general employers' collective commitment to make field of application of Article 85 of the EC the 5 0 % contribution and the freedom to Treaty, the scope of the Albany exception determine to whom those contributions must be narrowly construed. 21 Those alleg- should be paid. This submission echoes edly harmed by such anti-competitive the concern expressed by the national court restrictions, such as the plaintiff, may in its response to the inquiry from the always challenge them on the basis that Court (see paragraph 14 above) as to the agreement does not pursue a genuine whether the subcontracting of the relevant social objective because the restrictions insurance activity to IZZ/VGZ affects the resulting from it, or from its application, applicability of the principle enunciated in go beyond what is required by the pursuit the Albany cases. of its objective.

agree on a particular aspect of working Community law requires that such con- conditions, such as the provision of pen- tracts be submitted to tender. The scope of sions or health insurance, and for affiliation the exception from the application of to that agreement to be rendered — directly Article 85 of the EC Treaty is not therefore as in the Albany cases or indirectly as limited to matters that the parties to the would appear to be the case in the main agreement are capable of carrying out proceedings — compulsory by a Member themselves. State. It follows, in my opinion, that the parties to such an agreement should be entitled to establish a separate entity, such as the IZZ, to give effect to the agreement. The fact that such an entity engages another insurer does not affect the exclu- sion from Article 85 of the EC Treaty of the underlying collective agreement. The gen- eral gain for employees that is achieved by a collective agreement would be put at risk if each individual were permitted to pursue his own interest by withdrawing his own and his employer's contributions from the scheme in pursuit of alternative competitive offers while claiming the right to return only when the scheme's terms were more 35. If, on the other hand, the terms of the attractive. Such 'à la carte' behaviour by delegation went beyond what was neces- employees would undermine the normal sary to achieve the social objective of the principles regulating mutual insurance. agreement, such as, for example, if the commercial insurer were also retained to provide other insurance services for the sole benefit of the employers, there would be no reason for it not to fall within the scope of application of Article 85 of the EC Treaty. It has not been suggested in the present case-file that the contract granted to VGZ goes further than the provision of the insurance cover agreed in the CAO. The allegations made by the plaintiff that the level of service provided by the IZZ, through VGZ, is inferior to that which VGZ's competitors could have provided, even if upheld by the national court, could 34. To subject downstream agreements like not render the retention of VGZ as the that between the IZZ and VGZ to that service provider subject to Article 85 of the provision, where they merely confer upon a EC Treaty. Apart from the possible appli- third party the responsibility for providing cation of Article 86 of the EC Treaty (now the insurance cover required by the collec- Article 82 EC) to IZZ/VGZ, consideration tive agreement, would operate to under- of the adequacy of the service provided by mine the autonomy of the parties involved it is, in reality, a matter for the parties to in the collective-agreement process. I do the CAO, who are, of course, represented not, therefore, agree with the plaintiff that on the board of management of the IZZ.

B — Article 86 of the EC Treaty undertaking within the meaning of the competition rules of the Treaty'. 22 While such constraints 'might justify the exclusive right of such a body to manage a supple- mentary pension scheme', they did not preclude the activity engaged in by the fund in question from being characterised as economic in nature. 23 It then proceeded to examine the issue raised by the third 36. The question referred by the national question referred, namely whether Arti- court also refers to Article 86 of the EC cle 86 of the EC Treaty, read in conjunction Treaty. It is noteworthy that the plaintiff, in with Article 90 of the EC Treaty (now his observations to the Court, bases his case Article 86 EC), precluded such a pension exclusively on the alleged infringement of fund from being granted the exclusive right Article 85 of the EC Treaty and suggests to manage a supplementary pension that it is not necessary to reply to the scheme. It is, consequently, clear that, question referred in so far as it concerns notwithstanding the social objective pur- Article 86 of the EC Treaty. In light of the sued by the scheme, the activities of the view that I have taken above regarding the fund were subject to Article 86. non-applicability of Article 85 of the EC Treaty to a collective agreement such as the CAO, it would clearly be of assistance to the national court if its question regarding the possible application of Article 86 of the EC Treaty were also considered. 38. The Commission points out, in its written observations, that, as it is accepted that the results of genuine collective bar- gaining between the social partners regard- ing working conditions fall outside the scope of Article 85 of the EC Treaty, the Court should be slow to conclude that their activities infringe Article 86 of the EC Treaty. I agree with the concern underlying this submission. While, of course, there can 37. It is appropriate to observe initially that never be any 'exemption' from the prohibi- the exception from the scope of application tion of an abuse of a dominant position, of Article 85 of the EC Treaty established acts which are done solely in pursuit of a by the Court in the Albany cases does not social objective by a body established under extend to Article 86 of the EC Treaty. In a collective labour agreement and enjoying answering the first question referred in a dominant position should not easily be Albany, the Court found that a sectoral characterised as an abuse. It is only if the pension fund engaged 'in an economic impugned acts go beyond what is necessary activity in competition with insurance for the attainment of that objective, and are companies' and that, consequently, '... the fact that [it was] non-profit-making and the manifestations of solidarity referred to by it 22 — Albany, loc. cit., paragraphs 84 and 85. and the intervening governments are not 23 — Albany, loc. cit., paragraph 86. See also the Opinion of Advocate General Jacobs in Pavlov and Others, op. cit., sufficient to deprive [it] of its status as an footnote 18 above, paragraph 175.

otherwise not justifiable, that an abuse may nant position within the meaning of Arti- be said to occur. cle 86 of the Treaty'. 24 It is therefore for the national court to determine whether, despite the competition faced by the IZZ from competing insurers such as RZG, it still enjoyed a position of such economic strength that it could be regarded as capable of acting independently of its competitors and, thus, as being in a domi- nant position for the purpose of Article 86 of the EC Treaty. 2 5 The market power, if any, enjoyed by IZZ/VGZ could only come from its 'exclusive' right to receive 39. It is necessary in this case only to employer contributions in the event of the consider Article 86 of the EC Treaty, since employee opting to take out supplementary no exclusive right has been conferred on health insurance with the IZZ. In the the IZZ by the CAO and since no reference absence of any such market power, no has been made to Article 90 of the EC possible abuse for the purpose of Article 86 Treaty by either the national court or the of the EC Treaty could arise. plaintiff. The national court has, apart from a reference to the number of persons insured with the IZZ, not furnished the Court with any precise information regard- ing the market upon which the IZZ is supposed to be dominant. Although it is clear, particularly in the light of the Albany cases, that the IZZ may be regarded as an undertaking for the purpose of Article 86, 40. Moreover, as the Commission points and even if, as the plaintiff reasonably out in its written observations, the theory suggests, it may be assumed that the of economic dependence, upon which the provision of health care insurance to plaintiff would appear to rely in justifying employees constitutes a distinct insurance his view that the IZZ enjoyed a dominant sub-market whose geographical boundary position, is not substantiated by the case- is coterminous with the territory of the file. The mere fact that the premium Netherlands, there is insufficient informa- charged by the IZZ would cost an tion in the case-file for the Court to be able employee such as the plaintiff NLG 69 less to formulate any definite view as to the than that offered by RZG (without the relative market power enjoyed by the IZZ, benefit of the employer's contribution) does through its contract with VGZ, vis-à-vis not, on its own, in itself, render such competing providers of such insurance like employees economically dependent on the RZG, the plaintiff's insurer of choice. This IZZ for supplementary health insurance. In case may therefore be distinguished from the case of the plaintiff, given that RZG Albany where the Court concluded that '[a] would reimburse him NLG 2 100 more sectoral pension fund ... , which has an than the IZZ for his envisaged dental exclusive right to manage a supplementary pension scheme in an industrial sector in a Member State and, therefore, in a substan- 24 — Albany, paragraph 92. tial part of the common market, may 25 — This definition of dominance was given by the Court in therefore be regarded as occupying a domi- Case 85/76 Hoffmann-La-Roche v Commission [1979] ECR 461, paragraph 38.

42. Similarly, the rules preventing employ- ees who opt to take out insurance with insurers other than the IZZ from returning to it might well be justified by the need to maintain solidarity. If employees were free to move at will or with few restrictions back and forth between insurers, it would clearly be easy for competing insurers like R Z G to cream off the better risks. 26 However, assuming the national court is satisfied that the IZZ enjoys a dominant 4 1 . Even if the national court were satisfied position whose benefit it assigned to VGZ, that IZZ enjoyed a dominant position on it would be for it to determine whether the the Netherlands health-insurance market, IZZ's restrictive rules regarding the possi- for the plaintiff to establish that a breach of bility of former members rejoining its Article 86 of the EC Treaty had occurred scheme were justified. In this regard, it he would have to demonstrate that the IZZ would need to pay particular attention to had abused that dominant position. The whether the scheme could function without mere fact that the premium charged by the the rules and whether the rules were IZZ might, taking into account the employ- applied in a uniform and consistent man- er's contribution, have been higher than ner. 2 7 that charged by R Z G , and that the cover provided by the former was seemingly less complete in certain respects than that of the latter, would not, in itself, establish that an abuse of a dominant position had occurred. This would particularly be the case if, as the Netherlands and the Commission sub- mitted at the hearing, the IZZ system was founded upon the principle of solidarity or 43. In the circumstances, I am satisfied, at community charging whereby the 'pre- least on the basis of the information mium' represented by the contributors contained in the case-file, that no abuse of p a y a b l e by b o t h the e m p l o y e r a n d a dominant position has occurred in the employee remained fixed and was unre- present case. lated to the risk associated with the condi- tions of health and age of individual employees. In pursuit of such a policy, it 26 — See, in this respect, particularly paragraph 108 of the judgment in Albany. may well be necessary for an insurer to 27 — See Albany, paragraph 121.

(3) A third-party subcontractor such as that mentioned above will be subject to Article 86 of the EC Treaty (now Article 82 EC) only if the right granted to it by the parties to the collective agreement suffices to place it in a dominant position on a distinct market and if it exercises its power on that market in a manner which goes beyond what is necessary for the attainment of the social objective underlying the collective agreement and which is not otherwise justifiable.

I - 7128