C-453/99

OPINION OF MR MISCHO — CASE C-453/99

OPINION OF ADVOCATE GENERAL MISCHO delivered on 22 March 2001 1

I — Facts and procedure had to buy their beer exclusively from Courage. Courage was to supply the quan- tities of beer ordered at the prices specified in the price lists applicable in the establish- 1. This matter has been referred to the ments leased to IEL. Court of Justice by the Court of Appeal of England and Wales (Civil Division) in proceedings between Courage Ltd (herein- after 'Courage'), the plaintiff in the main proceedings, and Mr Bernard Crehan, the defendant in the main proceedings. The Court of Appeal has referred four questions asking about the possibility for a party to an agreement prohibited under Article 81 4. IEL provided a standard form of lease EC to claim damages from his co-contrac- for its tenants. While the level of rent could tor. be a point of negotiation between a pro- spective tenant and IEL, the exclusive purchase obligation and the other clauses of the contract were not negotiable.

6. In 1993, Courage brought an action for 10. Second, English law did not allow a the recovery from Mr Crehan of the sum of party to an illegal agreement to claim more than GBP 15 000 for unpaid deliv- damages from the other party. Even if Mr eries of beer. Crehan's claim that his lease infringed Article 81 EC were upheld, English law would bar his claim for damages. In contrast, it was clear from the judgment of the Supreme Court of the United States of America in Pernia Life Mufflers Inc. v International Parts Corp. 392 U.S. 134 (1968) that where a party to an anti- 7. Mr Crehan's defence was that the exclu- competitive agreement is at an economic sive purchase obligation for certain speci- disadvantage, it may bring an action for fied types of beer ('the beer tie') in the lease damages. was contrary to Article 81 EC and he counter-claimed for damages. The basis for Mr Crehan's claim was the fact that Courage sold its beers to clients who were not bound by the beer tie at substantially lower prices than those given in the price 11. It is against that background that the list imposed on its tied tenants. He con- Court of Appeal referred the following tends that this price difference resulted in a questions to the Court of Justice. reduction in the profitability of tied tenants, driving them out of business.

II — The questions referred for a preli- minary ruling 8. The considerations which led the Court of Appeal to refer questions to the Court of Justice for a preliminary ruling were as follows. '1. Is Article 81 EC to be interpreted as meaning that a party to a prohibited tied house agreement may rely upon that article to seek relief from the courts from the other contracting party?

14. However, I do not consider that the Court must refuse to answer the questions raised because they are hypothetical ques- III — Appraisal tions. It should be borne in mind that, according to settled case-law, 2'it is for the national courts alone, before which the proceedings are pending and which must assume responsibility for the judgment to be given, to determine, having regard to the particular features of each case, both the Preliminary observation need for a preliminary ruling to enable them to give judgment and the relevance of the questions which they refer to the Court. A request for a preliminary ruling from a national court may be rejected only if it is 12. It is clear from the order for reference that, for the purposes of the main proceed- 2 — See inter alia Case C-230/% Cabour [1998] ECR I-2055, ings and in an endeavour to settle first of all paragraph 21.

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quite obvious that the interpretation of 19. Like the Commission, I think that this Community law sought by that court bears first question raises the general problem I no relation to the actual nature of the case mentioned in my preliminary observations, or the subject-matter of the main action'. that is to say that 'a strict application of the illegality rule in English law would prevent a co-contractor from seeking 3 even a declaration that the agreement was prohib- ited by Article 81 EC and thus void under Article 81(2) EC'. It is therefore from that 15. That is not the case here. point of view that I will consider the question.

16. It is clear from the grounds stated by the Court of Appeal that, on the basis of English law alone, the action brought by Mr Crehan cannot succeed and that it is only if he can rely on rights derived from 20. The Court of Appeal itself recognises the EC Treaty that the national court that there is an argument in favour of the would be obliged to consider his claims. view that Article 81 EC confers on a party to a prohibited agreement rights which are protected by Community law. In that connection, it cites the BRT judgment.4

agreement could not be the subject of an 25. An individual, even if he is a co- exemption decision under Article 85(3)'. 6 contractor, must thus be able to go before the national courts to seek the enforcement of all the consequences of the automatic nullity of contractual provisions which are incompatible with Article 81 EC. It should be borne in mind that, according to the 22. Since, as the Commission rightly case-law of the Court, that nullity is 'of observes, the basic sanction provided for retroactive effect'. 8 by Article 81(2) EC is that agreements prohibited by Article 81(1) EC are auto- matically void, any obstacle to that sanc- tion, such as, in the present case, a prohibi- tion on reliance on it by a co-contractor, would partially deprive that provision of its 26. Accordingly, if the application of the effect. clause has had adverse effects for one of the co-contractors in the past, the question of compensation for such effects arises. In replying to the other questions, it will be necessary to specify the conditions under which that can be achieved through an 23. Since, according to the case-law of the action for damages. Court, 7Article 81 EC 'constitutes a funda- mental provision which is essential for the accomplishment of the tasks entrusted to the Community and, in particular, for the functioning of the internal market', that 27. For the time being, the answer to the cannot be permissible. first question must be that Article 81 EC is to be interpreted as meaning that a party to a prohibited lease of a public house con- taining an exclusive purchase clause may rely on the nullity of that lease before the 24. It should be noted, moreover, that the courts. judgments in BRT and Delimitis, cited above, also concerned disputes between co-contracting parties. The Delimitis case concerned an exclusive supply contract between a brewery and the licensee of a public house. As the Commission has observed, in those cases the Court made The second and third questions no comment on the fact that it was a party to the agreement who was relying on Article 81 EC in order to evade the pay- ment claimed. 28. Second, the referring court raises the question whether the party claiming relief

31. As stated in the order for reference, the Court of Appeal has ruled in the Gibbs Mew case 9 that 'English law does not allow a party to an illegal agreement to 35. My reasoning in reaching that conclu- claim damages from the other party for loss sion starts from an analysis of the implica- caused to him by being a party to the illegal tions, for the parties to an agreement, of the agreement. That is so whether the claim is direct effect of Article 81 EC. I go on to for restitution or damages'. examine the way in which it falls to the national courts to safeguard the rights to which Article 81 EC can give rise even for a 9 — [1998] EuLR 588 at page 606. party to an agreement.

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36. I shall, therefore, first consider the Community system, according to which a implications of the direct effect of Arti- party may not profit from its own wrong. 12 cle 81 EC for the parties to an agreement. In the present case, this means that it may not rely on its own illegal actions to claim reparation for the adverse consequences those actions may have had on it.

37. As I have mentioned above, it is settled case-law that Article 81 EC produces direct effects in relations between individuals and 40. However, we must consider whether directly creates rights in respect of the the mere fact of being a party to an individuals concerned which the national agreement amounts automatically in all courts must safeguard.10 That includes the circumstances to a 'wrong'. There are cases right, for individuals, to be protected from where it is not at all clear that there was the harmful effects which an agreement such a 'wrong'. In that regard, the French which is automatically void may create. Government mentions the unilateral prac- tices of the party in a position of strength in a vertical agreement, such as the distribu- tion of a circular imposing a minimum resale price by the supplier or imposing exclusivity in regard to a leasing business.

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relation to horizontal agreements, but we 45. The second stage in my reasoning leads cannot rule out their existence. me to examine the way in which it falls to national courts to safeguard the right which Article 81 EC creates for a party to an agreement in certain circumstances.

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48. How should this case-law be applied in form, for the action in question, that render the present case? virtually impossible or excessively difficult the exercise of rights conferred by Com- munity law.

49. The English legal system, like many other legal systems, allows for actions for damages between individuals. 53. It must be borne in mind that, for the party to the agreement who bears only a negligible degree of responsibility for the distortion of competition, Article 81 EC gives rise, as I see it, to a right to protection from the adverse effects on it of that 50. As the Commission states in its obser- agreement. I believe that the rule of English vations, the English courts have allowed law in question impedes the effective pro- such actions to make good loss caused to tection of that right. third parties by conduct which infringes Community law.

56. I would add that the parties to the main proceedings and several of the governments which submitted observations in these proceedings discussed the question whether the possibility for a party to a prohibited agreement to bring an action for damages would decrease or increase the effectiveness 59. I therefore agree with the United King- of Community law. dom Government when it states that it 'does not advocate that the party to the unlawful agreement should obtain more than it has lost by reason of the unlawful agreement. In certain cases the claimant, even if in a weaker bargaining position, may have obtained benefits from the 57. Courage submits that if the possibility unlawful provisions of the agreement, of compensation were conceded, it would and, to avoid unjust enrichment and the make participation in an illegal act more imposition of penal damages on the defen- attractive. Individuals would know that dant, such benefits should in principle be they could always be released from an taken into account in the assessment of unlawful contract and seek damages if the damages. The precise quantification of the contract did not deliver the benefits antici- damages is, of course, a matter for national pated. However, I share the view of the courts.' United Kingdom and the Commission that not only would the prospect of being able to recover damages constitute an incentive for weaker parties to denounce agreements infringing Article 81 EC but also, and perhaps more importantly, it would be an effective means of deterring the party in a position of strength from imposing an agreement restricting competition. 60. On the basis of all the foregoing considerations, I propose that the answer to the second and third questions should be that Community law precludes a rule of national law which prevents a party subject to a clause in a contract which infringes Article 81 EC from recovering damages for 58. However, I must make clear that I do the loss suffered by it on the sole ground not believe it is a matter of inflicting some that it is a party to that contract. sort of penalty on the other party similar to the fine which the Commission can impose under Council Regulation No 17 of 6 Feb- 15 — OJ, English Special Edition, 1959-1962, p. 87.

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68. As I stated above, the principle of nemo 73. In order to assess the responsibility auditur propriam turpitudinem allegans borne by the party seeking damages, also exists in Community law. account must be taken of the economic and legal background against which the parties are operating and, as the United Kingdom Government proposes, the respective bargaining power and conduct of the two parties.

69. It follows that Community law does not prevent a party who has been found to bear responsibility for the distortion of competition from being barred by national law from recovering damages from his co- contractor. 74. In particular it should be ascertained whether one party was in a markedly weaker position than the other. That weaker position must be such that it seriously calls into question the freedom of that party to choose the terms of the contract. 70. My view is that the protection con- ferred by Article 81 EC ceases if that party bears significant responsibility for the dis- tortion of competition.

75. Finally, it must be added that the fact that a party bears negligible responsibility does not preclude its being required to provide evidence of reasonable diligence to 71. The responsibility to be borne is clearly limit the extent of its loss. significant if that party is in pari delicto in relation to the other party, that is to say if it is equally responsible for the distortion of competition.

76. As Courage rightly points out, there is such a principle in Community law. 16 Community law can therefore hardly oppose such a principle in national law. 72. On the other hand, the responsibility borne is negligible in the case cited by the 16 — Joined Cases C-104/89 and C-37/90 Mulder and Others v Italian Government of an injured party in a Council and Commission [1992| ECR I-3061, paragraph markedly weaker position than his co- 33, and Joined Cases C-46/93 and C-48/93 Brasserie du Pêcheur and Factortame [1996| ECR I-1029, paragraph contractor. 85.

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(2) Community law precludes a rule of national law which prevents a party subject to a clause in a contract which infringes Article 81 EC from recovering damages for the loss suffered by it on the sole ground that it is a party to that contract.

(3) Community law does not preclude a rule of national law which provides that courts should not allow a person to plead and/or rely on his own illegal actions as a necessary step to recovery of damages, provided that it is established that this person bears more than negligible responsibility for the distortion of competition. The responsibility borne is negligible if the party is in a weaker position than the other party such that it was not genuinely free to choose the terms of the contract.

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