The Gazette 1985

JULY/AUGUST 1985

GAZETTE

Care brought proceedings against the Commission before the Court of Justice, which interpreted the Commission's powers under Council Reg. 17/62 and ruled that the Commission had power to take interim measures in appr opr i a te c i r cums t anc e s . 6 Sub s e qu e n t l y, the Commission imposed substantial fines on Victor Hasselblad and its European distributors who appealed to the Court of Justice, which in a judgment delivered on 21 February 1984 partially annulled the decision of the Commission and reduced the overall fine to be paid. 7 Enforcement of Competition Law by Irish Courts The direct enforceability of Articles 85 and 86 of the Treaty was confirmed by the Court of Justice in a case in 1974, BRT-v- SABAM, 8 so that it has been clear since then that parties before national courts could assert rights or raise defences based on those Articles. However, it has also emerged in recent years that an aggrieved party could in addition seek damages for infringement of either Article 85 or Article 86. The Commission has been keen for some time to share the burden of enforcing competition policy by de-centralising it through emphasising the practical advantages of seeking enforcement through the national courts. In its Thirteenth Report on Comp e t i t i on Po l i cy the Commission stated that it "believes it desirable that the judicial enforcement of Articles 85 and 86 should also include the award of damages to injured parties, because this would render Community law more effective." 9 The recent House of Lords decision in Garden Cottage Foods Limited -v- Milk Marketing Board 10 would seem to have established the availability in the English courts of both injunctions and damages for infringements of Article 86, and the same principles would apply in the case of infringement of Article 85. Although the judgments of the House of Lords were in interlocutory proceedings, the majority view appeared to be that damages would be available to an aggrieved party. There is no definitive decision of the Irish courts on the point, but it would appear that an action for damages — and presumably in appropriate circumstances an application for an injunction — would lie and could be claimed in the normal way by issuing declaratory proceedings. Both Article 86 and Article 90(2) were relied upon in Sugar Distributors Ltd. and Thomas Kelehan -v- Comhlucht Suicre Eireann Teoranta (High Court, May 1975), 11 a case in which the Sugar Company — which has a statutory monopoly of the right to manufacture sugar in Ireland — decided that it would also enter the distribution end of the business, and had refused to supply any sugar to the plaintiff company which was a traditional distributor in the Munster area. The Plaintiff claimed that this constituted an abuse of a dominant position by the Sugar Company, but after several days hearing the matter was settled by the parties. More recently, in Cadbury Limited -v- Kerry Co-op Limited/ 2 Mr. Justice Barrington held that the plaintiffs' claim for damages for abuse of a dominant position must fail because the area of County Kerry could not be considered " . . . a substantial part of the common Market". However, the Court does not appear to have questioned the fact that damages had been sought for infringement of Article 86. Apart, of course, from enforcement through claims for damages or injunctive relief, parties may also seek enforcement through the Irish courts by relying on Article 85 as a defence to an action in contract. Unless an

individual or group exemption has been secured under Article 85(3), all agreements prohibited by Article 85(1) are automatically void. Therefore, if a company is being sued for breach of contract it may well argue in its defence that the particular agreement was prohibited by Article 85(1) and is therefore void. This issue was raised in Aluminium Distributors Ltd. -v- Alean Windows Ltd., xi discussed in Part V. State Aids Apart from the competition Articles, which of course apply to public enterprises as well as private companies, with the limited exception for undertakings falling within Article 90(2), legal practitioners should note the increasing importance of the provisions of the EEC Treaty relating to State aids, Articles 92-94, and the significant body of case law which is emerging in this area. The Fourteenth Report on competition policy, covering 1984, revealed the scope of the Commission's powers io curtail the granting of aid by the Irish Government. 1i. report refers to the fact that in December 1983 the Irish Government informed the Commission of a proposed aid amounting to £2.9m in favour of a producer of polyester yam, which would require the approval of the commission under Article 90(3). The Commission decided on 19 October 1984 that this aid would be incompatible with the Common Market and must not be granted because: "the Commission concluded that the investment which it was proposed to support concerned modernization of an obsolete plant which should be carried out using the resources of the undertaking concerned without State aid, especially since a very large percentage of the plant's output was exported to other Member States. The Commission also took the view that — while the standard of living in the area concerned was very low and it suffered from serious underemployment — the sectoral effects of aids to this particular industry needed to be controlled even for the most underdeveloped areas. Taking into account the situation of the polyester sector which was likely to continue in the future, the proposed aid would not promote the economic development of the region concerned but would be likely to distort competition in intra-Community trade without making a contribution to regional development sufficient to compensate for that distortion. The aid also would have the effect of further reducing capacity utilization in the industry concerned." 14 It is worth emphasising that companies who might be the recipients of such aid for which authorisation is refused, or refused in part, by the Commission can appeal to the Court to annul the Commission's decision. For example, in the Intermills Case, xi a Belgian paper firm appealed to the Court to annul the Commission's decision refusing as incompatible with Article 92 a provision of new capital to the firm by the Wallonia Regional Executive because the Commission had considered that this amounted to a rescue aid designed to enable the firm to meet its current liabilities and was likely to have a very adverse effect on competitive conditions. The Court allowed the appeal and struck down the decision on technical grounds, having concluded that although the

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