The Gazette 1985

GAZETTE

SEPTEMBER 1985

and Ideal Standard 27 on the other hand, were held to be contrary to Article 85(1) and not to be worthy of exemption under Article 85(1). The wholesalers in these cases were obliged by their agreements with the manufac- turers to sell only to plumbing contractors. The Commission considered this an unnecessary restriction on sales to retailers. The Commission's hostility to export bans or impediments in distribution arrangements in the common market is well known and fully supported by the case law of the Court of Justice. Our fining policy for well- established infringerhents is also widely understood. Attempts to divide the common market to the detriment of consumer choice will continue to be challenged. The opportunities offered by access to the wider common market notwithstanding all its imperfections carry with them certain legal obligations: manufacturers cannot have their cake and eat it, their common market and absolute territorial protection for their distributors. The Commission will also have to look at a new form of distribution, namely franchising 28 . The Commission needs to gain further experience through the decision of individual cases before further block exemptions can be envisaged, but is already examining the implications of franchising for competition policy. The Court of Justice's coming judgment in the Pronuptia case should assist the Commission greatly in its policy development in this area. Services It is now well established that Article 85 applies to the activities of banks and insurance companies 29 as well as to the rest of the services sector. The Commission will continue to examine agreements notified to it and will take whatever action is necessary to counter anti- competitive practices to fix prices or share markets in the EEC. On the other hand, co-operation to extend services to a wider range of consumers throughout the common market will be welcomed. An example of what I mean is the Eurocheque system, a continent-wide cheque system which enables the European traveller to write a cheque drawn on his own bank in the local currency of the country he is visiting. In Brussels, one rarely sees traditional national cheques any more. An exemption under Article 85(3) was granted last year in respect of the agreements governing the Eurocheque network 30 . As the services sector increases in size and importance as an employer in the industrialised economies, it will become increasingly important to apply the competition rules in a sensitive and realistic way, taking account, for example, of the special characteristics of the banking sector, while remaining committed to the goals of a competitive economy and a common market. A real common market in services does not yet exist. Competition policy will play its part in fostering the moves already afoot to make it a reality. Deregulation Some European countries have already adopted a limited number of deregulation measures, others are more reticent, even sceptical. In the Commission, we are certainly convinced that the American experience cannot be applied as such in Europe. Our historical and present circumstances are just too different. However, regulation in the way of the common market receives a fairly critical treatment in the Community Treaties and a great deal of

This means that parallel imports must remain possible between distributors' territories. Distributors must remain free to set prices and to sell to whomever they wish. While in the absence of per se rules in Community law, an individual exemption is always possible, the policy on distribution set out in the block exemption regulations is intended to apply to as many industries and products as possible. Certain special rules have, however, been laid down for brewery and petrol station contracts (exclusive purchasing) and automobile distribution and servicing (a mixture of selective and exclusive distribution). We are confident that these regulations strike the right balance between the legitimate needs of industry and the just demands of consumers. Our policy on distribution is designed to facilitate the penetration and opening-up of new markets, while giving producer and consumer alike access to the benefits of a common market. We have now to set about implementing the regulations carefully, explaining and clarifying where necessary. The Commission's general policy on selective distribu- tion has also been set out recently in a number of decisions. We are fortunate too to have several judgments of the Court of Justice on this issue which, I am pleased to say, generally endorse the Commission's approach. Summarising that approach, I would say that our competition policy recognises the need for manufac- turers to restrict distribution of their products in certain circumstances to specialists. Identification of those circumstances requires analysis of the market under examination: in past cases, the Commission has considered cases involving technically sophisticated products calling for considerable pre-sales advice and after-sales service and luxury goods demanding a particualr sales environment. If dealers are admitted to the selective distribution network on the basis of objective criteria pertaining to the quality of the service they are to offer and those criteria are applied uniformly and without discrimination to all consumers, the agreements concerned will not fall within Article 85(1). The principal limit placed on the distributors' freedom of action once chosen — the undertaking to sell only to fellow dealers or final users, i.e. not to dealers outside the network — is considered to be ancillary to the overall lawful purpose and outside Article 85(1). Resale price maintenance is unlikely to be tolerated more in a selective distribution context than in other areas of our policy. The dangers for the embryonic and fragile unity of the common market are too manifest. The major problems seem to be the identification of products in real need of selective distribution because they are too complicated or precious for supermarkets and the opportunities for abuse contained in the admission process. The former requires economic analysis and the latter may be solved at least partially by decentralising the admission process. The second SABA 24 decision which sets out at length some of the Commission's views on selective distribution is currently under appeal to the Court of Justice and we look forward to further enlightenment from the judgment. The recent Grundig decision also explains our policy clearly. Two 1984 decisions illustrated the limits of this policy. The IBM personal computer 2 * decision granted negative clearance under Article 85(3) to a distribution system which, in the prevailing circumstances of the EEC personal computer market, fell outside the terms of Article 85(1). The selective distribution systems operated by German sanitary equipment manufacturers Grohe 26

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