The Gazette 1985

GAZETTE

SEPTEMBER 1985

Article 87 of the EEC Treaty provides for the enactment of legislation by the Council, on a proposal from the Commission and after consulting the European Parliament, "to give effect to the principles set out in Articles 85 and 86". I have no doubt about the need for action and the existence of the necessary powers. This issue is not a matter of choosing between policy options; nor is it one of Constitutional Law. The time has come to begin consultations with the Member States, Community institutions and all interested parties to decide how best to move forward in the best interests of the Community and all who trade and consume within its borders. Rule of Reason 46 Proponents of a rule of reason in Article 85( 1) advocate a balancing of the pro- and anti-competitive features of a given arrangement under Article 85(1), rather than concentration on the anti-competitive features to bring the arrangement under Article 85(1) and only then consideration of the pro-competitive features under Article 85(3). One problem with this approach is that, at best, it caricatures and, at worst, it distorts what the Commission does in its decisions. Of course, we have to establish "the prevention, restriction or distortion of competition" (Article 85(1)). In making that analysis, account is taken of market conditions and all the other circumstances of the case. In some cases, what appears at first sight to be a restriction of competition turns out not to fall within Article 85(1) since it is in fact ancillary to an overall lawful purpose, be it a no-competition agreement on the sale of a business or a ban on sales outside the network other than to end-users in a selective distribution system 47 . In other cases, however, a genuine restriction of

competition is found and can be redeemed only by Article 85(3) under which the Commission has regard to the possible benefits of the arrangement in the light of the Treaty's policy. Article 85(3) is in a way our rule of reason. We do not have per se infringements of Article 85(1), and every case is considered under Article 85(1) on its merits. The reasonable approach under Article 85(1) has already thrown up some areas in which apparent restrictions are revealed on analysis to be innocent after all in competition terms if kept within certain bounds. Community law therefore has a two-stage approach: under Article 85(1) a market analysis is carried out to determine whether there is a restriction or distortion of competition and, if so, whether it is appreciable; then, and only then, Article 85(3), a statutory, even constitutional, rule of reason is applied in order to consider whether, in all the circumstances, the arrangement in question presents objective advantages justifying an exemption. Conclusion Community antitrust law has undergone a series of procedural reforms in recent years designed to reinforce confidence in the application of rules on the rights of the defence (due process) 48 . We are now turning our attention to ways of speeding things up, while maintaining on the one hand the Commission's ability to investigate and act in the European public interest and respecting on the other hand undertaking's desire for both full consideration and prompt resolution of their cases. The adoption of block exemption Regulations with opposition procedures and the judicious use of administrative ("comfort") letters to give undertakings a feel for the attitude of the Commission in suitable cases will enable undertakings to obtain a quick reaction. Finally, the assumption by national courts of part of the enforcement burden will enable the Commission to concentrate on the larger policy issues and will reflect more fully than now the sharing of responsibilities between national and Community institutions which the Treaty and the Court of Justice clearly intended. I have not sought in this article to consider all the issues of the Community's competition law. That this is an impossible task in a short article shows just how rich and complex a legal system has grown out of Articles 85 and 86 of the EEC Treaty. • Footnotes 17. See Competition Law Enforcement: International Co-operation in the Collection of Information, O.E.C.D., Paris, 1984, (contains the text of the Recommendation of 25 September 1979). 18. On joint ventures and EEC competition policy generally, see Faull, Joint Ventures under the EEC Competition Rules. (1984) European Competition L.R. 358; Hawk, op. cit., vol II. chap. 9; Ritter and Overbury, An Attempt at a Practical Approach to Joint Ventures under the eec Rules on Competition (1977) 14 Common Market Law Review 601; Temple Lang, Joint Ventures under the EEC Treaty Rules on Competition. 3 parts, (1977) 12 Irish Jurist 15; (1978) 13 Irish Jurist 132; (1980) 15 Irish Jurist 13 and European Community Antitrust Law and Joint Ventures involving Transfer of Technology (1982) Fordham Corporate Law Institute 203. 19. In its 13th Report on Competition Policy, Brussels/Luxembourg, 1984, para. pp. 50-52, the Commission published a checklist of criteria to be used in the "realistic" assessment of potential competition. 20. On exclusive distribution, see Schroter, The Application of Article 8? of the EEC Treaty to Exclusive distribution Agreements. (1984-85) 8 Fordham Intl. L.J. 1; Korah, Exclusive Dealing Agreements in the 275

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