Vereeniging ter Bevordering van de Belangen des Boekhandels and others v Eldi Records BV (106/79)

Contents

In Case 106/79REFERENCE to the Court under Article 177 of the EEC Treaty by the Vice-President of the Arrondissementsrechtbank [District Court], Amsterdam, for a preliminary ruling in the action pending before that court between(1) De Vereniging ter Bevordering van de Belangen des Boekhandels,(2) Casterman-Nederland BV.,(3) Dupuis Zonen en Co. N.V.,(4) Standaard Uitgeverij en Distributie BV.andEldi Records BV.THE COURT (Second Chamber),composed of: A. Touffait, President of Chamber, P. Pescatore and O. Due, Judges,Advocate General: F. CapotortiRegistrar: J. A. Pompe, Deputy Registrargives the following

Judgment

Facts and Issues

The facts of the case, the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:

I —Facts and written procedure

1.Regulation No 17 of the Council of 6 February 1962: First Regulation implementing Articles 85 and 86 of the Treaty, provides in Article 5 (1) as amended by Regulation No 59 of the Council of 3 July 1962 (Official Journal, English Special Edition 1959—1962, p. 249) that:“Agreements, decisions and concerted practices of the kind described in Article 85 (1) of the Treaty which are in existence at the date of entry into force of this regulation and in respect of which the parties seek application of Article 85 (3) shall be notified to the Commission before 1 November 1962.”The original wording of Article 4 (2) of Regulation No 27/62 of the Commission of 3 May 1962: First Regulation implementing Council Regulation No 17 of 6 February 1962 (Form, content and details concerning applications and notifications) (Official Journal, English Special Edition 1959—1962, p. 132) provided that notifications under Article 5 of Regulation No 17 “ shall be submitted on Form B as shown in the annex to this regulation”. Paragraph (3) of that article provided that “Applications and notifications shall contain the information asked for in the forms”.

2.The first plaintiff in the main action is a Netherlands association to promote the interests of the book trade (hereinafter referred to as “the Association”). The other plaintiffs in the main action are publishers and distributors of inter alia strip-cartoon books.The Association drew up a set of rules entitled “Reglement voor het Handelsverkeer in de Nederlandse Uitgeverij en Boekhandel” [Rules for the trade in books in the Netherlands], (hereinafter referred to as “the Rules”). The Rules were sent to the Commission on 30 October 1962, attached to a notification form. The Rules, as they then stood, provided for an exclusive sale and purchase system with certain prices imposed vertically between recognized publishers, bookshops, importers or wholesalers. The recognized booksellers are bound to observe the provisions of the Rules and the agreements made by the Association. If persons seeking recognized status are not members of the Association, they must sign a declaration by which they bind themselves to observe the Association rules. Publishers are required to fix a single retail price for like copies of each of their books, and the price of books published abroad is generally fixed by converting the retail price determined by the publisher at the prevailing exchange rate. Neither national nor foreign editions may be sold at a price lower than the retail price imposed. Discounts on the retail price may be given only to recognized bookshops and wholesalers and also, as regards publications up to a certain retail price limit, to specially listed businesses and institutions provided, inter alia, that they bind themselves to comply with the Association rules. Discounts may also be obtained by lending library administrators and by “specialized firms”, that is to say, for example, that travel agents may obtain discounts on guides, and photographers discounts on books on photography, provided that they maintain the retail price of those publications.

3.The Rules have been repeatedly amended. While retaining the main provisions the new versions which were sent to the Commission provide inter alia for different relationships between recognized and non-recognized booksellers, the right to reduce or to abolish the retail price in certain cases and to determine special lower prices parallel to the retail price; they also increase the number of cases in which discounts may be given.

4.The parties are in disagreement over the extent to which strip-cartoon books have been covered by the Rules as successively amended.

5.The version of the Rules sent to the Commission on 30 October 1962 was attached to Form B as annexed to Regulation No 27. Under the heading “Information regarding contents of agreement, decision or concerted practice”, the form was completed thus: “Zie bijgaand [see attached]: Reglement voor het Handelsverkeer in de Nederlandse Uitgeverij en Boekhandel. Aru. 29 b en 30 a”.These provisions concerned foreign books. A copy of the Rules, as they stood at 30 October 1962, was attached to the form.By letter of 18 March 1975 the Commission, in pursuance of Article 11 of Regulation No 17, sent a request for information to the Association “in order to put the Commission in a position to rule, with all the facts of the matter before it, upon the compatibility of the abovementioned rules and agreements with the competition law of the European Economic Community”. The letter is headed inter alia “Subject: ... Notifications (a) of the Rules of your Association, (b) ...”.

6.The defendant in the main action (hereinafter referred to as “Eldi”) is a company which is not a member of the Association and whose business consists inter alia of selling strip-cartoon books at reduced prices. The plaintiffs in the main action have sought a temporary injunction against Eldi before the President of the Arrondissementsrechtbank, Amsterdam, asking the court to forbid Eldi to sell or offer for sale to the public the books of recognized publishers at a price other than that fixed or to be fixed by the recognized publishers, and to award a penalty payment to the plaintiffs in the main action amounting to 50000 guilders for each breach of the injunction which they seek.One of the most far-reaching claims put forward by Eldi in its defence is that the Rules were contrary to Article 85 (1) of the Treaty and that they were null and void because they had not been exempted under Article 85 (3). It further contended that the Rules were not even provisionally valid since they had not been notified or had been insufficiently and incorrectly notified for the purposes of Article 5 (1) of Regulation No 17.The plaintiffs in the main action have contested these arguments.

7.By judgment of 3 May 1979 the Vice-President of the Arrondissementsrechtbank, Amsterdam, stayed the proceedings and in accordance with Article 1 77 of the EEC Treaty asked the Court of Justice to give a preliminary ruling upon the following question:1. Is the Reglement voor het Handelsverkeer in Nederland in its entirety, consequently both in so far as it relates to foreign books and books in Dutch to be regarded as provisionally valid, in the sense that, until the date on which the European Commission takes a decision, the court in a legal action must accept that the whole Reglement gives rise to the legal consequences which the law applicable to the agreement attributes to it, without those legal consequences' being affected by a dispute relating to its compatibility with Article 85 (1) of the EEC Treaty in view of the fact that, as appears from Form B used for notification pursuant to Article 5 (1) of Regulation No 17 of the Council, Rules 29 (b) and 30 (a) of the said Reglement were notified in good time and the Reglement was also submitted as one of the annexes to the form?2. Is it relevant in this connexion that it was expressly stated on behalf of the Commission by letter of 18 March 1975 that the whole Reglement would be examined as to its compatibility with the competition rules of the EEC?3. If Question (1) is answered in the negative, are the rules relating to foreign books to be regarded as provisionally valid in the sense described above or does the whole Reglement lose its provisional validity in that case?4. If Question (1) is answered in the affirmative, is that question to be answered differently with regard to strip-cartoon books as it has appeared from the evidence submitted that strip-cartoon books up to a certain price limit, which fall within the scope of the Reglement as submitted to the European Commission as an annex to the aforesaid Form B, were excepted from the scope of the Reglement for a certain time and were again included in the definition in Rule 4 (a) only from 1 August 1978?”

8.The judgment containing the reference was received at the Court Registry on 2 July 1972.In accordance with Article 20 of the Statute of the Court of Justice of the EEC written submissions have been lodged by the plaintiffs in the main action, represented by D. J. Gijlstra, of the Amsterdam Bar, by the defendant in the main action, represented by R. A. A. Duk, of the Bar of The Hague, and by the Commission of the European Communities represented by its Legal Adviser, B. van der Esch, acting as Agent.Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.By order of 21 November 1979, pursuant to Article 95 (1) of the Rules of Procedure, the Court assigned the case to the Second Chamber.

II —Written observations

A —First question

1.The Association claims that an examination of Regulation No 27, of Form B, of the Practical Guide to Articles 85 and 86 of the Treaty establishing the EEC and to the regulations implementing them published in 1962 by the Press and Information Office of the Communities, as well as of the views of legal commentators, leads to the conclusion that notification is constituted by Form B, which may be completed in a summary fashion if a letter has been sent concerning the agreement in question and it is one of the annexes attached to the form. On this point the Association stresses that the space available on Form B is so limited that if the rules which are to be notified are fairly complicated there is no alternative but to refer to the annexes containing a detailed description or the complete text of the rules in question. Thus in filling in the form the Association wished to emphasize those matters which, at a time when neither the Commission nor the Court of Justice had made any decisions on the scope of Article 85 or of the regulation implementing it, were viewed as the greatest restriction on competition in the Rules, namely the rules relating to the importing of foreign books. As regards everything else, the Association sought to refer to the Rules themselves.

2.Eldi maintains that it is clear from Article 4 (2) of Regulation No 17, taken together with Section II of Form B, that there cannot be any question of provisional validity as regards those clauses of an agreement which were not notified as such, even if the Commission was able to take cognizance of those clauses by studying the annexes attached to the notification of the other articles of that agreement.

3.The Commission points out that the 1962 version of the Dutch Rules fulfils the three conditions for provisional validity which have been laid down by the Court, in particular in its judgment of 14 December 1977 in Case 59/77, Ets. A. de Bloos S.P.R.L. v S.C.PA. Bouyer [1977] ECR 2359.(a) The agreement is an “old” one since it dates from January 1961 apart from minor exceptions.(b) The agreement was notified before 1 November 1962 in accordance with Article 5 (1) of Regulation No 17. The Commission is of the opinion that if the person making the notification provides full information about the agreement there is no need to take a strictly formal view on which parts of the information are notified or not. In the Commission's view this applies particularly to the notification of “old” agreements to which Article 5 (1) of Regulation No 17 relates. In fact at the time when these agreements had to be notified it was not always possible to tell which part of them would be considered to be relevant in the light of Article 85 of the Treaty.(c) The Commission has not yet taken a decision on the agreement. In two letters sent to the Association it has raised certain objections to the Rules but according to the Commission these cannot constitute application of Article 3 (1) or Article 15 (6) of Regulation No 17. This is also clear from the wording of these provisions.The Commission then examines the effect on the provisional validity of the Rules of the amendments made to them since 1962. It stresses that if an amendment does not change the very essence of an agreement, the former agreement, notified in good time, may in principle remain provisionally valid. In its opinion the amendment itself has the benefit of this provisional validity unless it makes the agreement appreciably more restrictive then it was at the time of notification. This would be the case, for example, if the territory covered by the agreement and its effect rattorte personae and rattorte materiae were increased. However, such an increase in the scope of an agreement hardly ever changes the very essence of the agreement and the former agreement may remain provisionally valid in the form originally notified but not the amendments.The Commission takes the view that this way of assessing the effect of subsequent alterations upon the provisional validity of agreements conforms with the aim underlying the concept of provisional validity which is the maintenance of legal certainty for the parties to a contract who act in good faith.Applying this method of assessment, the Commission goes on to examine the amendments made to the Rules. As regards the amendments rattorte materiae, the Commission refers to its answer to the fourth question. As regards the other amendments which were examined, the Commission concludes that they have not altered the essence of the Rules and that they are not manifestly more restrictive than the Rules originally notified.The Commission therefore proposes the following answer to the first preliminary question:“An Agreement or a decision about which the parties or one of them provide full information at the time of notification may be considered to be notified as a whole, even if only some clauses of that agreement are mentioned on the notification form.Provided that they do not modify the very essence of the agreement and do not make it appreciably more restrictive, the amendments made in the meantime to a former agreement, notified in good time, do not in any way impair the provisional validity of that agreement and may therefore be covered by it.”

B —Second question

1.The Association thinks that the question must be read as follows: “Does the fact that the Commission itself has confirmed that the rules on trade have been validly notified have any significance for the present proceedings?”In the Association's view the Commission did acknowledge in its correspondence and particularly in its letter of 18 March 1975 that the Rules had been validly notified and in good time. According to the Association, whether notification has taken place and whether it has been complete is assessed in the first instance by the Commission.The Association therefore thinks that the question calls for an answer to the effect that the fact that the Commission has acknowledged that the RuLes were notified in their entirety is important because it obliges the national court to accord legal effect under the applicable law to the Rules as a whole.

2.Eldi is of the opinion that it appears from the letter of 18 March 1975 that it contains only a request for information. In its opinion the letter does not in fact constitute an acknowledgement of receipt of the notification, within the meaning of Article 5 (1) of Regulation No 17, of the other provisions of the Rules supplementing notification of Rules 29 (b) and 30 (a).As far as it is concerned, the situation referred to in the second question does not therefore have any effect, in a sense favourable to the plaintiffs in the main action, on the appropriate reply to the first question.

3.The Commission states that a distinction must be drawn between formal measures and preparatory acts. The Commission's opinion on this is that decisions which the Commission may take pursuant to Regulation No 17 are to be considered formal measures, in particular, the decisions having substantive legal effect upon the undertakings to which they are addressed and which are referred to in Article 19 of the regulation. These decisions may have an effect upon the provisional validity of former agreements, notified in good time, inasmuch as they may bring it to an end or convert it to permanent validity. According to the Commission it is proper to categorize decisions of a procedural nature taken pursuant to Regulation No 17 as preparatory acts, like, for example, the decisions taken by the Commission to request particular information. Preparatory acts have no effect on the provisional validity of an “old” agreement, notified in good time. The Commission maintains that it has not taken any decision on the Dutch Rules pursuant to Regulation No 17 and that the letter of 18 March 1975 quoted by the national court in its question constitutes a request for information pursuant to Article 11 of Regulation No 17.The Commission consequently proposes the following answer to the second preliminary question :“A measure adopted by the Commission which does not constitute a decision pursuant to Regulation No 17 of the Council carrying substantive legal effect has no effect upon the provisional validity of an old agreement notified in good time.”

C -—Third question

1.The Association points out that even if only the rules relating to foreign books can be considered to be duly notified and therefore provisionally valid, the rest of the Rules are also provisionally valid because they are rules which according to Article 4 (2) of Regulation No 17 do not need to be notified.

2.Eldi states that if Rules 29 (b) and 30 (a) are considered as constituting a distinct agreement the question may be answered in the affirmative. In its opinion it is still possible to argue that the restrictions on competition contained in the Rules constitute a single entity. Owing to the fact that the notification relates only to Rules 29 (b) and 30 (a) it is not therefore valid because it covers only part of the agreement.

3.According to the Commission the question has lost its point owing to the answer in the affirmative given to the first question.

D —Fourth question

1.While arguing that strip-cartoon books have never been exempted from the scope of the Rules — because the relevant amendment has not come into effect — the Association points out that a temporary exemption making the Rules less restrictive would not affect their provisional validity. The reapplication of the Rules to strip-cartoon books would not effect it either since they would again be identical to the rules notified.

2.Eldi thinks that the fact that the national court stated in its question that strip-cartoon books have been temporarily excluded from the scope of the Rules must lead to the conclusion that their reapplication to them must be considered as a “new” agreement for which the provisional validity of the Rules cannot be claimed.

3.The Commission asks whether it is correct, as the wording of the question seems to assume, that strip-cartoon books were covered by the Rules until 1 January 1978 or whether they were, on the contrary, covered by the express exemption for “picture-books” which is contained in all versions of the Rules from 1962 to 1977. The Commission thinks a good argument may be made in favour of the latter proposition.Referring to the method of assessing the effect of subsequent amendments on the provisional validity of former agreements which the Commission has expounded in relation to the first question, the Commission proposes the following alternative answer:“The extension of an agreement which is provisionally valid to another category of goods makes the agreement appreciably more restrictive within the meaning of the answer to the first question and is not therefore covered by the provisional validity.The reapplication of a provisionally valid agreement to a category of goods originally covered by the agreement but then briefly excluded from its scope is covered by the provisional validity.”

III —Oral procedure

At the sitting on 17 January 1980 oral argument was presented by the plaintiffs in the main action, represented by D. J. Gijlstra, of the Amsterdam Bar, by the defendant in the main action, represented by R. A. A. Duk, of The Hague Bar, and by the Commission, represented by J. F. Verstrynge, a member of its Legal Department, acting as Agent.The Advocate General delivered his opinion at the sitting on 28 February 1980.

Decision

1By a judgment of 3 May 1979, received at the Court on 2 July 1979, the Vice President of the Arrondissementsrechtbank, Amsterdam, submitted four questions pursuant to Article 177 of the EEC Treaty on the interpretation of the provisions concerning the notification of agreements, decisions and concerted practices existing at the date of the entry into force of Regulation No 17 of the Council of 6 February 1962: First Regulation implementing Articles 85 and 86 of the EEC Treaty (Official Journal, English Special Edition 1959-1962, p. 87).

2Those questions were raised during summary proceedings in which the Netherlands Association for the Promotion of the Interests of the Book Trade, together with three publishers recognized by the Association, sought an injunction restraining a Netherlands undertaking from selling to individuals books, and in particular strip-cartoons, published by recognized publishers, at a price other than that fixed by those publishers. The plaintiffs based their action on a set of rules for the book trade in the Netherlands (hereinafter referred to as “the Rules”) which was drawn up by the Association and which imposes inter alia a vertical system of prices. The defendant undertaking, for its part, pleads that the Rules are contrary to Article 85 (1) of the Treaty, that it has not benefited from exemption under Article 85 (3) of the Treaty and that it is not provisionally valid either, not having been properly notified under Article 5 (1) of Regulation No 17.

3It emerges from the file in the case that the Rules existed at the time of the entry into force of Regulation No 17 and that the version in force at the time was sent to the Commission on 30 October 1962, that is to say before the expiry of the period laid down in Article 5 (1) of Regulation No 17. The Rules were attached to the notification form provided for in the Annex to Regulation No 27 of the Commission of 3 May 1962, the First Regulation implementing Council Regulation No 17 of 6 February 1962 (Form, content and other details concerning applications and notifications) (Official Journal, English Special Edition 1959-1962, p. 132). Whilst the Rules concerned books published in the Netherlands as well as foreign publications, the replies given by the Association to the question on the form referred, in general, only to provisions relating to foreign publications.

4It is settled that the Commission has not yet taken a decision with regard to the Rules, but that there has been correspondence between the Association and the Commission, of which the Association cites in particular a letter from the Commission of 18 March 1975 concerning “the notifications ...^of the rules of your Association ...”, and asking for further information “in order to put the Commission in a position to rule, with all the facts of the matter before it, upon the compatibility of the abovementioned rules and agreements with the competition law of the European Economic Community”. The Association concludes from the wording of that letter that the Commission regarded the Rules as notified in their entirety.

5After 30 October 1962 the Association amended its Rules on several occasions. The parties in the main action are not in agreement as regards the extent to which strip-cartoon books were covered by the Rules in their various versions, but the judge making the reference assumed that that was the case, except during a fairly short period.

6Taking into account the circumstances and in order to give a ruling on the objection raised by the defendant in the main action, the judge making the reference asked the Court to rule on four questions which all concern the provisional validity of the Rules.

7Article 177 of the Treaty does not allow the Court to give a ruling on a specific case when it is called upon to interpret Community law. Even though the questions raised in these proceedings seem to concern such a case, none the less they make it possible to identify easily and without ambiguity the general problems concerning the interpretation of Community law which are raised by the dispute.

8In fact, by his first question, the judge making the reference asks whether an old agreement, the entire text of which was attached to the notification form, may be regarded as notified and hence provisionally valid in its entirety, even though only some of the clauses of that agreement are quoted on the notification form.

9This question must be considered in the light of the aims of the Community provisions on notification as disclosed by the second and third recitals in the preamble to Regulation No 17, which state:“Whereas in establishing the rules for applying Article 85 (3) account must be taken of the need to ensure effective supervision and to simplify administration to the greatest possible extent;Whereas it is accordingly necessary to make it obligatory, as a general principle, for undertakings which seek application of Article 85 (3) to notify to the Commission their agreements, decisions and concerted practices;”.

10By means of notification the Commission must be supplied with the information necessary to enable it to take the decisions provided for in Regulation No 17. If the agreement has been reduced to writing and if a copy of its entire text is attached to the form, the information given on that form is intended solely to facilitate verification. If that information is correct, and above all if it relates fairly to the provisions which at the time were considered the most important, the objectives of the notification seem to be attained. In that case the agreement must be regarded as properly notified in its entirety, unless the intention to notify only a part of the agreement emerges clearly from the information supplied.

11It is therefore necessary to reply to the first question that an agreement may be regarded as properly notified in its entirety and may therefore benefit from the effects of an agreement which has been notified, where its entire text has been attached to the notification form, even though only some of the clauses of the agreement are quoted on the form, provided that the description given there constitutes a fair and accurate record of the provisions which at the time were considered most important.

12By the second question the judge making the reference asks whether a letter from the Commission requesting further information, whilst stating that the agreement notified would be examined in its entirety, is relevant as regards the extent of the effects of the notification.

13As the letter referred to merely constitutes a request for information under Article 11 of Regulation No 17, and as such a letter cannot in any event — whatever wording is used — alter the effects of the notification, it is necessary to reply to that question that à letter from the Commission requesting, under Article 11 of Regulation No 17 further information about an agreement which has been notified does not in any way alter the effects of the notification.

14As the reply to the first question is in the affirmative, the third question, which is asked solely in the event of the reply to the first question being negative, has become otiose.

15By the fourth question, the judge making the reference, assuming that a particular category of goods fell within the scope of an agreement at the time of its notification, asks whether the fact that the goods were subsequently excluded from the scope of that agreement for a certain period can erase the effects of the notification as regards the category in question.

16The effects of the notification extend to the scope of the agreement at the time of its notification. To restrict those effects in the case envisaged by the question would be tantamount to penalizing the parties to an agreement for having voluntarily limited its scope, which would be contrary to the spirit of competition law. It is therefore necessary to reply to the fourth question that the reintroduction of a category of goods which fell within the scope of an agreement at the time of its notification, but which was subsequently excluded voluntarily by the parties for a certain period, is covered by the effects of the original notification.

Costs

The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable; as these proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

Operative part

On those grounds,THE COURT (Second Chamber),in answer to the questions referred to it by the Vice President of the Arrondissementsrechtbank, Amsterdam, by a judgment of 31 May 1979, hereby rules:

1.An agreement may be regarded as properly notified in its entirety and may therefore benefit from the effects of an agreement which has been notified, where its entire text has been attached to the notification form, even though only some of the clauses of the agreement are quoted on the form, provided that the description given there constitutes a fair and accurate record of the provisions which at the time were considered the most important.

2.A letter from the Commission requesting, under Article 11 of Regulation No 17 of the Council of 6 February 1962, the First Regulation implementing Articles 85 and 86 of the EEC Treaty, further information about an agreement which has been notified does not in any way alter the effects of the notification.

3.The reintroduction of a category of goods which fell within the scope of an agreement at the time of its notification, but which was subsequently excluded voluntarily by the parties for a certain period, is covered by the effects of the original notification.

Delivered in open court in Luxembourg on 20 March 1980.