254/87 · GlobalLawDB

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Judgment of the Court (Third Chamber),14 July 1988^noteIn Case 254/87REFERENCE to the Court of Justice under Article 177 of the EEC Treaty by the tribunal de grande instance, Alençon, for a preliminary ruling in the proceedings pending before that court betweenSyndicat des libraires de NormandieandL'Aigle distribution SA, centre Leclerc, Saint Sulpice sur Risle,THE COURT (Third Chamber)composed of J. C. Moitinho de Almeida, President of Chamber, U. Everling and Y. Galmot, Judges,Advocate General: Sir Gordon SlynnRegistrar: H. A. Rühi, Principal Administratorafter considering the observations submitted on behalf ofSyndicat des libraires de Normandie, by G. Delahaye,L'Aigle distribution SA, centre Leclerc, by G. Parleani,the French Government, by J. P. Puissochet and C. Chavance,the Commission of the European Communities, by C. Durand and N. Coutrelis,having regard to the Report for the Hearing and further to the hearing on 19 April 1988,after hearing the Opinion of the Advocate General delivered at the sitting on 2 June 1988,gives the following

Judgment

1By order of 5 August 1987 which was received at the Court on 21 August 1987, the tribunal de grande instance (Regional Court), Alençon, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of certain rules of the EEC Treaty relating to competition in order to be able to assess the compatibility with Community law of national legislation requiring all publishers or importers of books to fix a retail sale price for books published or imported by them.

2Under French Law No 81-766 of 10 August 1981 concerning book prices (Journal Officiel de la République Française of 11 August 1981, p. 2198) all publishers and importers of books are required to fix retail prices for the books which they publish or import. Under the fourth paragraph of Article 1 of that law retailers must charge an actual retail price between 95 and 100% of that price. If the provisions of that law are breached actions for an injunction or for damages may be brought inter alia by any competitor or association of book publishers or distributors.

3As regards imponed books, the fifth paragraph of Article 1 of the Law of 10 August 1981 provides that ‘where imported books were published in France, the retail price fixed by the importer shall be no less than that fixed by the publisher’.

4In its judgment of 10 January 1985 (in Case 229/83 Leclerc v Au blé vert [1985] ECR 1) the Court held that that obligation imposed on importers was in principle a measure having equivalent effect to a quantitative restriction on imports, prohibited by Article 30 of the Treaty, as regards the sale of books published in France and re-imported after previously having been exported to another Member State. Following that judgment a sixth paragraph was added to Article 1 of Law No 81-766 of 10 August 1981 by Law No 85-500 of 13 May 1985 (Journal Officiel de la République Française of 14 May 1985, p. 5415) which provides that the provisions of the fifth paragraph relating to the importer's obligations concerning retail prices ‘are not applicable to books imported from a Member State of the European Economic Community unless it is established, in particular by the fact that the books have not actually been marketed in that State, that the object of the operation was to exclude the sale to the public from the provisions of the fourth paragraph of this article’.

5On 28 April 1987 the Syndicat des libraires de Normandie (Normandy Booksellers' Association) brought interlocutory proceedings before the tribunal de grande instance, Alençon, seeking an injunction to prevent l'Aigle distribution SA, centre Leclerc (hereinafter referred to as ‘Aigle distribution’) from selling books at prices lower than those authorized by Article 1 of the Law No 81-766 of 10 August 1981 as amended by Law No 85-500 of 13 May 1985. Aigle distribution did not dispute that it was engaged in the alleged practice but argued in its defence that the French rules did not comply with the competition rules in the EEC Treaty. The tribunal de grande instance considered that the case raised the problem of whether the reform enacted by Law No 85-500, which restores to certain undertakings complete freedom to fix book prices, allowed the creation of price agreements and the setting up of captive distribution networks. Furthermore, it considered that the Court of Justice had not yet decided the question whether the fact that power to fix retail selling prices unilaterally was delegated to publishing houses within the National Publishers' Association enabled them to abuse a dominant position within the common market.

6Accordingly, by order of 5 August 1987, the tribunal de grande instance, Alençon, stayed its proceedings and referred the following questions to the Court of Justice for a preliminary ruling:1. Does the fact that the freedom to fix prices is restricted to a single category of trader facilitate the establishment of captive or controlled distribution networks and therefore constitute an infringement of the combined provisions of Article 3 (f) and Articles 5 and 85 of the EEC Treaty or at the very least detract from their effectiveness?2. Does the delegation of powers by the French law to certain traders, namely publishers, infringe Article 86, and in the alternative Article 85, or at the very least detract from their effectiveness, by virtue of the fact that the selling price is fixed within a single trade in the light of economic principles which are not determined by competition or by the market?’

7Reference is made to the Report for the Hearing for a fuller account of the facts of the main proceedings, the provisions of national law in question and the observations submitted to the Court which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

Interpretation of Article 3 (f) and Articles 5, 85 and 86 of the Treaty

8In its questions the tribunal de grande instance, Alençon, is essentially asking whether the introduction or maintenance in force by a Member State of rules on retail prices for books such as those described above is contrary to the Member States' obligations under the second paragraph of Article 5 of the Treaty in so far as such national rules are capable of depriving Articles 85 or 86 of the Treaty of their effectiveness by facilitating the establishment of captive distribution networks or the abuse of a dominant position.

9Aigle distribution takes the view that, even in the absence of a common policy with regard to books, the delegation by national rules of the responsibility for determining the obligatory retail prices for books to certain traders detracts from the effectiveness of Articles 85 and 86 of the Treaty in so far as those rules do not prevent those traders from engaging in anticompetitive conduct.

10In this respect it must be declared that the Court has consistently held (see most recently the judgment of 1 October 1987 in Case 311/85 Vereniging van Vlaamse Reisbureaus [1987] ECR 3801) that Member States may not adopt or maintain in force measures which could deprive the competition rules applicable to undertakings of their effectiveness, in particular by requiring or favouring the conclusion of agreements contrary to Article 85 of the Treaty or reinforcing the effect of such agreements.

11As regards the alleged establishment of captive distribution networks it should be recalled that the Court noted in its abovementioned judgment in Case 229/83 that legislation of the type applicable in France at that time did not require agreements to be concluded between publishers and retailers or other behaviour of the sort contemplated by Article 85 (1) of the Treaty but imposed on publishers and importers a statutory obligation to fix retail prices unilaterally. The Court therefore held that in the absence of a Community competition policy concerning purely national systems and practices in the book trade, Member States' obligations under Article 5 of the EEC Treaty, in conjunction with Articles 3 (f) and 85, are not specific enough to preclude them from enacting legislation of the type at issue, provided that such legislation is consonant with the other specific Treaty provisions, in particular those concerning the free movement of goods.

12This assessment cannot be affected by the amendment of the French rules which took place in 1985. It is true that under the sixth paragraph of Article 1 of Law No 81-766 of 10 August 1981 as amended by the abovementioned Law No 85-500 of 13 May 1985 every importer is, in principle, free to fix for books published in France and imported from another Member State a retail price which may be different from the price fixed by the French publisher. This freedom conferred on the importers cannot be considered to be a State measure whose object or effect is to require or favour the conclusion of agreements contrary to Article 85 of the Treaty or to reinforce their effects. The abovementioned provision places importers on the same footing as publishers with regard to the power to fix retail prices freely and its consequence ought therefore be to intensify competition in the book trade.

13As for the allegations made by Aigle distribution that French publishers' conduct has been contrary to Article 85 of the Treaty, that is a question of fact the assessment of which, in the context of the preliminary ruling procedure, is a matter for the national court.

14As regards the conformity with Article 86 of the Treaty of national rules such as those referred to by the national court, it is sufficient to declare that the fact that a class of traders is obliged to fix the retail price of goods produced or imported by them does not of itself confer on them a dominant position in so far as those rules do not in any way interfere with the freedom of each of those traders to determine those price levels independently. It should be added that the order for reference reveals no facts stemming from any abuse of such a position and resulting from a causal link between the conduct of the traders and the rules in question.

15Consequently the answer to the questions referred by the tribunal de grande instance, Alençon, should be that, as Community law stands, the second paragraph of Article 5 of the EEC Treaty, in conjunction with Articles 3 (f) and 85 and 86, does not prohibit Member States from enacting legislation whereby the retail price of books must be fixed by the publisher or importer thereof and is binding on all retailers, provided that such legislation is consonant with the other specific provisions of the Treaty, in particular those relating to the free movement of goods.

Costs

16The costs incurred by the French Government and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings 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 (Third Chamber),in answer to the questions referred to it by the tribunal de grande instance, Alençon, by order of 5 August 1987, hereby rules: As Community law stands, the second paragraph of Article 5 of the EEC Treaty, in conjunction with Articles 3 (f) and 85 and 86, does not prohibit Member States from enacting legislation whereby the retail price of books must be fixed by the publisher or importer thereof and is binding on all retailers, provided that such legislation is consonant with the other specific provisions of the Treaty, in particular those relating to the free movement of goods.

Delivered in open court in Luxembourg on 14 July 1988.