OPINIONMR OF WARNER —CASESJOINED32/7836 82/78 AND TO

OPINION OF MR WARNER — JOINED CASES 32/78 AND 36 TO 82/78

OPINION OF MR ADVOCATE GENERAL WARNER

DELIVERED ON 12 JUNE 1979

My Lords,

Introductory

These actions are brought by BMWBelgium N.V. ("BMW Belgium") and by47 BMW dealers in Belgium to challengea Decision of the Commission dated 23

December 1977 (78/115/EEC, OJ L 46of 17. 2. 1978, p. 33). By Article 1 of thatDecision the Commission declared that

the Applicants had infringed Article 85(1) of the EEC Treaty by agreeing, onthe basis of two circulars dated 29

September 1975, to a general prohibitionon exports, and by maintaining thatprohibition in force from 29 September1975 to 20 February 1976. By Article 2fines were imposed in respect of theinfringement amounting to 150 000 unitsof account (or 7 500 000 BF) in the caseof BMW Belgium and, varyingly, to2 000, 1 500 or 1 000 units of account(or, respectively, 100 000, 75 000 and50 000 BF) in the case of each dealer.

Two major questions are for decision byYour Lordships:

(1) Did the Commission correctlyinterpret the two circulars of 29September 1975, together with theacceptance of their terms by the 47dealers in question, as constitutingan agreement for the prohibition ofall re-exports of new BMW carsfrom Belgium? The Applicants

concede (as I understand it) thatsuch an agreement would infringeArticle 85 (1); their contention isthat the circulars were aimed only atsales to non-approved dealers inbreach of contracts entered into bythe BMW dealers in Belgium withBMW Belgium.

(2) If the answer to the first question is"Yes", were the fines imposed on theapplicants appropriate?

BMW Belgium is a wholly owned sub­sidiary of the wellknown BayerischeMotoren Werke AG of Munich, which,following the example of the parties, Ishall call "BMW Munich".

The standard form contracts under

which BMW Munich supplies itsproducts to dealers in Germany were theobject of a Decision of the Commissiondated 13 December 1974 (75/73/EECOJ L 29 of 3. 2. 1975, p. 1) grantingthose contracts, for a limited period,exemption under Article 85 (3) of theTreaty from the prohibition contained inArticle 85 (1). By means of thosecontracts BMW Munich maintains a

system of selective distribution through-approved dealers. It is an essentialfeature of the system that approveddealers are prohibited from resellingBMW products to non-approved dealers.They are, however, free to resell to otherapproved dealers or to consumers, notonly within their own concessionterritory but anywhere in the common

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market; and purchases may be made onbehalf of consumers (and I assume,though it is nowhere expressly stated inthe papers before the Court, on behalf ofother approved dealers) through non-approved dealers acting purely asintermediaries. The contracts as orig­inally notified by BMW Munich to theCommission contained a generalprohibition of exports by BMW dealersto other Member States. TheCommission made it a condition of

granting exemption under Article 85 (3)that that prohibition should be deleted(see paragraphs 11, 12 and 34 of theDecision).

BMW products are imported intoBelgium by BMW Belgium anddistributed through a similar network ofapproved dealers. The standard form ofcontract entered into by the Belgiandealers largely corresponds to that of thecontracts entered into by Germandealers. It contains no exportprohibition. Article 1 provides:

" …

Le concessionnaire s'interdit toutefoistoute vente à des revendeurs de véhicules

ou de pièces detachées non-agréés pourla distribution des produits contractuels,sauf l'hypothèse de pieces de rechange etéquipement d'origine démandés aux finsde reparation ..."

On 13 January 1975 BMW Belgiumnotified the standard form contract to

the Commission and applied forexemption under Article 85 (3). Therehas so far been no decision on that

application. The Commission explainedto us that, having clarified its generalapproach to selective distribution systems

by granting temporary exemption toBMW's German dealers' contracts, it isnow conducting an overall examinationof the distribution system for BMWproducts in the whole of the commonmarket. Some of the relevant contracts

(notably those in force in France and inthe United Kingdom) were not notifiedto it until 1977 and 1978. The

Commission is particularly disturbed bythe persistence of different prices forBMW cars, motorcycles and spare partsin different Member States. It hopeshowever to conclude its examination

soon after the end of the presentproceedings.

In 1975 prices for new BMW cars wereappreciably lower in Belgium than inother Member States, owing, in part atleast, to a price freeze imposed by theBelgian Government between 5 May and1 November 1975.

The lower prices in Belgium led to amarked increase in the re-exportation ofBMW vehicles from that country. Someof those re-exports were made to non-approved dealers acting on their ownaccount.

BMW Belgium reacted by addressing anumber of letters to individual Belgiandealers reminding them of the terms ofArticle 1 of their contracts (see theletters of May and June 1975 in Annex 5to the Defence in Case 32/78). It alsosent out a number of circulars to all the

BMW dealers in Belgium: Having regardto the central role played by thosecirculars in this case, I shall have to readthem in full. They were issued in French

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and Dutch, and I shall read the French.It was not disputed that the Dutch hadexactly the same meaning.

The first circular was dated 4 July 1975and was in these terms:

"Ventes à l'étranger

Messieurs,

Nous devons vous faire savoir que nosusines de Munich nous ont communiquéle fait que plusieurs concessionnaires ontvendu des voitures BMW aux Pays-Basou en Allemagne.

Un fait qui est difficilement compréhen­sible pour nous dans une périodependant laquelle nous devons fournir nosvoitures par des contingents limités.

De l'autre côté nous devons attirer votre

attention sur le fait que chaque conces­sionnaire BMW s'est obligé en signant lecontrat de concession BMW de ne pasfournir des produits BMW à des reven­deurs non agrees pour la vente desproduits contractuels BMW.

Des concessionnaires qui vendent desvoitures par l'intermédiaire de tels reven­deurs en Belgique ou à l'étranger, ontcommis une infraction grave contre lesarticles du contrat de concessionnaireBMW.

Nous devons vous faire savoir que noussommes tenus de réagir sévèrement et sinécessaire de résilier le contrat deconcession BMW au cas où de tellesinfractions seront commises."

Your Lordships observe that, already inthat circular, BMW Belgium was

expressing its concern that there shouldbe any re-exports from Belgium at all.But undoubtedly the emphasis in thecircular was on the prohibition of salesto non-approved dealers.

Despite the circular, re-exports fromBelgium, including sales to non-approveddealers, continued. There are among thepapers before the Court copies of anumber of letters sent by BMW Belgiumto individual Belgian dealers about suchre-exports in July, August and September1975 (see Annex 5 to the Defence andAnnexes 7 and 8 to the Rejoinder inCase 32/78). Some of those letters wentfurther than to seek to prevent sales tonon-approved dealers. Some of themwere couched in terms suggesting thateven sales through such dealers (asintermediaries) to consumers wereforbidden and some went so far as to

suggest that there should be no salesabroad at all. At the terms of one of

these, of which it had received a copy,BMW Munich, conscious no doubt of itsobligations under Communitiy law,became alarmed, and wrote to BMWBelgium, on 22 July 1975, drawing itsattention "once again" ("noch einmal")to the fact that a re-exportation did notin itself constitute a breach of the

dealer's contract and asking BMWBelgium to concern itself only withimproper sales to dealers (Annex 10 tothe Rejoinder in Case 32/78).

On 29 September 1975 the two circularswere issued on the basis of which theCommission held that Article 85 of the

Treaty had been infringed. The drafts ofthose circulars had been submitted byBMW Belgium to Counsel for him tosettle. (He was not one of the Counselwho appeared before us). In returning

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the settled drafts to BMW Belgium on 26September 1975 he wrote this (Annex tothe Reply):

"Messieurs,

BMW/Vente étranger/réf. 27466

J'ai examiné les documents qui m'ont étéremis par M. Thyssen lors de notredernier entretien.

J'ai eu l'occasion à ce moment de luifaire part des différentes remarques etmodifications qui, à mon avis, devaientêtre apportées à ce texte afin d'éviterqu'il ne soit en contradiction tropflagrante avec les dispositions de l'article85 du traité de Rome.

J'y ai supprimé dans toute la mesure dupossible toute mention relative à desmesures de rétorsion qui pourraient êtreprises par BMW AG à l'encontre dumarché belge dans son ensemble.

Il me paraît, quant à moi, que le simplefait d'annoncer lesdites menaces, sansmême passer le cas échéant à leur exécu­tion, constitue déjà une infraction à lalegislation communautaire et pourraitêtre utilise par un concessionnaire ou partoute personne désireuse de nuire àBMW.

A fortiori si des mesures devaient être

effectivement prises, l'infraction à lalegislation communautaire seraitévidente.

Je suppose que vous ne manquerez pasd'attirer l'attention de votre société mère

sur ce point.

Je tiens également à attirer votre atten­tion sur le fait que des retards tropimportants de livraison ou des non-livrai­sons qui trouveraient leur origine dansde telles mesures, entraîneraient trèsprobblement de nombreux litiges entrevotre firme et vos concessionnaires ainsi

qu'entre vos concessionnaires et leursclients.

J'attire enfin votre attention sur le faitque le texte des circulaires telles qu'elles

ont été rédigées et revues par moi, cons­tituent incontestablement le maximun

au-delà duquel on ne peut aller sansprendre de risques certains.

Déjà dans leur forme actuelle et édul­corée, ces circulaires se situent incontes­tablement à la limite de ce qui ne doitpas être franchi.

Je reste bien entendu à votre entièredisposition pour tous renseignementscomplémentaires."

Of the two circulars issued on 29

September 1975 the first was addressedby BMW Belgium to all the BelgianBMW dealers. It was in these terms:

"Vente de nouvelles voitures BMW à

l'étranger

Messieurs,

En dehors de lettres individuelles à

certains concessionnaires nous avons déjàau 4. 7. 1975 attire l'attention de vous

tous aux stipulations du contrat deconcession BMW concernant la ventedes produits BMW.

Néanmoins nous devons constater quenous recevons toujours des rapports de lapart de nos usines de Munich et de l'im­portateur des Pays-Bas, concernant desventes de voitures BMW dans ces payspar les concessionnaires beiges etmalheureusement nous devons en tirer la

conclusion que ceux-ci ne peuvent ou neveulent pas voir les consequences deleurs actions.

Au cours d'une reunion extra-ordinairedu conseil consultatif des concession­

naires nous avons exposé ce qui suit:

1. Un certain nombre de concession­

naires livre des voitures en Allemagneet aux Pays-Bas, ceci c'est un faitconstaté.

2. Il y a deux raisons pour ce phéno­mène:

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1) La difference de prix

2) Très vraisemblablement le fait quecertains concessionnaires disposentd'un stock trop important ou malassorti.

3. Chacun comprendra facilement queles "usines BMW de Munich peuventen tirer seulement deux conclusions:

a) les prix en Belgique sont trop bas

b) les concessionnaires belges onttrop de stock.

Et les conséquences en seront:

a) nos prix vont être adaptés aussivite que possible aux prix des paysenvironnants.

b) la livraison de voitures neuves pourla Belgique sera diminuée à partirdu mois d'octobre 1975.

4. Vous crééz pour vous-mêmes déjà desdésavantages énormes par le fait quevous vendez, dans une période où l'onn'a pas assez de voitures, à des clientsqui:

a) n'apparaîtront jamais dans votreatelier

b) auxquels vous ne pourrez jamaisvendre des pièces détachées ou desaccessoires

c) qui vous donneront pas la possibi­lité de faire un profit additionnelpar la revente de leur voiture d'oc­casion

d) qui ne vous achèteront jamais unedeuxième ou troisième BMW

comme le font en général lesclients de votre propre région.

5. En dehors de tout cela vous crééz des

difficultés énormes pour vous-mêmeset vos collègues en vue des mesuresque BMW Munich serait logiquementamenées à prendre, cela veut dire, uneréduction importante des quantités devoitures prévues principalement pourla Belgique.

Nous croyons donc que dans cette situa­tion il y ait seulement une solution:aucun concessionnaire BMW en

Belgique ne vendra à l'avenir des voituresà l'étranger ou à des firmes qui fourni­raient des voitures à l'étranger.

C'est une question de solidarité et desauvegarde du réseau belge.

Cette solidarité absolue du réseau

complet BMW et le respect de cette poli­tique de vente seront les seuls argumentsqui permettront de renouveller laconfiance au réseau BMW belge.

Veuillez-bien donner votre accord avec

ces propositions en signant la copie de lalettre ci-jointe pour accord.

Vous trouverez en annexe une declara­tion des membres du conseil consultatif

des concessionnaires qui sont unanimesdans leur accord avec nos arguments etqui expliqueront leur point de vuepersonnellement au cours des réunionsrégionales."

The second circular of 29 September1975 was addressed to all the BelgianBMW dealers by the Dealers' AdvisoryCommittee (the "conseil consultatif desconcessionnaires"). This appears to be abody elected by the dealers to liaisebetween them and BMW Belgium. Itconsisted at the time of eight members,who were proprietors of or held seniorpositions in firms which were approvedBMW dealers. We were told that theyhad merely signed what was placedbefore them on behalf of BMW Belgium.It was in the following terms:

"Ventes à l'étranger

Cher Collègue,

Comme membres du conseil consultatifdes concessionnaires nous sommes tous

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BMW v COMMISSION

d'accord avec les faits exposés par BMWBelgium dans la lettre du 29. 9. 1975.

Nous le trouvons vraiment regrettableque les réseau complet des concession­naires devra souffrir des conséquencesdésavantageuses qui ont leur origine dansle fait qu'un certain nombre de conces­sionnaires n'a pas suivi les conseils del'importateur du 4 juillet 1975 et qui ontcontinué à livrer des voitures à l'étranger.

Nous avons demandé qu'on nous fasseconnaître les noms de ces concession­

naires de sorte que nous, votre conseilconsultatif des concessionnaires, soyonsà même de faire savoir à vous tous

lesquels de vos collègues sont responsa­bles pour une réduction éventuelle desquantités des voitures 2-portes et 518pour la Belgique.

Le conseil consultatif des concession­

naires considère sa tâche la plus impor­tante de donner au réseau BMW des

bons conseil. Dans ce cas ce conseil peutuniquement être le suivant: 'plus aucunevente en dehors de la Belgique!'

Vous serez invité dans les prochainsjours à des réunions régionales au coursdesquelles nous voudrions vous donnerdes informations plus détaillées concer­nant ce problème important."

Forty-seven dealers (out of 90), i.e the47 who are applicants in theseproceedings, complied with the requestcontained in the first circular that theyshould sign a copy of it to mark theiragreement.

Regional meetings as forshadowed in thecirculars were held on 13 and 31

October 1975, but nothing of particularmoment seems to have emerged at them.

On behalf of BMW Belgium importancewas attached to a further circular which

it issued on 2 October 1975, dealingspecifically with the activities of a firmcalled Pentacom N.V. of Antwerp(Annex 1 to BMW's Answers to theCourt's Questions). That circular was inthese terms:

"Messieurs,

Nous venons d'apprendre que la firmasusdite agit comme intermédiaire pourdes importateurs allemands et mêmepour des concessionnaires BMW alle­mands pour acheter chez des concession­naires belges des voitures destinées pourd'Allemagne.

Dans un cas bien précis il nous a étécommuniqué que la firma Pentacomaurait commande des voitures, soit disantpour la Belgique, et les a expédiées paraprès en Allemagne.

Nous le croyons donc utile d'attirervotre attention sur l'article du contrat de

concession BMW s'y référant qui nevous permet pas de vendre des voituresvia des revendeurs non agréés."

It was submitted that that circular

showed that BMW Belgium's trueconcern throughout was to enforce theclause in the BMW dealers' contracts

forbidding sales to non-approved dealers.It seems to me however that the circularwas equivocal. Why, if that was its onlypurpose, the reference to "et même pourdes concessionnaires BMW allemands"?

And why the reference to Pentacom'spurchase "soit disant pour la Belgique"?If Pentacom was not an approved dealer,a sale to it was a breach of contract even

if the destination of the cars in questionwere the Belgian market. The fact thatthe true destination was the German

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market made no difference. Moreover

the last sentence was positivelymisleading: a sale "via" a non-approveddealer was permitted if he were acting asan intermediary for a consumer or foranother approved dealer.

After hearing from BMW Belgium of thecontent of the circulars of 29 September1975, BMW Munich wrote to BMWBelgium on 17 October 1975, congratu­lating BMW Belgium on taking action tocurb sales to non-approved dealers, butcontinuing:

"As already mentioned on 17 January,23 June and 22 July 1975, we must againask you, in respect of any measurestaken, to bear in mind that:

— no action may be taken against yourdealers simply because they have re­exported cars; warnings may be givenonly where a dealer is suspected ofselling cars to non-approved dealersin breach of his agreement,

— no action may be threatened againstyour dealers unless made necessaryby a proved breach of theiragreement.

This instruction must also be compliedwith in any correspondence betweenBMW Belgium SA and the Belgiandistribution network."

The papers before the Court includecopies of a few letters written by BMWto individual Belgian BMW dealers inOctober 1975. They are in terms thatvirtually equiparate any exportation witha breach of the dealer's contract (seeAnnex 5 to the Defence in Case 32/78).

A great deal of the evidence and of theargument before us concerned the

activities of two German firms, namelyAutomobilimporte C. Heuer of Dillingen("Heuer") and MGH MotorgesellschaftmbH of Herford ("MGH"). They werenon-approved dealers and I wouldaccept, on the evidence, the contentionof BMW Belgium that they never tradedin BMW cars except on their ownaccount, whatever they may have donein relation to other makes. It would

follow that any sale by an approvedBMW dealer to either of them was inbreach of that dealer's contract. There

appear to have been a number of suchsales.

It seems to me however that the activities

of Heuer and of MGH are relevant onlyin two respects, and in those onlybecause they form part of the history ofthe case.

Firstly it was as a result of applicationsmade by Heuer and by MGH, on 24November 1975 and 9 December 1975

respectively, under Article 3 of Regu­lation No 17, that the Commissioncommenced the proceedings that led toits Decision of 23 December 1977. The

point was briefly taken on behalf ofBMW Belgium that, since neither Heuernor MGH could "claim a legitimateinterest" in the matter, those proceedingsmight be invalid. In my opinion thatpoint is a bad one. The Commission wasperfectly entitled to carry on theproceedings "upon its own initiative",whatever might be Heuer's or MGH'sstanding.

Secondly, it became common groundduring the course of the argument beforeus that it was as a consequence of anaction instituted by MGH against BMW

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BMW v COMMISSION

Belgium in the Rechtbank vanKoophandel of Antwerp that BMWBelgium, on 20 February 1976, sent yetanother circular to the BMW dealers in

Belgium. This circular was in thefollowing terms:

"Vente de voitures BMW neuves à des

revendeurs non agréés

Messieurs,

Par notre lettre du 29 septembre 1975nous avons attiré votre attention sur la

nouvelle situation du marché belge suiteà la vente de voitures BMW neuves à des

revendeurs situés à l'étranger au cours del'année 1975.

Nous vous avions à l'époque formulé àce sujet différents conseils et nous avionsattiré votre attention sur ce qui nous asemble et qui nous semble toujours êtrevotre intérêt personnel.

Contrairement à notre propos il nous aété rapporté que cette circulaire ainsi queson annexe avaient été considérées pardes tiers comme pouvant être des direc­tives de l'importateur à son réseau dedistributeurs.

Si tel a pu être le cas nous entendons parla présente mettre fin à toute confusion àce sujet.

Il n'a jamais été et il n'est toujours pasde notre intention ni de celle du conseilconsultatif des concessionnaires de vous

donner des directives précises ou de vousformuler des interdictions de réexporta­tion. En toute hypothèse nous vousdemandons de bien vouloir considérer

notre circulaire du 29 September 1975,en tant qu'elle pourrait être interprétéecomme une interdiction à la réexporta­tion, comme nulle et non avenue.

Le but de notre lettre du 29 September1975 consistait à vous rappeler qu'envertu du contrat de concession signé parvous la vente de voitures BMW à des

revendeurs non agréés tant à l'intérieurdu pays qu'à l'étranger est interdite.

En aucun cas nous n'avons voulu et ne

voulons empêcher le concessionnaireBMW de négocier avec un intermédiairedu client particulier, mais nous nousopposons à ce que les concessionnairesnégocient avec les revendeurs.

En accord avec le conseil consultatif desconcessionnaires nous aimerions attirervotre attention encore une fois sur le fait

que votre intérêt financier personneln'est pas limité seulement à la vente devoitures BMW neuves.

Un client qui s'adresse à vous égalementpour l'entretien de sa BMW est acqué­reur de pièces détachées et d'accessoireset utilisateur de prestations de services,ce qui offre aussi une source de bénéficesappréciables.

Cette considération vaut également lorsde la reprise éventuelle de voitures d'oc­casion.

En conclusion un client satisfait vous

achètera aussi sa prochaine BMW.

Nous espérons que ces précisions écarte­ront les doutes éventuels que vous pour­riez ressentir concernant les droits et lesdevoirs des concessionnaires BMW auto­

rises en Belgique."

It was of course because of the issue ofthat circular that the Commission held

that the infringement of Article 85 (1)ceased on 20 February 1976.

The interpretation of the circularsof 29 September 1975

I can be comparatively brief on the.question of the interpretation of thecirculars of 29 September 1975.

The statement in BMW Belgium's owncircular "Nous croyons donc que danscette situation il y ait seulement unesolution: aucun concessionnaire BMW

en Belgique ne vendra a l'avenir des

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voitures à l'étranger ou à des firmes quifourniraient des voitures à l'étranger"and the statement in the AdvisoryCommittee's circular "... ce conseil peutuniquement être le suivant: 'plus aucunevente en dehors de la Belgique!" arequite unequivocal and susceptible of onlyone interpretation. Moreover the wholetenor of the circulars reinforces that

interpretation. The heading of each ofthem does so. The arguments theycontain do so: they are argumentsagainst exporting, not arguments merelyagainst selling to non-approved dealers.The sanctions that are threatened do so:an increase in Belgian prices and areduction of deliveries to the Belgiandealers generally, not the cancellation ofthe contracts of dealers who sell to non-

approved dealers. On behalf of theApplicants much reliance was placed onthe first sentence in BMW Belgium'scircular, referring to its circular of 4 July1975, but that sentence is much too weakto contradict what follows and, in anycase, as I pointed out earlier, the circularof 4 July 1975 had already expressedBMW Belgium's concern that carsshould be re-exported from Belgium atall.

Nor do I find more impressive thearguments of the Applicants based onfactors external to the texts of thecirculars themselves.

First it was said that BMW Belgium mustbe presumed to have been seeking to actin accordance with the wishes of BMWMunich, which were confined to theprevention of exports to non-approveddealers. A passage from my Opinion inCases 6 & 7/73 Commercial Solvents v

Commission [1974] 1 ECR at p. 264 wascited in that connexion. The short

answer is that BMW Belgium clearlyexceeded its instructions from BMWMunich, as the latter's own lettersevinced.

Secondly it was said that the circularsmust be interpreted in the light of theletters that BMW Belgium sent toindividual dealers in the period May toOctober 1975. But those letters, as I havementioned, were not uniformlyconsistent with a desire on the part ofBMW Belgium to prevent only sales tonon-approved dealers. Nor, in any case,could such letters affect the meaning thatthe circulars would have to dealers whohad not received them.

Thirdly it was said that the activities ofnon-approved dealers, in particularHeuer and MGH, were so notorious atthe time that dealers receiving thecirculars would automatically concludethat they were designed to cope with theproblem that those activities created.Maybe so, but a reader of the circularswould conclude that the solution of the

problem was to be a total ban onexports.

Lastly it was said that the behaviour ofthe parties after the circulars had beensent showed that they did not interpretthem as imposing a total ban on exports,because exportations continued after thatdate and BMW Belgium raisedobjections only in cases of sales to non-

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approved dealers. I find thisunconvincing. According . to figuressupplied by BMW Belgium in answer toone of the Court's questions, BMWBelgium was informed between October1975 and February 1976 of 59 re-expor­tations of new cars by Belgian BMWdealers. It was able to ascertain the

identity of the buyer in only 28 of thosecases. In 2 the buyer was a BMW dealer,in 8 he was a private person and in 18 hewas a non-approved dealer. Whateverthose figures show, they do not showthat the recipients of the circularsinterpreted them as forbidding onlyexports to non-approved dealers. As forBMW Belgium's own alleged conduct (asto which there is no relevant evidence

relating to the period after October1975), that could be explained asresulting from BMW Munich's letter of17 October 1975.

I am thus of the opinion that theCommission came to the right conclusionwhen it interpreted the circulars of 29September 1975 as intended to impose atotal ban on exports. That being so therewas a clear infringement of Article 85 (1)of the Treaty by BMW Belgium, by themembers of the Dealers' AdvisoryCommittee and by the other dealers whosigned the first circular, regardless ofwhat the actual effect of what they didmay have been: consider Case 19/77Miller v Commission [1978] ECR 131.

The fines

I turn to the question whether the finesimposed by the Commission on theapplicants were appropriate.

I think it important to have in mind therelevant provisions of Article 15 (2) ofRegulation No 17. They are as follows:

"The Commission may by decisionimpose on undertakings ... fines of from1 000 to 1 000 000 units of account, or asum in excess thereof but not exceeding10% of the turnover in the precedingbusiness year of each of the undertakingsparticipating in the infringement where,either intentionally or negligently ...they infringe Article 85 (1) or Article 86of the Treaty ...

In fixing the amount of the fine, regardshall be had both to the gravity and tothe duration of the infringement."

In the Miller case ([1978] ECR at p. 161)I pointed out (among other things) thatthe Commission's discretion as to theamount of a fine should therefore be

taken to lie in the range between 0%and 10% of the turnover of the under­

taking concerned; that a fine of 10% ofturnover should be taken to be appro­priate to an intentional infringement ofthe gravest kind and of considerableduration, whilst, at the other end of thescale, a fine of less than 1% would beappropriate for a merely negligentinfringement of the most trivial kind andcontinuing only for a short time, in acase where, nonetheless, the circum­stances warranted the imposition of somefine. I also expressed the view that thelower limit of 1 000 u.a. must be taken to

indicate that, if the appropriate finewould be less than that amount, no fineshould be imposed.

Article 17 of Regulation No 17 conferson the Court unlimited jurisdictionto review decisions whereby theCommission has fixed a fine; the Court

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may, under that Article, cancel, reduceor ■ increase the fine. That does not,however, in my opinion, mean that theCourt should, in every case broughtbefore it, substitute its own assessment ofthe appropriate fine for theCommission's. The Court should, in myopinion, alter the amount of a fineimposed by the Commission only ifpersuaded that the Commission has, infixing the fine, made a material error offact or of law. Such an error may ofcourse be either implicit or explicit in therelevant decision of the Commission.

On two other points of interpretation ofArticles 15 and 17 of Regulation No 17we were referred by the parties to theOpinion of Mr Advocate GeneralMayras in Case 26/75 General Motors vCommission [1975] 2 ECR at pp. 1388-1390 (Rec. 1975 II, pp. 1389-1391).

It was submitted, firstly, that in thatOpinion Mr Advocate General Mayrashad authoritatively defined whatconstituted, for the purposes of Article15, an "intentional" infringement ofArticle 85 (1) or Article 86 of the Treatyand what, in contrast, constituted only a"negligent" infringement of it. I do nothowever, for my part, read his Opinionas intended to supply exhaustivedefinitions of those concepts. MrAdvocate General Mayras was, I think,concerned to deal only with the facts ofthe case before him and in particular toshow why, in his view, General Motorshad not infringed Article 86intentionally. At all events his Opinionhas now been overtaken by the Judgmentof the Court in the Miller case. The

Court there decided that one who has

adopted or accepted a clause which hemust have known had as its object therestriction of competition within thecommon market must be held to have

intentionally committed an act prohibitedby the Treaty, whether or not he wasconscious of infringing the prohibitioncontained in Article 85 (see paragraph 18of the Judgment).

Secondly, attention was drawn to thefact that, in that Opinion, Mr AdvocateGeneral Mayras had expressed the viewthat, where the Commission had fined anundertaking on the footing that it had"intentionally" infringed Article 85 (1)or Article 86 of the Treaty, the Courtcould not, if it found that the under­taking had acted only "negligently",alter the amount of the fine accordingly,but must then cancel it altogether. Fromthat view I must express my respectfuldissent. The powers conferred on theCourt by Article 17 of Regulation No 17are in the widest terms and are, in myopinion, sufficient to enable the Court todo in every case whatever it considersthat justice requires.

In the present case the Commission heldthat BMW Belgium and the eightmembers of the Dealers' AdvisoryCommittee had infringed Article 85 (1)intentionally, and that the other dealerswho had signed a copy of the firstcircular had, in doing so, been "at leastnegligent".

As I mentioned at the outset the

Commission imposed on BMW Belgiuma fine of 150 000 units of account or

7 500 000 BF. This appears to have beenless than 1/2% of the amount of BMW

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Belgium's turnover for the accountingyear ended 30 September 1975 (seeAnnex 6 to the Defence in Case 32/78)and therefore almost at the lowest end of

the scale prescribed by Article 15 ofRegulation No 17. Nonetheless BMWBelgium seeks the cancellation of or,alternatively, a reduction in the fine.

Through the arguments put forward onbehalf of BMW Belgium in support of itsclaim for the cancellation or reduction ofthe fine there runs the same thread as

through its arguments on the question ofinterpretation of the circulars. BMWBelgium's sole purpose, it is said, was tostop sales to non-approved dealers. If,however, as I think, the Commission wasright in holding that the circulars, on theface of them, had as their object toimpose a total ban on exports, and that itwas that, essentially, that constituted theinfringement of Article 85 (1), it is tothat that the amount of the fine must berelated.

Three specific points were made onbehalf of BMW Belgium.

First it was contended that the

imposition of the fine constituted abreach of Article 15 (5) of RegulationNo 17, which precludes the impositionof a fine in respect of, inter alia, "actstaking place ... after notification to theCommission and before its decision in

application of Article 85 (3) of theTreaty, provided they fall within thelimits of the activity described in thenotification". The immunity conferredby that provision could not howeverextend to the ban on exports enjoined bythe circulars, which was never notified tothe Commission and in respect of whichexemption under Article 85 (3) was neverapplied for. The Commission does notdispute that the immunity would extendto the prohibition of sales to non-approved dealers contained in Article 1of each dealer's contract, but it was notin respect of that that the fine wasimposed.

Secondly it was contended on behalf ofBMW Belgium that, if it had infringedArticle 85 (1), it had not done sointentionally, but at most negligently,because its true intention had been onlyto stop sales to non-approved dealers.Reference was made to the fact that

BMW Belgium had taken the precautionof consulting Counsel on the text of thecirculars. In the light of the evidence andof the Judgment of the Court in theMiller case, that contention must, in myopinion, fail. BMW Belgium deliberatelyuttered documents in terms restrictive of

competition within the common market;and of the plain meaning of thosedocuments it cannot be heard to say thatit was unaware. Nor would it matter if

BMW Belgium did not have the terms ofArticle 85 in mind. In fact however it

was expressly referred to that Article byCounsel. In the Miller case the Court

held (contrary to the view I hadexpressed) that the opinion of Miller'slegal adviser could not be "a mitigatingfactor". Here the opinion of Counselwas, to my mind, if anything, an ag­gravating factor. It conveyed thatCounsel thought the circulars contrary to

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Article 85 but hoped that, with theemendations he had made, theirincompatibility with it would not be "tooflagrant".

Thirdly it was contended on behalf ofBMW Belgium that the fine was tooheavy having regard to the short periodfor which the ban had been in force andto the fact that it had had little effect.

But those factors were expressly takeninto account by the Commission, which,in paragraph 26 of its Decision said:

"The fines to be imposed on BMWBelgium and these eight undertakingsshould reflect the fact that the agreementexisted for only a relatively brief periodand that its effects cannot be quantifiedprecisely."

I would therefore wholly reject BMWBelgium's claim for the cancellation orreduction of the fine.

I turn to the amounts of the fines

imposed on the dealers.

On five of the eight members of theAdvisory Committee the Commissionimposed fines of 2 000 units of accountor 100 000 BF each; on the other three itimposed fines of 1 500 units of accountor 75 000 BF each. The five had in 1975

turnovers ranging between 39 842 000BF and 79 913 367 BF, whilst the otherthree had turnovers ranging between12 202 675 BF and 22 213 431 BF (seeAnnex 5 to the Application in Case

42/78). Hence the difference in theamounts of their fines.

On the 39 dealers who were not

members of the Advisor)' Committee butwho signed the first circular, theCommission imposed the minimum fineof 1 000 units of account or 50 000 BF.

No information has been placed beforethe Court as to the amount of the

turnover of any of them, but no point istaken on behalf of any of them related totheir turnover.

As respects these 39, the only questioncan be whether is was permissible for theCommission to impose fines on them atall. There can be no reduction of thefine. No argument was put forward ontheir behalf to show that the Commission

was powerless to fine them, or that ithad erred in the exercise of its power tofine them. It was said that this was the

only case in which the Commission hadbeen known to fine dealers upon whomtheir supplier imposed a restriction asdistinct from fining that supplier himself.The Commission answered that therewere features of this case that were not

present in other cases. Be that as it may,the Court cannot hold that, because theCommission has not fined dealers in

other cases, it may not fine them in anycase: that would amount to a partialrepeal of Regulation No 17.

Much was made on behalf of all the

dealers of the fact that they wereeconomically dependant on BMWBelgium, so that it was difficult for themto resist pressure from BMW Belgium.That fact was fully taken into account bythe Commission in fixing the amounts oftheir fines. But I think that they, and

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others in a similar position, may in futurefind it easier to resist improper pressuresfrom a supplier if they can point to thiscase and thereby show that, by giving into such pressures, they may laythemselves open to fines.

On behalf of the members of the

Advisory Committee it was submittedthat the Commission had erred in

holding that they had infringed Article85 intentionally as distinct fromnegligently. I do not think it did. Themembers of the Advisory Committee,albeit at the behest of BMW Belgium,signed the second circular in full

knowledge of its contents. They cannothave done so in a moment of absent-

mindedness. Here again the Judgment ofthe Court in the Miller case is relevant.

But even if their action is to be regardedas merely negligent, I do not see how thefines imposed on them could properly bereduced. Their role was a much more

active one than that of the other 39, andtheir membership of the Committeeimposed on them an added responsibility.What they did was designed to maketheir fellow BMW dealers fall into line.

The circular they signed even containeda threat addressed to those who did notfall into line.

Conclusion

In the result I am of the opinion that these actions should be dismissed withcosts.

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