In Joined Cases 228 and 229/82,

JUDGMENT OF 28. 2. 1984 — JOINED CASES 228 AND 229/82

In Joined Cases 228 and 229/82,

FORD OF EUROPE INCORPORATED, of Wilmington (County of Newcastle), Delaware (USA),

and

FORD-WERKE AKTIENGESELLSCHAFT, of Cologne (Federal Republic of Germany),

represented by J. Lever QC and C. Vajda, both of Gray's Inn, instructed by P. G . H . Collins, solicitor, and by P. Sambuc of Messrs. Boden, Oppenhoff & Schneider, Rechtsanwälte, Cologne with an address for service in Luxembourg at the Chambers of J.-C. Wolter, 2 Rue Goethe,

applicants,

supported by

JAMES A. LAIDLAW (HOLDINGS) LIMITED, of Edinburgh (Scotland), represented by P. L. O. Leaver, barrister-at-law, and Messrs. Durrant Piesse, solicitors, of London,

and

STORMONT LIMITED, of Kent (England), represented by P. L. O. Leaver, barrister-at-law, and Messrs. Travers Smith, Braithwaite & Co., solicitors, of London,

both having an address for service in Luxembourg at the Chambers of E. Arendt, 34 Β Rue Philippe-Il,

interveners,

ν

COMMISSION OF THE EUROPEAN COMMUNITIES, represented by its Legal Adviser,

John Temple Lang, with an address for service in Luxembourg at the office of O. Montalto, a member of the Commission's Legal Department, Jean Monnet Building, Kirchberg,

defendant,

supported by

BUREAU EUROPÉEN DES UNIONS DE CONSOMMATEURS (BEUG), [European Office of Consumer Unions], of Brussels, represented by Stanley A. Crossick, solicitor of the Supreme Court of England and Wales, with an address for service in Luxembourg at the 'Chambers of E. Arendt, 34 Β Rue Philippe-Il,

intervener,

1130

FORD ν COMMISSION

APPLICATION for a declaration that the Commission's decision of 18 August 1982 relating to a proceeding under Article 85 of the EEC Treaty (IV/30.696 — Distribution system of Ford-Werke AG — Interim measure), published m Official Journal L 256, p. 20, is void,

THE COURT

composed of: J. Mertens de Wilmars, President, T. Koopmans, K. Bahl-mann, Y. Galmot (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, G. Bosco, O. Due and E. Everling, Judges,

Advocate General: Sir Gordon Slynn Registrar: P. Heim

gives the following

JUDGMENT

INDEX

Facts and issues

I — Facts and procedure 1132

A — The Ford Group and its members 1132

B — The manufacture and marketing of Ford vehicles in Europe 1133

C — The roles of the applicants in the Ford Group 1133

D — The institution of proceedings 1134

E — The contested decision 1135

F — The procedure before the Court 1136

II — Conclusions of the parties 1137

III —Submissions and arguments of the parties 1138

Introduction 1138

A — The admissibility of the application in Case 228/82 1140

1. The Commission's arguments 1140

2. The arguments of Ford of Europe Incorporated 1140

1131


Β — The substance of the case 1 1 4 0

First submission 1141

(i) The applicants' arguments 1 1 4 1

(ii) The Commission's arguments 1 1 4 3

Second submission 1 1 4 5

(i) The applicants' arguments 11 4 5


Third submission 1 1 4 8

(i) The applicants' arguments 1 1 4 8


The observations of the intervening parties 1 1 5 3

1. The observations of the Bureau Européen des Unions de Consommateurs [European Office of Consumer Unions] 1 1 5 3

2 The observations of Stormont Limited and James A. Laidlaw (Holdings) Limited 1 1 5 4

IV — Oral procedure 1 1 5 5

Decision

Decision 1 1 5 6

Admissibility 1 1 5 9

Substance of the case

Costs 1 1 6 3

Facts and Issues

The facts of the case, the course of the procedure and the conclusions, submissions and arguments of the parties may be summarized as follows :

I — Facts and p r o c e d u r e

A — The Ford Group and its members

1. Ford of Europe Incorporated (hereinafter referred to as "Ford of Europe"), the applicant in Case 228/82, is a corporation incorporated in the United States of America and has offices in the United Kingdom, Belgium and the Federal

Republic of Germany. It is a subsidiary of Ford Motor Company.

2. Other subsidiaries of Ford Motor Company are Ford-Werke Aktiengesellschaft (hereinafter referred to as "Ford AG"), the applicant in Case 229/82, which is a company incorporated under German law. Ford Motor Company Limited (hereinafter referred to as "Ford Britain") and Henry Ford and Son Limited (hereinafter referred to as "Ford Ireland").

3. In the present cases the European subsidiaries of Ford Motor Company are referred to as "the Ford Group".

1132

FORD ν COMMISSION

4. The Ford Group manufactures and supplies motor cars and other vehicles. It is accepted that neither the Ford Group nor any of its members occupies a dominant position with regard to the sale of cars in the common market.

Β — The manufacture and marketing of Ford vehicles in Europe

1. In Europe, Ford vehicles are manufactured in the United Kingdom by Ford Britain, in the Federal Republic of Germany and in Belgium by Ford AG and in Spain by Ford España.

2. In each European country, with the exception of Luxembourg, Ford vehicles are marketed by a Ford Group company which has responsibility for that geographical market. In the case of the Grand Duchy of Luxembourg marketing is undertaken by Ford Motor Company (Belgique) NV. Ford Britian is responsible for marketing in the United Kingdom and Ford AG is responsible for marketing in the Federal Republic of Germany.

Each marketing company establishes its own sales programme and its own distribution network.

C — The position of the applicants within the Ford Group

1. Ford of Europe coordinates the allocation of economic activity, such as the manufacture and sale of vehicles, among the companies of the Ford Group.

2. On the other hand, Ford AG manufactures Ford vehicles and is also responsible for the sale of the vehicles in the market consisting of the Federal Republic of Germany.

2.1. As a manufacturing company Ford AG is responsible for manufacturing vehicles for export in particular to certain Member States where they are marketed by other companies of the Ford Group, in addition to producing part of its own requirements as the sales company for the Ford Group in the Federal Republic of Germany. Ford AG regularly produces both left-hand drive and right-hand drive vehicles, the latter being constructed to British and German specifications. The differences between the specifications in the case of right-hand drive cars are not significant and relate essentially to the head lights and the speed indicator on the speedometer dial. Ford AG manufactures right-hand drive cars and sells them directly to Ford Britain and Ford Ireland for marketing in the United Kingdom and in Ireland. The sales of Ford AG to Ford Britain represents a considerable percentage of its production.

2.2. As a sales company Ford AG's activities may be summarized as follows:

2.2.1. In the Federal Republic of Germany Ford AG establishes its own sales programme which is tailored principally to meet the requirements of the domestic market. Vehicles are ordered under Ford AG's "Regular Production Ordering" system.

2.2.2. In order to meet special orders which, according to the applicants, do not form part of the sales programme, Ford AG has established two systems for special orders:

1133


(a) The "Special Vehicle Ordering" system is intended to enable distributors and other customers to order vehicles with special specifications. For example, Ford AG has supplied, for use by the German police forces, fleets of vehicles incorporating police specifications which are not found in any other part of its manufacturing programme.

(b) In addition under its "Visit Europe Plan" Ford AG supplies vehicles which do not form part of its sales programme for the German market to persons who are staying temporarily in the Federal Republic, such as diplomats and other Embassy staff.

2.2.3. In order to implement its sales programme on the German market, Ford AG has established a selective distribution system governed by a "Haupthändler-Vertrag" [main dealer agreement] between it and its German distributors. As is stated below that agreement was notified to the Commission in 1976.

2.2.4. Until 1 May 1982 a number of right-hand drive cars, some constructed to British specifications and others constructed to German specifications, were sold in the Federal Republic of Germany.

D — The institution of proceedings

1. On 14 May 1976 Ford AG, in accordance with Article 4 of Regulation No 17 of the Council of 6 February 1962 (Official Journal, English Special Edition 1959-1962, p. 87) (hereinafter referred to as "Regulation No 17"), notified its aforementioned selective distribution system, namely the "Haupthändler-

Vertrag", to the Commission. It was notified with a view to obtaining negative clearance in accordance with Article 2 of that regulation or, in the alternative, an exemption under Article 85 (3) of the EEC Treaty. Notwithstanding the contacts established between Ford AG and the Commission since that time, the Commission had still not adopted a formal decision regarding that agreement by May 1982.

2. By a circular of 27 April 1982, Ford AG informed the German Ford distributors that after 1 May 1982 it would no longer accept any orders which those distributors might place for right-hand drive vehicles and that the "Visit Europe Plan" was to be maintained only for left-hand drive vehicles. Orders for right-hand drive vehicles placed by tourists, diplomats and persons travelling on business would in future have to be taken by a subsidiary of Ford Britain established in London, namely Ford Personal Import/Export Limited.

3. Following that circular the Commission decided to "institute proceedings against Ford AG on 2 July 1982 under Article 6 (1) of Regulation No 17" and sent a statement of objections to Ford AG on 2 July 1982. In that statement the Commission emphasized the following:

"In view of the importance and urgency of the case, the Commission intends to issue a provisional order instructing Ford AG to withdraw the circular of 27 April 1982 sent to German Ford dealers and to reinstate R H D [right-hand drive] vehicles in the company's product range. Following the decision in the interim proceedings, it is planned that the Commission should rule in the main proceedings that the marketing system practised by Ford AG contravenes Article 85 Paragraph (1) of the EEC Treaty and cannot be exempted under Article 85 Paragraph (3) of the EEC Treaty."

1134

FORD ν COMMISSION

4. After hearing the parties on 23 July 1982 and after informing the Advisory-Committee on Restrictive Practices and Monopolies, the Commission adopted Decision IV/30.696 headed "Distribution system of Ford Werke AG — Interim measure (Official Journal 1982 L 256, p. 20), which is the subject of the present proceedings.

E — The contested decision

1. In the aforementioned decision of 18 August 1982 the Commission decided:

"Article 1

Ford-Werke Aktiengesellschaft is hereby required within 10 days from the date of notification of this Decision:

(a) to withdraw its circular dated 27 April 1982 to German Ford dealers;

(b) to inform German Ford dealers that right-hand drive vehicles still form part of Ford-Werke Aktiengesell-schaft's agreed delivery range.

Ford-Werke Aktiengesellschaft shall refrain for the future from taking any measures having the same effect as the circular.

Article 2

In respect of the measures set out in Article 1 a periodic penalty payment of 1 000 ECU per day shall be payable by Ford-Werke Aktiengesellschaft for each day of delay.

Article 3

This Decision shall apply until adoption of the Decision concluding the proceedings."

2. In its statement of the reasons on which it based its decision the Commission stated inter alia:

"The facts

1. On the basis of a Main Dealer Agreement . . . notified to the Commission on 14 May 1976, [Ford AG] operates a distribution system

2. The main provisions of relevance to the present proceeding are the clauses in the Main Dealer Agreement which concern Ford AG's sales range and the vehicles which Ford main dealers are entitled to distribute. These clauses are as follows (translated from the German) :

Article 1 (1)

'Products means all vehicles and original parts as defined below and the bodies for vehicles included in the company's supply range. The other goods included in the supply range are the subject of separate agreements, and do not fall within the definition of products for purposes of this agreement.'

Article 1 (2)

'Vehicles means the standard specification models of all the passenger cars, light commercial vehicles and chassis listed in Annex 1 to this Main Dealer Agreement.'

Article 2 (1)

'The company undertakes to sell its products to the main dealer. The main dealer undertakes to sell these products to final customers or to dealers.

1135


(a) The main dealer may sell vehicles to final customers regardless of whether they are resident in his marketing area . . .

(b) The main dealer may sell vehicles to his own downstream organization and to other main dealers for resale; he may further sell vehicles to dealers resident in another European Community country and authorized to sell such vehicles by a group company. . . .'

17. At the hearing on 23 July 1982 the Ford Group companies did not dispute that their objective in discontinuing sales of right-hand drive vehicles on the Continent was to keep up price levels of new Ford vehicles in the United Kingdom. Unrestricted parallel imports would bring heavy revenue losses, notably to Ford Britain, but also to Ford AG, because the inter-group prices to Ford Britain were higher than the prices to German dealers.

Ford AG told the Commission that if an interim measure were adopted it could be forced on economic grounds to raise the prices for right-hand drive vehicles in Germany so as to discourage parallel exports to the United Kingdom.

21. On 12 May 1982 the Bureau Européen des Unions de Consommateurs (BEUC) made an appli

cation to the Commission, pursuant to Article 3 of Regulation No 17, for the initiation of proceedings against four car manufacturers, including Ford AG.

. . ."

3. In its decision the Commission states that it was adopted "having regard to Council Regulation No 17 . . ., and in particular Articles 3 (1) and 6 (1) thereof." Moreover, the Commission emphasizes that the decision is a temporary and provisional measure which is without prejudice to the measure to be adopted by the Commission to terminate the infringement in accordance with Article 3 (1) of Regulation No 17. The decision on interim measures does not actually find that an infringement has been committed, but merely shows that an infringement is highly probable. The decision is based on the view that it is highly probable that the "Haupthändler-Vertrag" is incompatible with the prohibitions contained in Article 85 (1) and that, by reason of the measures contained in the aforementioned circular of 27 April 1982, it will not qualify for an exemption under Article 85 (3). It is stated that the decision, as already indicated in the statement of objections, constitutes an analogous application of Article 8 (3) (d) of Regulation No 17.

4. The decision was notified to Ford AG on 27 August 1982.

F — The procedure before the Court

1. By applications lodged at the Court Registry on 3 September 1982, the applicants, Ford of Europe and Ford AG, brought two actions both seeking

1136

FORD ν COMMISSION

a declaration that the Commission's decision of 18 August 1982 is void.

2. By separate documents, received on the same day at the Court Registry, the applicants submitted, pursuant to Article 185 of the EEC Treaty and Article 83 (1) of the Rules of Procedure, two applications for the suspension of the operation of the contested decision.

3. Having heard the submissions of the parties at the sitting relating to the adoption of interim measures, the President of the Court, by order of 29 September 1982, decided:

(a) To suspend the operation of Article 1 of the contested decision in so far as it requires Ford AG to deliver right-hand drive vehicles, constructed to British specifications, in the Federal Republic, either directly or through the intermediary of its German distributors, or to execute orders placed by the latter;

(b) To maintain the operation of the said provision as regards the requirement that Ford AG shall execute orders placed by its German distributors in the same conditions as prior to 1 May 1982 for right-hand drive vehicles, constructed to German specifications, of models incorporated in the sales programme to which the "Haupthändler-Vertrag" relates, subject to certain conditions set out in the order; and, in particular, a limitation of the number of vehicles to which the requirement related;

(c) To direct that the delivery requirement as so limited shall apply until a decision is taken by the Commission terminating the administrative proceedings pending or until delivery of the judgment in the main proceedings;

(d) For the rest, to dismiss the applications for the adoption of interim measures.

4. By order of 17 November 1982 the Court decided to join the two cases for the purposes of the oral procedure and the judgment.

5. By order of 1 December 1982 the Court allowed the intervention of the Bureau Européen des Unions de Consommateurs (BEUC) (hereinafter referred to as "the European Office of Consumer Unions") in support of the defendant's conclusions. Finally, by orders of 2 February 1983 the Court also allowed the intervention of two of Ford Britain's distributors of Ford vehicles in the United Kingdom, namely James A. Laidlaw (Holdings) Limited and Stormont Limited, in support of the applicants' conclusions.

6. 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.

II — C o n c l u s i o n s of the pa r t i e s

1. The applicants claim that the Court should:

(a) Review the legality of the decision under Article 173 of the Treaty;

(b) Declare the decision void under Article 174 of the Treaty;

(c) Require the Commission to take the necessary measures to comply with the judgment of the Court under Article 176 of the Treaty;

(d) Order the Commission to pay the costs incurred by Ford; and

(e) Grant any further or other relief to the applicants as may seem appropriate to the Court.

1137


2. The Commission contends that the Court should:

(a) Dismiss the applications, and

(b) Order the applicants to pay the costs.

I I I — Submiss ions and a r g u men t s of the p a r t i e s

Introduction

1.1.1. The applicants explain that Ford AG's dealers place their orders in one of two ways :

(a) Vehicles which form part of Ford AG's sales programme are all built to normal series specifications and are ordered under the Regular Production Ordering system;

(b) Vehicles which are the subject of special orders, by definition, are not built to normal series specifications and must be ordered under the Special Vehicle Ordering system or under the "Visit Europe Plan".

1.1.2. Furthermore, the economic activities of manufacturing and selling of the various members of the Ford Group are separate and distinct. Thus the fact that some companies, like Ford AG, are both manufacturing and sales companies does not create or imply any connection or link between their manufacturing activities and their sales programme. Accordingly there is no connection or link between the vehicles manufactured

and the method by which the sales programme is promoted, that is to say the distribution system.

1.1.3. According to the applicants right-hand drive vehicles have never been included in the sales programme for the German domestic market. They were delivered either under the "Visit Europe Plan", in most cases directly to consumers and in exceptional cases through a Germari distributor who then received an agency commission, or against orders from German distributors under the Special Vehicle Ordering system for vehicles which do not form part of its sales programme but in respect of which it applies the conditions of the "Haupthändler-Vertrag", where it is in a position to fulfil them. In 1976 when Ford AG notified its agreement to the Commission no special orders for right-hand drive cars were placed by dealers with Ford AG and the latter did not supply any such vehicles to its dealers.

1.2.1. On the other hand, in April 1982, at the time of the applicants' decision, Ford AG's dealers were able, for economic reasons beyond the control of the Ford Group (essentially, by reason of monetary fluctuations), to resell right-hand drive vehicles supplied to them by Ford AG at prices substantially below the prices prevailing in the United Kingdom. Consequently, an increasing number of British customers were buying vehicles from German dealers. To continue such sales was therefore threatening to undermine the position of Ford Britain and its distribution network and it would have caused irreparable and long-term damage to Ford Britain as Ford AG's most important outlet for the vehicles manufactured by it, had the situation been allowed to continue. Moreover, the applicants state that the profit margins in favour of Ford Britain and its dealers were very reasonable.

1138

FORD ν COMMISSION

1.2.2. Such continued sales of right-hand drive cars by Ford AG to its German dealers were also creating an incentive to those dealers to divert their energies from their primary function of marketing Ford cars on the German market, where Ford's market share had declined substantially.

1.2.3. In the circumstances the applicants conclude that it was necessary and proper to decide, in April 1982, that Ford AG should discontinue the supply of right-hand drive cars in the Federal Republic of Germany.

2.1.1. The Commission emphasizes that Ford AG's dealer agreement with its German distributors did not distinguish between right-hand drive and left-hand drive motor vehicles or between German and British specifications.

2.1.2. In practice, prior to the circular of 27 April 1982, Ford AG sold both right-hand drive and left-hand drive cars corresponding to German specifications to German dealers who were parties to the dealer agreement. Under the "Visit Europe Plan" Ford AG delivered right-hand drive and left-hand drive cars corresponding to British specifications to the dealers; legally, those cars were sold to individual buyers, the German dealers acting as the buyers' agents.

2.1.3. Noting that the applicants repeatedly state that Ford AG's distribution system did not include the "Visit Europe Plan", the Commission retorts that a distribution "system" includes not only the dealer agreement but also any collateral arrangements, sales pro

grammes, guarantees and the like, which from time to time may apply in the relationship between manufacturers and dealers. The "Visit Europe Plan" was just as much part of the distribution system as the dealer agreement. Moreover, the circular itself showed that the applicants, too, regarded their action as affecting the other parties to the agreement and as representing a change in their practice with regard to such parties.

2.2.1. Finally, the Commission emphasizes that the applicants do not deny that the purpose of the refusal to supply right-hand drive cars was to prevent parallel imports of such cars, bought at German prices, which were on average 20% lower than the British prices, into the United Kingdom. The objective was anti-competitive and contrary to the basic principles of Community law.

2.2.2. In the Commission's view, a car manufacturer which concluded distribution agreements in one Member State to which Article 85 (1) applies should be refused an exemption under Article 85 (3) for those agreements if it stops selling right-hand drive cars in that State at the local price, when it does so in order to prevent intra-brand competition in Member States where there is a demand for such cars and where its sales prices to its dealers are approximately 20 % higher than those in the State in question.

2.2.3. Thus the Commission may, by interim measures, order the undertaking to resume supplies of right-hand drive cars to dealers in the State where the prices are lower and where it had until recently sold them, in order to prevent

1139


car buyers in "right-hand drive" countries from suffering substantial losses as a result of having to pay unnecessarily high prices for their new cars.

A — The admissibility of the action in Case 228/82

1. The Commission questions the admissibility of Ford of Europe's application. It maintains that the contested decision is addressed to a company other than the applicant and that that company does not claim to have suffered any losses itself (as distinct from Ford Britain and Ford AG) as a direct result of the application of the decision. In the circumstances it does not appear to the Commission that the decision is of "direct and individual concern", within the meaning of Article 173 of the Treaty, to Ford of Europe even if Ford of Europe is the authorized representative of the Ford Group. While it takes the view that Ford of Europe would presumably be entitled to intervene in the action brought by Ford AG, the Commission entertains reservations as to the consequences of a possible acceptance by the Court that separate companies, forming part of the same group, could make separate applications or interventions when they could certainly say whatever they wished to say in a single application. Multiple applications add unnecessarily to the length and complexity of written arguments. They also increase legal fees.

2. Ford of Europe contends that the contested decision is of direct and

individual concern to it. It emphasizes that the decision to discontinue the sale of right-hand drive cars in the Federal Republic of Germany was taken by the applicants in conjunction with Ford Britain in April 1982 and that the participation of Ford of Europe in that decision represented an essential part of its responsibility for the coordination of the allocation of economic functions of members of the Ford Group. Furthermore, there is no dispute (and it would appear that the Commission is not disputing the question either) that the decision taken by it in August 1982 is of direct and individual concern to the Ford Group. For that reason the only question is whether Ford of Europe is competent to represent the Ford Group in the present proceedings. In fact the Commission does not dispute that Ford of Europe is the authorized representative of the group.

In those circumstances and taking account of the difficulty the decision would cause Ford of Europe in coordinating economic functions within the Ford Group, it would not be correct to dismiss its action.

Β — The substance of the case

The applicants emphasize that in practice the Commission is saying that it may adopt an interim measure to prohibit an act or omission that is not in itself unlawful if there is a distinct likelihood that such . an act or omission would render a notified agreement ineligible for exemption. They rely essentially on three submissions :

1140

FORD ν COMMISSION

(1) There is no likelihood, and no reasonably strong prima facie case exists for saying, that the omission to supply right-hand drive vehicles in the Federal Republic would render its notified agreement ineligible for exemption.

(2) Even if Ford AG's dealer agreement is not eligible for exemption unless it resumes supplies of right-hand drive vehicles in the Federal Republic of Germany, the Commission is not entitled, by way of an interim measure adopted under Article 3 of Regulation No 17, to require Ford AG to resume such supplies in that State at the prices actually in force since such omission to supply does not constitute an infringement of Article 85 (1) of the Treaty.

(3) The Commission's decision of 18 August 1982 does not satisfy all the other legal requirements necessary for the adoption of interim measures, in particular those laid down by the Court in its order of 17 January 1980 (Case 792/79R Camera Care Ltdv Commission [1980] ECR 119).

First submission

(i) The applicants' arguments

1. The applicants submit that there is no reasonably strong prima facie case for the Commission to refuse to grant an exemption in respect of the dealer agreement notified by Ford AG. The question to be considered is whether the fact that certain vehicles are not supplied in the Federal Republic of Germany is a

relevant fact or circumstance which the Commission ought or has a right to take into account when applying the appropriate procedure under Article 85 (3) of the Treaty.

1.1. According to the applicants a fact or circumstance is relevant for such purposes only (1) if it was caused by the agreement in question or (2) if it nullifies or reduces the benefits flowing from the agreement or aggravates detriments, as the case may be.

1.1.1. As to the causal relationship the existence of the dealer agreement is neither a necessary condition for nor a positive cause of the discontinuance of supply of right-hand drive cars in the Federal Republic of Germany.

1.1.2. As to the effect of discontinuance of supply on the benefits and detriments of the notified agreement, the benefits apply to vehicles supplied under the dealer agreement since discontinuance of supply of right-hand drive cars in the same manner and to the same extent as previously and the detriments, if there are any, arc wholly unaffected by it.

1.2. As to the eight important circumstances on the basis of which the Commission claims to be entitled to refuse to grant an exemption, the applicants observe that many of them were not mentioned in the statement of objections or in the decision. The applicants therefore had no opportunity in the course of the administrative procedure to put forward any argument based upon the alleged circumstances. Consequently the Commission may not rely on them to support its decision. In

1141


any event the eight circumstances do not in any way justify, upon examination, the refusal to exempt Ford AG's dealer agreement. In the present case there is no suggestion that any restriction in the agreement causes excessive rigidity in the market, even if it is aggregated with other similar restrictions in the selective distribution agreements of other suppliers of motor vehicles. Furthermore, the Commission itself concedes that until 30 April 1982 the agreement notified by Ford AG probably qualified for exemption.

1.2.1. Moreover, discontinuance of supplies of right-hand drive cars by Ford AG in the Federal Republic of Germany cannot be equated, as the Commission seeks to equate it, with an export ban: an export ban relates to goods which have been placed on the market whereas a mere omission or refusal to supply is purely unilateral and does not relate to goods which have been placed on the market. The applicants add that a unilateral decision adopted by a supplier who is not in a dominant position to the effect that it will supply to its distributors only certain of the products it manufactures is not an agreement or concerted practice which has as its object or effect the prevention, restriction or distortion of competition within the meaning of Article 85 (1) of the Treaty. The same can be said even if the decision in question was adopted following discussions between a given number of companies which, like the Ford Group, constitute a single undertaking for the purposes of Community competition law since Article 85 does not apply to such a situation. Moreover, Community law does not impose an obligation to supply under that article.

2. The applicants dispute the view of the Commission that it may adopt an

interim decision under Article 15 (6) of Regulation No 17. The basis of any such decision would be as flawed as the basis for the actual contested decision.

3. They go on to state that the fact that a manufacturer supplies all the products it produces to its distributors in a Member State cannot be a precondition for the grant of an exemption under Article 85 (3) of the Treaty in respect of the manufacturers' selective distribution system.

3.1. The applicants maintain that the Treaty does not impose on manufacturers (or on suppliers in general) any obligation to adopt positive measures to enable distributors to compete but simply forbids them to impose restrictions on the competitive capacity of distributors. According to the applicants the Commission forces Ford AG, on the contrary, to deliver products to German , distributors almost wholly for the purpose of enabling them to take advantage of short-term economic conditions and, in so doing, to undermine the profitability of Ford Britain, one of Ford AG's most important customers, and of its distribution network. They are of the opinion that the Treaty does not impose on manufacturers such an obligation to destroy themselves.

3.2. The applicants submit that there is no precedent in Community law, not even the only regulation laying down conditions for the exemption of á distribution system under Article 85 (3) (Regulation No 67/67 of the Commission of 22 March 1967 (Official Journal, English Special Edition 1967, p. 10)), to support the Commission's argument to the effect that the availability of all products in the range is a precondition for the grant of exemption

1142

FORD ν COMMISSION

in respect of the distribution system.

4. The applicants conclude that the discontinuance of the supply of right-hand drive cars by Ford AG to German distributors does not of itself constitute an infringement of Article 85 (1) and that the Commission cannot refuse to grant the exemption requested in respect of the dealer agreement on the ground that supplies have been terminated. As the Commission does not allege that the agreement itself does not satisfy the conditions for the grant of the exemption, the latter should be granted. Accordingly by relying on the incorrect premise that exemption in respect of the agreement should be refused, the Commission had no justification for adopting the interim measure in question.

(ii) The Commission's arguments

1. The Commission disputes the applicants' proposition that a fact or circumstance may be taken into account by the Commission in the course of the procedure for exemption only if it was caused by the dealer agreement or if it reduces the benefits or increases the harm resulting from the agreement. It considers that there is nothing in the Court's case-law to compel the Commission to consider only the kind of facts defined by the applicants. Their argument would make it impossible for the Commission to take account of other similar agreements made with the same supplier. Furthermore, it would exclude consideration of any structural rigidity arising from the fact that a certain number of manufacturers have selective distribution networks for competing products, which would be contrary to what the Court has held.

1.1. The Commission states that Ford AG's change of policy and its refusal to supply right-hand drive cars, as it had done in the past, surely reduces the benefits flowing from the agreement. Likewise, the circular increased the harm resulting from the restrictive effects of the dealer agreement by reducing the number of Ford dealers in the Community who could supply right-hand drive cars.

1.2. The Commission considers that it is certainly entitled to refuse to grant the exemption when:

(1) The difference between the prices applied in the two States is substantial, and transport costs and the cost of any changes in specification which the consumer would need to make are low;

(2) Right-hand drive cars are being produced in one State with a view to sale in another State where the prices are higher than in the first State;

(3) The undertaking has been selling right-hand drive cars at the lower price in the lower-price State;

(4) The cost of manufacturing left-hand drive cars is identical to that of manufacturing right-hand drive cars;

(5) The manufacture of left-hand drive cars is technically very similar to the manufacture of right-hand drive cars and both can be manufactured easily on the same production line.

(6) The undertaking stopped selling right-hand drive cars in the State where the prices are lower solely

1143


because it wished to maintain the prices in the State where the prices are higher;

(7) The discontinuance of the sale of right-hand drive cars may therefore be regarded as the key element in a system of partitioning the market artificially;

(8) Most other car manufacturers have restrictive distribution systems in most Member States so that the structural rigidity of the whole car market is considerable.

The Commission considers that all those eight circumstances exist in this case.

1.2.1. It adds that a refusal to supply, or any other unilateral act preventing exports, may be taken into account in deciding whether to grant an exemption, because it has the same economic effects as an export ban and partitions the market. The Commission points out that it is irrelevant whether the refusal to supply is, of itself, lawful or unlawful. The decision not to supply certain goods to dealers cannot be isolated from the circumtances in which it was adopted. When the Commission is called upon to decide whether an exemption should be granted under Article 85 (3) of the Treaty, it must take into account the actual facts and it is irrelevant in that

respect that the facts result from Ford's "unilateral" act or from Ford AG's dealer agreement or from any other act. Furthermore, the Commission has not ordered Ford AG to supply its German dealers with right-hand drive cars, but has ordered Ford to restore the status quo as it was before it sent the circular of April 1982.

2. The Commission maintains that there is no doubt that it could properly have adopted a decision under Article 15 (6) of Regulation No 17 if the circular of April 1982 had contained an export ban. But that circular went further, rendering any application of Article 85 (3) of the Treaty to Ford AG's restrictive distribution system completely unjustified. If, as it appears to the Commission, Ford AG's distribution agreement is unlawful when combined with its refusal to supply right-hand drive cars in the Federal Republic of Germany, the Commission's final decision would compel Ford AG either to resume supply of right-hand drive cars or to change its agreement in such a way that it no longer falls within Article 85 (1) of Treaty. In fact the Commission considers that the result would have been practically the same if it had adopted an interim decision under Article 15 (6) of Regulation No 17, unless the undertaking chose to continue and to risk having a fine imposed on it. An interim decision ordering Ford AG to resume its previous practice does not interfere with its distribution system and is therefore less onerous for Ford AG than either of the aforementioned decisions. According to the Commission if Ford AG seriously believes that it is more onerous to resume the practice which it had followed until April 1982, it may alter or suspend the dealer agreements it has made in the Federal Republic of Germany in such a way as to

1144

FORD ν COMMISSION

make Article 85 (1) inapplicable to them. The Commission emphasizes that it chose to adopt a decision involving interim measures because it wished to protect consumers' interests as much as possible and because the most effective way of doing that was to adopt a decision ordering Ford AG to resume supplies.

3. The Commission states that it has in no way imposed on Ford AG any obligation to sell to its German dealers all the Ford vehicles manufactured by the Ford Group, or even all the vehicles manufactured by Ford AG. It has simply restored the status quo by requiring Ford AG to supply right-hand drive versions of the vehicles which it was already supplying under the "Visit Europe Plan" and to German dealers.

3.1. The Commission maintains that the applicants are making an old-fashioned plea for the right to divide the common market for the purpose of obtaining territorial protection against its own products manufactured in the Federal Republic of Germany for its British factory whose production costs are much higher. They are asking for protection from competition by obliging buyers of cars in the United Kingdom to pay the high production costs applicable there instead of being allowed to buy the same vehicles more cheaply in the Federal Republic of Germany. No such argument can be accepted, in the view of the Commission, either under Article 85 or under Articles 30 to 37 of the Treaty.

3.2. As to the precedents in Community law the Commission notes that Regulation No 67/67, cited above, does not deal with selective distribution agreements. It concedes that the present case

concerns the first decision involving the adoption of interim measures adopted by the Commission under the Treaty, but that is the only sense in which the decision in question is novel. The Commission maintains that there is a large body of case-law in which the Court has consistently prohibited measures of all kinds, whether public or private, which produce effects equivalent to export bans and quantitative restriction on imports.

4. The Commission concludes that, if there is an agreement to which Articles 85 (1) applies for other reasons, then a refusal to supply is equivalent to any other measure by which parallel imports are prevented and may be a sufficient reason to refuse to grant an exemption under Article 85 (3) of the Treaty. It is in that sense that the refusal to supply, althought not by itself an infringement of Article 85 (1), has the same effect as an export ban. Consequently, this case is concerned exclusively with the application of Article 85 (3) and the Commission has a discretion in the application of that provision. It is of the opinion that, in view of the circumstances of this case, it was therefore justified in refusing to grant the exemption in respect of the agreement in question.

Second submission


1. The applicants contend that even if Ford AG's dealer agreement does not qualify for exemption under Article 85 (3) of the Treaty unless Ford AG

1145


resumes the supply of right-hand drive vehicles in the Federal Republic of Germany, the Commission is not entitled to make an order, either on an interim or final basis, requiring Ford AG, which does not occupy a dominant position, to resume such supplies. Refusal to supply is not of itself an infringement of Article 85 (1) of the Treaty and the Commission may not require undertakings to act in a specific manner when the omission to act in that manner does not constitute an infringement of Article 85 or 86. In that respect the applicants recall that the Commission has still not adopted a decision expressing its definitive opinion of Ford AG's request for negative clearance or, in the alternative, an exemption in respect of its dealer agreement. Unless and until it is definitively established that Article 85 (1) applies to the agreement it is premature to discuss the prerequisites for the application of Article 85 (3).

2. If the requisite conditions had been satisfied, which is, moreover, disputed by the applicants, the Commission could have adopted an interim measure prohibiting the parties from using Ford AG's dealer agreement unless Ford AG resumed supplies of right-hand drive cars in the Federal Republic of Germany. Such a measure would have had completely different effects from the interim measure which the Commission actually adopted in this case.

2.1. Thus, if the Commission had prohibited the use of Ford AG's dealer agreement (unless it resumes supplies of right-hand drive cars in the Federal

Republic of Germany), Ford AG could simply have ceased to give effect to or to enforce or to seek to enforce the dealer agreement. Even if the Commission's decision had subsequently been declared void by the Court, its existence would have given Ford AG absolute protection against claims by its dealers for breach of contract by Ford AG if, in conformity with the decision, it disregarded the obligations arising under the agreement by virtue of Article 85 (1) during the period of validity of the decision, by choosing not to resume supplies of right-hand drive cars in the Federal Republic of Germany.

2.2. Instead, according to the ap-plicants, the decision imposes on Ford AG a public-law duty to resume supplies of right-hand drive cars in the Federal Republic of Germany and Ford AG must either comply with that duty or, according to the Commission, divest itself of that duty by running the risk of disregarding its civil-law duties under the dealer agreement which may subsequently be exempted retroactively under Article 85 (3) and therefore be declared valid retroactively.

3. The applicants conclude that even if Ford AG's dealer agreement is not capable of being exempted (unless it resumes supplies of right-hand drive cars in the Federal Republic of Germany) the Commission cannot, by means of an interim measure adopted under Article 3 of Regulation No 17, which only applies to infringements of Article 85 and 86 of the Treaty, order Ford AG to resume the sale of right-hand drive cars in the State

1146

FORD ν COMMISSION

in question at the prices actually applied there.


1. The Commission considers that it is entitled, if it is necessary to preserve the status quo, to prohibit, in an interim decision, the objectionable features of an agreement or a practice which is contrary to Article 85 (1). If that was not the case, the power to adopt a decision ordering interim measures would differ little from the power already given by Article 15 (6) of Regulation No 17. The Commission adds that it is able to do more by ordering the adoption of interim measures than it is empowered to do in its final decision since the two types of decision are entirely different and have different objectives. Thus, if the parties to an exclusive distribution agreement begin to interfere with parallel imports, the Commission may order them, by an interim decision, to stop the interference. It follows that if a party to an exclusive distribution agreement refuses to supply a dealer because he is exporting or importing in parallel, the Commission may order supplies to be resumed if such a measure is necessary to restore the status quo and to protect the dealer in question, even if the refusal to supply is not of itself an infringement of Article 85. The Commission states that the fact that it has not yet refused a negative clearance or an exemption in respect of the agreement is of no importance: the adoption of a final decision is not a prerequisite for the adoption of a decision ordering interim measures. In this case

the decision which has been adopted was rendered necessary by the circular of April 1982 and not by the notification of the agreement.

2. The Commission takes the view that it could have adopted an interim measure prohibiting the parties from operating the dealer agreement unless Ford AG resumed supplies of right-hand drive cars. In fact, the decision adopted in August 1982 was better than the hypothetical decision postulated above. Thus the contested decision restored the status quo instead of altering it and it did not affect the operation of the dealer agreement. Furthermore, it directly prevented the injury caused to buyers of right-hand drive cars and to the Community interest resulting from Ford AG's refusal to supply. On the other hand the decision does not take away from Ford AG the possibility of ceasing to operate its dealer agreement. The Commission adds that the type of "hypothetical" interim measure which Ford concedes would have been permissible, would have been more onerous than a decision adopted under Article 15 (6) of Regulation No 17 which would have allowed Ford to continue to operate its agreement only at the risk of being fined.

3. The Commission concludes that it was entitled to adopt the interim measure even if Ford AG's refusal to supply right-hand drive cars to German distributors was not of itself an infringement of Article 85 of the Treaty.

1147


Third submission


1. The applicants contend that the Commission's decision raises novel and complex problems for which there is no precedent in Community law and with which it is not appropriate to deal by means of an interim decision.

2. They go on to allege that the Commission has failed to satisfy the legal conditions laid down by the Court in the order in the Camera Care case, cited above, for the valid exercise of any power it may have in the present case to adopt an interim measure. In support of that assertion they submit the following arguments.

2.1. The interim measures must be indispensable in order to avoid the exercise of the power to adopt a decision given by Article 3 of Regulation No 17 becoming ineffectual er even illusory.

2.1.1. A brief interruption in supplies of right-hand drive cars by Ford AG would not enable Ford AG to prevent the resumption of purchases and imports following a final Commission decision if such a decision were made and upheld.

2.1.2. Accordingly the interim measures ordered by the Commission in the present case are not indispensable.

2.2. Furthermore, the Commission cannot adopt interim measures without having regard to the legitimate interests of the undertaking concerned by such measures.

2.2.1. The applicants affirm Ford AG's right, as an undertaking which is not in a dominant position, to choose where to sell its products and to the need to preserve the profitability of Ford AG's most important customer, namely Ford Britain, and its distribution network. They believe that if they were obliged to comply with the Commission's decision, they and the Ford Group would suffer irreparable damage.

2.3. With regard to the legitimate interests of the undertaking concerned it is essential, on the other hand, that interim measures be taken only in cases proven to be urgent in order to avoid a situation likely to cause serious and irreparable damage to the parties seeking their adoption or damage which is intolerable for the public interest.

2.3.1. The applicants maintain that, until the Commission's response in the proceedings for the suspension of the operation of its decision of 18 August 1982, there was no suggestion that that decision had been adopted pursuant to a request made by the European Office of Consumer Unions or any other third party. The Commission is therefore now precluded from relying on the request made by the European Office of Consumer Unions.

2.3.2. In the second place the allegation now made by the Commission of serious and irreparable harm to third persons is, in any event, based upon invalid reasoning; the absence of an opportunity for British buyers to improve their position by buying right-hand drive Ford cars directly or indirectly from German dealers or under the "Visit Europe Plan" cannot be equated with damage suffered by those buyers within the meaning of the urgency requirement. Thus the interim measure did not protect British

1148

FORD ν COMMISSION

buyers from damage, irreparable or unavoidable or at all; on the contrary it secured for them a benefit which no final decision would be able to guarantee.

2.3.3. Finally the applicants submit that the urgency requirement can be satisfied in this case only if there is a situation which is intolerable for the public interest. The public interest which the rules on competition contained in the Treaty are intended to protect is in the maintenance of a system of competition in the common market which is not distorted. The public interest is not benefited in the long term by what are, in effect, forced price reductions.

2.4. The interim measures must, furthermore, be of a temporary and conservatory nature and must be restricted to what is required in the given situation.

2.4.1. The applicants maintain that the Commission's decision requires Ford AG to do that which it had never previously done:

(a) To accept a legally binding contractual obligation to make right-hand drive cars available to dealers;

(b) To accept orders for right-hand drive cars constructed to British specifications which it had never previously sold to dealers;

(c) To supply more right-hand drive cars than it had ever done before (since the decision set no limits to the number of cars which had to be supplied).

2.4.2. Furthermore, the small, albeit increasing, quantity of sales of right-hand drive cars by German dealers to British customers before 1 May 1982 would become a flood, magnified because of the provisional nature of the measures ordered by the Commission.

2.4.3. The applicants conclude from this that the Commission's decision is not of a conservatory nature.

2.5. Finally, when adopting interim measures, the Commission must maintain the essential safeguards guaranteed to the parties in particular by Regulation No 17 and Article 19 thereof.

2.5.1. The applicants allege that the Commission did not inform Ford AG either in the statement of objections or during the hearing that it proposed to rely on Article 3 of Regulation No 17. Consequently the applicants did not, at any point, address the Commission on its powers to apply that article in this case.

2.5.1.1. Thus the applicants conclude that the Commission failed to comply with the requirements of Regulation No 99/63/EEC of the Commission of 25 July 1963 on the hearings provided for in Article 19 (1) and (2) of Council Regulation No 17 (Official Journal, English Special Edition 1963-1964, p. 47), in particular those laid do\vn in Articles 2 and 4 thereof, and that it failed to observe the principle of Community law that the parties must be given an opportunity to state their case.

2.5.2. They also refer to the failure to consult the Advisory Committee in accordance with Article 10 (3) and (5) of Regulation No 17.

2.5.2.1. The aforementioned article requires the Commission to consult the Advisory Committee before adopting any decision following upon any proceedings brought for the purpose of establishing the existence, inter alia, of an infringement of Article 85. As the Commission did not declare, cither in the statement of objections or during the

1149


hearing, that it intended to rely on Article 3 (1) of Regulation No 17, the applicants had no alternative but to assume that the Commission did not inform the Advisory Committee of that intention. Furthermore, even if the Advisory Committee was given an opportunity to consider the new basis for the Commission's decision it could have been given the opportunity only at the hearing and that was not a reasonable opportunity as required by Article 10 of Regulation No 17.

2.5.3. The applicants state that a number of Ford Britain's dealers applied by telex to be heard by the Commission in respect of the proceedings which had been initiated against Ford AG and that the Commission does not deny that they had a sufficient interest to be heard. Nevertheless the Commission did not reply to those telex messages before adopting its decision and even assuming that it did take them into consideration, it decided not to grant the dealers an opportunity to state their case in writing.

2.5.3.1. The applicants therefore conclude that in adopting the decision the Commission infringed Article 19 (2) of Regulation No 17 and Article 5 of Regulation No 99/63, cited above.

3. The applicants allege that the Commission stated in its statement following the Camera Care case that there must be a strong prima facie case before interim measures can be adopted. As the decision nowhere expressly indicates that the Commission considered that question, the applicants conclude that this requirement has not been fulfilled in the present case.

4. Finally, the applicants consider that the Commission has, in any event,

infringed the principle of Community law that a mandatory decision must be precise in its terms.

4.1. They maintain that the decision gives them no indication as to:

(a) The types of cars which Ford AG is required to supply;

(b) The price at which and the terms on which Ford AG is required to supply those cars;

(c) The extent of its obligation to supply.


1. The Commission states that to argue, as do the applicants, that no interim decision should be taken which is "novel" is to maintain that the Commission should adopt interim measures rarely, if ever. In the Commission's view that is not what the law provides.

2. The Commission contends that its decision of 18 August 1982 fulfils all the conditions required to give it the power to order interim measures and laid down by the Court in its order of 17 January 1980 in the Camera Care case, cited above.

2.1. It maintains that it is impossible to adopt a final decision within a short time. A final decision would be "ineffective" within the meaning of the Court's order in the Camera Care case if it came too late to prevent the damage which prompt measures would prevent or minimize.

1150

FORD ν COMMISSION

2.1.1. In this case the Commission considers that a final decision would have been ineffective to prevent substantial losses for British car buyers during the period prior to its adoption.

2.1.2. It concludes that an interim decision was indispensable to prevent such losses.

2.2. The Commission points out that the concept of "legitimate interests" does not appear as a separate criterion in the Court's order in the Camera Care case.

2.2.1. It admits that Ford has a legitimate interest in its dealer system in both the Federal Republic of Germany and the United Kingdom. Nevertheless that interest does not justify its prohibiting German dealers from exporting. The Commission adds that the applicants have produced no evidence to show that they run the risk of serious damage if German dealers make additional profit on additional sales to the United Kingdom.

2.3. The Commission considers that interim measures should be adopted in respect of Ford AG because the maintenance of German dealers as a channel of supply of right-hand drive cars to the United Kingdom and the avoidance of the partitioning of the market, which was a situation which was intolerable in the public interest, were matters of urgency.

2.3.1. It emphasizes the fact that the European Office of Consumer Unions requested the adoption of interim measures in its complaint made in respect of, inter alia, Ford AG's refusal to supply. It was therefore entitled to order

interim measures in order to prevent serious and irreparable damage to a large number of clearly identifiable persons, namely car buyers in the United Kingdom. The fact that the complaint made by the European Office of Consumer Unions was not clearly mentioned in the decision does not prevent the Commission from relying on it in the present cases.

2.3.2. According to the Commission, to be deprived of an opportunity to save money when purchasing an article which it is necessary to buy is to suffer damage, In the present case the British buyers of Ford vehicles did effectively suffer such damage, similar to the damage caused by an export ban or a restrictive agreement not to sell at a favourable price.

2.3.3. The Commission disagrees that the decision "forced" a reduction in prices: it re-established intra-brand competition and it freed it from a measure which stopped all parallel imports of right-hand drive cars and deprived all buyers in the Community of the opportunity of buying such cars at the lowest price at which they had previously been available.

2.4. The Commission states that a decision involving interim measures is conservatory it if maintains the existing position.

2.4.1. It maintains that the contested decision created a duty to treat right-hand drive cars and left-hand drive cars in the same way, as Ford AG had done until May 1982. The decision did not oblige Ford AG to accept a new contractual obligation to supply "all cars" to its dealers; it obliged it to withdraw the circular and thus to resume the supply of

1151


right-hand drive cars through German dealers under the "Visit Europe Plan". Even if Ford AG was under no contractual obligation with regard to right-hand drive cars before the decision was adopted, in practice such cars were delivered to German dealers. In addition it was right for the decision not to impose a quantitative limit on the number of cars which Ford AG was to supply: the loss against which Ford AG wishes to be protected was not so direct, so immediate or so certain that it necessitated the imposition of such a limit which had not previously existed and which would be inconsistent with the maintenance of the status quo.

2.4.2. The Commission also maintains that a decision involving interim measures does not cease to be conservatory simply because a large number of persons are likely to make use of the opportunities presented to them by the situation.

2.4.3. It concludes that the decision it adopted was of a conservatory nature.

2.5. As to the duty to observe essential procedural guarantees the Commission states as follows.

2.5.1. A procedure begun by the Commission with a view to the adoption of interim measures is necessarily part of a main procedure. It was therefore correct for the Commission to say in the statement of objections that a procedure under Article 6 of Regulation No 17 has been initiated; it clearly follows, furthermore, from the text of that statement and from the minutes of the hearing that the Commission was planning to adopt a decision ordering interim measures. Such a decision was clearly possible under

Article 3 and not under Article 6 of Regulation No 17.

2.5.1.1. The Commission concludes that it did not deprive the applicants of their right to give their opinion on the applicability of Article 3 of Regulation No 17 to the present cases.

2.5.2. The Commission considers that it was under no obligation to consult the Advisory Committee at all before adopting a decision ordering interim measures; nor was it under an obligation to consult that committee in the case of interim measures adopted under Article 15 (6) of that regulation.

2.5.2.1. Nevertheless the Commission did give an Advisory Committee, which had seen the statement of objections, an opportunity to deliver its opinion on 23 July 1982, after the hearing and the Committee was presumed to be aware that an interim decision would be based on Article 3 of Regulation No 17 because that clearly followed from the order in the Camera Care case.

2.5.3. The Commission denies that Ford's dealers had a sufficient interest to entitle them to be heard during the procedure leading to an interim decision. Furthermore, even if the dealers have the right to present written submissions in the main procedure, they do not have a right to insist on presenting their written submissions during the procedure involving interim measures and thereby delay that procedure. The Commission points out that they did nevertheless make written submissions which it took into account; they did not simply ask to be heard. The Commission adds that the applicants do not rely on any particular argument of the dealers: the interests of

1152

FORD ν COMMISSION

British Ford dealers in maintaining the highest possible retail price has always been clear and the applicants referred to them during the hearing.

3. As to its statement in the Camera Care case the Commission observes that the complaints against Ford AG were sufficiently serious to justify the adoption of interim measures. It refers to its remarks set out above.

4. The Commission emphasizes that a decision involving interim measures does not have to provide precisely for every possible contingency. If the Commission orders an undertaking to resume its previous practice, as it has done in the present case, there is no need to be as specific as might be necessary in other circumstances. In the case of genuine ambiguity the undertaking can always seek guidance from the Commission and, in the case of conflicting interpretations, any genuine ambiguity should be interpreted in favour of the undertaking.

4.1. The Commission adds that it is clear that Ford AG is being ordered by the contested decision to resume its pre-May 1982 practice. Consequently Ford AG must sell to its dealers right-hand drive cars corresponding to German specifications and to individual buyers right-hand drive cars corresponding to British specifications, as it had done until 1 May 1982. In addition it must sell substantially at German prices plus any extra sums genuinely needed to cover the extra costs to Ford of providing such cars. Moreover, the delivery date for such vehicles must be broadly the same as that for the delivery of left-hand drive cars, as it was before 1 May 1982. Finally, the decision imposes no obligation to sell vehicles corresponding to British specifications to buyers not entitled under the "Visit

Europe Plan", as it was before May 1982. On the other hand, Ford Britain would have to reduce its prices and deliver the vehicles itself in so far as Ford AG was unable to meet the demand for right-hand drive cars at German prices.

The observations of the intervening parties

1. The European Office of Consumer Unions, which represents consumers before the institutions of the EEC, emphasizes that only the Commission is able to determine, on the basis of the facts of the present case, whether or not the decision should be adopted. Only if the Court considers that there is no factual basis for the adoption of interim measures may it declare that the Commission has committed an error of law in adopting them.

1.2. When it orders interim measures the Commission must, according to the European Office of Consumer Unions, on the one hand, (a) take account of the legitimate interests of Ford and, on the other hand, (b) decide whether the European Office of Consumer Unions and the interests it represents will suffer serious and irreparable harm and (c) whether the situation in question is intolerable for the public interest.

(a) The European Office of Consumer Unions emphasizes that individual parallel imports represent only a small proportion of Ford's British market and that a very large proportion of the purchasers on the British market buy by means of hire-purchase agreements. Since a large number of the remaining purchasers buy on the second-hand car market, there remains only a small percentage of purchasers in a position to buy their cars on the Continent.

1153


(b) Whether or not the situation is intolerable for the public interest, it is clear, so far as the European Office of Consumer Unions is concerned, that the consumers it represents suffer serious and irreparable harm.

(c) As regards the public interest the European Office of Consumer Unions contends that the public interest is not represented by those persons who purchase a vehicle but by all those to whom such choice is given. In competition law the public interest requires that the choice be given. Consequently a partitioning of the market, as practised by Ford AG, is not in the public interest.

1.3. The European Office of Consumer Unions claims that the Court should order the applicants to pay its costs.

2. The two companies, Stormont Limited and James A. Laidlaw (Holdings) Limited (hereinafter referred to respectively as "Stormont" and "Laidlaw"), both of which are distributors and dealers for Ford Britain, submit that the Commission did not observe the procedural requirements relating to the rights of third parties before adopting its decision involving interim measures.

2.1. First, the Commission wrongly refused to grant their applications to be heard. Although the Commission seeks to draw a distinction between the right of third parties to be heard during the procedure for the adoption of interim measures and the same rights during the main procedure, that distinction is not justified either by the wording of Article 19 of Regulation No 17 or by the Court's order in the Camera Care case. In fact it is probable that third parties will be affected the most by interim

decisions adopted before the facts have been considered fully. Stormont and Laidlaw consider that they each had a sufficient interest to be heard during the administrative procedure preceding the adoption of the interim measure. They emphasize that the periods which elapsed between the various stages of that procedure show clearly that the contested decision was not adopted in circumstances of urgency. Consequently the Commission's assertion that there was insufficient time available to give Ford Britain's dealers the opportunity to make their submissions, whether orally or in writing, is wholly unfounded.

2.2. Stormont and Laidlaw maintain that it is an established rule that any tribunal administering Community law must, in deciding whether or not to grant interim measures, consider and balance all the interests involved, including those of third parties. The failure to hear the dealers prevented the Commission's balancing all the interests involved.

2.3. Stormont and Laidlaw are of the opinion that the Commission's decision is not conservatory in nature. Thus, far from preserving the status quo, it would, had it remained unsuspended, have irrevocably destroyed it. The Commission is wrong in suggesting that the applicants could have gathered evidence in support of their contention that the decision would threaten the profitability of Ford Britain and its distribution network. As the decision has been partially suspended by the Court the only evidence that could be given is evidence of opinion based upon the commercial competence and experience of Ford and its dealers.

2.4. Stormont and Laidlaw submit that there is no evidence that, before

1154

FORD ν COMMISSION

adopting the decision, the Commission considered alternative courses such as not adopting any interim decision or adopting an interim decision on different terms or even proceeding in accordance with Article 15 (6) of Regulation No 17 or accelerating the main administrative procedure.

2.5. Stormont and Laidlaw conclude that the consequence of the Commission's failure to observe the essential procedural requirements is to vitiate the decision. They claim that the Court should order the Commission to pay the costs of their intervention.

IV — O r a l p r o c e d u r e

At the hearing on 18 October 1983 the applicants, represented by J. Lever and P. Sambuc, the interveners James A. Laidlaw (Holdings) Limited and Stormont Limited, represented by P. L. O. Leaver, and the Commission, represented by J. Temple Lang, presented oral argument and answered questions put to them by the Court.

The applicants stressed at the hearing inter alia that the Commission's interim decision was unconditional and involved an obligation for Ford which could not be contained in the Commission's final decision. The Commission's power to adopt interim measures could not be

extended in this way. If the Commission could impose, within the framework of provisional measures, obligations which it cannot impose by a final decision under Article 3 of Regulation No 17, undertakings could be subjected to extraordinary obligations over quite long and not readily regulated periods of time. Thus if the Commission intended to restore the status quo ante, it should only have proceeded by adopting a decision under the powers expressly conferred on it by Article 15 (6) of Regulation No 17.

The Commission stressed that if an agreement is unlawful, if an act causes damage and if the other conditions for interim measures are fulfilled, it may order the action causing the damage to be stopped. In this context the Commission's powers are the same, whether or not the undertakings have notified their dealer agreement. The real legal basis of the interim measures is not Article 8 of Regulation No 17, but Article 3 of that regulation, as stated in the Camera Care order. Further, recourse to Article 15 (6) would not be appropriate in the case in point. First, it would have done nothing to prevent the damage to the free movement of goods within the Community, and in particular to British consumers. Secondly, such a decision would have a more extensive and more damaging effect on Ford's distribution system in the Federal Republic of Germany than was necessary, or appropriate, first, to restore the status quo and, secondly, to prevent the damage which the Commission feared.

The Advocate General presented his opinion at the sitting on 15 December 1983.

1155


Decision

1 By applications lodged at the Court Registry on 3 September 1982, Ford of Europe Incorporated, of "Wilmington, Delaware (United States) and Ford-Werke Aktiengesellschaft, of Cologne, brought two actions under the second paragraph of Article 173 of the EEC Treaty for a declaration that Commission Decision No 82/628 of 18 August 1982 relating to a proceeding under Article 85 of the EEC Treaty (IV/30.696 — Distribution system of Ford-Werke AG — Interim measure, Official Journal L 256, p. 20) is void.

2 By order of 17 November 1982 the Court ordered the cases to be joined, because of their close relationship, for the purposes of the written and the oral procedure and the judgment.

3 The applicants are subsidiaries of Ford Motor Company, a company incorporated in the United States of America. Ford of Europe Incorporated (hereinafter referred to as "Ford of Europe") is a corporation incorporated in the United States of America and has offices in the United Kingdom, Belgium and the Federal Republic of Germany, while Ford-Werke Aktiengesellschaft (hereinafter referred to as "Ford AG") is a company incorporated under German law established in the Federal Republic of Germany and, in its capacity as a manufacturing company, in Belgium as well.

4 Ford of Europe coordinates the allocation of economic activity amongst the European subsidiaries of Ford Motor Company (hereinafter referred to as "the Ford Group"). Ford AG manufactures Ford vehicles, some of which are sold by it on the market consisting of the Federal Republic of Germany and the remainder of which are exported, in particular to certain Member States where they are marketed by other companies of the Ford Group. A large proportion of Ford AG's production is sold directly to Ford Motor Company Limited (hereinafter referred to as "Ford Britain") in the United Kingdom with a view to its being marketed there by that company which, like Ford AG, has established its own sales programme and its own distribution network. Consequently Ford AG produces both left-hand drive cars and right-hand drive cars on a regular basis.

1156

FORD ν COMMISSION

5 In order to implement its sales programme in the German market Ford AG established a selective distribution system based on a main dealer agreement ["Haupthändler-Vertrag"] binding it to its German distributors. That agreement was notified to the Commission on 14 May 1976 and Ford AG requested negative clearance for it under Article 2 of Regulation No 17 of the Council of 6 February 1962 (Official Journal, English Special Edition 1959-1962, p. 87) or, in the alternative, an exemption under Article 85 (3) of the Treaty. At the time of the facts relevant to this case the Commission had still not adopted a formal decision on that request but it is common ground between the parties that the agreement, which is based on quantitative as well as qualitative criteria, is similar to other dealer agreements in the motor car industiy in relation to which the Commission has granted or intends to grant an exemption under Article 85 (3).

6 Until 1 May 1982 a certain number of right-hand drive cars, some constructed to British specifications and the rest to German specifications, were supplied by Ford AG to its appointed German dealers and were sold in the Federal Republic of Germany. Since the spring of 1981 there had been a great increase in demand for right-hand drive cars in that market because prices were considerably lower than those on the British market, partly as the result of monetary fluctuations, and therefore a growing number of British customers were buying those vehicles from German dealers.

7 Because it was concerned about the effects of such sales on the position of Ford Britain and its distribution network Ford AG notified the German Ford dealers by a circular dated 27 April 1982 that with effect from 1 May it would no longer accept their orders for right-hand drive cars and that as from that date all such cars would have to be purchased either from a Ford dealer established in the United Kingdom or from a subsidiary of Ford Britain.

8 That circular led the Bureau Européen dc Unions de Consommateurs [European Office of Consumer Unions], an intervening party in these cases, to lodge with the Commission on 12 May 1982 a complaint requesting it to order interim measures. On 2 July 1982 the Commission decided to "institute proceedings . . . under Article 6 Paragraph (1) of Regulation No 17/62", a provision which concerns the application of Article 85 (3) of the Treaty, and

1157


sent a statement of objections to Ford AG. In that statement the Commission indicated that it planned to rule that the marketing system practised by Ford AG contravened Article 85 (1) and could not be exempted under Article 85 (3) but that in the meantime it intended to issue a provisional order instructing Ford AG to withdraw its circular of 27 April 1982 and to reinstate right-hand drive cars in the company's product range.

9 On 18 August 1982, after hearing the company and interested third parties and after giving the Advisory Committee an opportunity to deliver its opinion, the Commission adopted the contested decision requiring Ford AG, within 10 days from the date of notification thereof, to withdraw its circular of 27 April 1982 and to inform its German Ford dealers that right-hand drive cars still formed part of Ford AG's agreed delivery range. In addition the decision prohibited the adoption of any measures having- the same effect as the circular and imposed on Ford AG a periodic penalty payment for each day of delay in fulfilling the aforementioned requirements. The decision was to apply until adoption of a decision concluding the proceedings.

10 In the decision, which was adopted on the basis of Regulation No. 17, and in particular of Articles 3(1) and 6(1) thereof, the Commission indicates that it is probable that Ford's distribution system is incompatible with Article 85 (1) but that it is highly likely that the system as applied until 1 May 1982 could have been exempted under Article 85 (3). Had the - agreement been exempted, abuse of the exemption could .have been terminated by prohibiting retroactively specified acts by Ford AG under Article 8 (3) (d) of Regulation No 17. Since the present circumstances are analogous to a situation to which Article 8 (3) (d) could be applied and since the conditions for the adoption of interim measures referred to by the Court in its order of 17 January 1980 (Case 792/79 R Camera Care Limited v Commission [1980] ECR 119) are satisfied, the Commission could order Ford AG to re-establish the distribution system as applied by it until 1 May 1982.

1 1 Following applications made to the Court by Ford of Europe and Ford AG the President of the Court, by order of 29 September 1982, suspended the operation of the Commission's decision in part.

1158

FORD ν COMMISSION

A d m i s s i b i l i t y

12 The Commission questions the admissibility of Ford of Europe's application. It maintains that the contested decision is addressed to another company and that Ford of Europe does not claim that it, as distinct from Ford Britain and Ford AG, was going to suffer losses as a result of the application of the decision. In those circumstances the Commission takes the view that the decision is not of direct and individual concern to Ford of Europe.

13 That argument cannot be accepted. If right-hand drive cars manufactured by Ford AG and intended for sale on the British market by Ford Britain's dealers are supplied directly to British consumers by the German distribution network, the problems to which this could give rise unquestionably come within the province of the activities for which Ford of Europe is responsible in its capacity as coordinator of manufacture and sales for the companies belonging to the Ford Group. It follows that the contested decision, although it is addressed solely to Ford AG and relates to the circular which that company sent to the German Ford dealers, is of direct and individual concern to Ford of Europe within the meaning of the second paragraph of Article 173 of the Treaty.

14 Ford of Europe's application is therefore admissible.

S u b s t a n c e of the case

15 The applicants admit that the purpose of the circular was to ensure that British customers would buy their Ford cars through Ford Britain's distribution network and consequently to restrict competition in the common market with regard to the sale of Ford vehicles to persons residing in the United Kingdom. Nevertheless they contend that that measure is not, by itself, contrary to Article 85 or Article 86 of the Treaty and that it is not sufficiently closely related to the notified dealer agreement for it to affect the assessment of that agreement in the light of those provisions. In any case the Commission's powers do not extend to the adoption of an interim decision which relates specifically to the refusal to supply part of production to the appointed dealers. Furthermore the contested decision does not satisfy the requisite conditions, as set out by the Court in its order of 17 January 1980, for the adoption of interim measures. In that respect the applicants submit

1159


that the decision was not indispensable in order to guarantee the effectiveness of the final decision and that it went beyond the scope of a conservatory measure. Since the circular caused no serious and irreparable damage to consumers, there is, in addition, no urgency. Finally they contend that the Commission failed to observe a number of procedural guarantees. In particular it did not give to two British dealers, who are intervening parties in these cases, an opportunity to state their views in writing although they had requested to be heard and had a sufficient interest for the purposes of Article 19 (2) of Regulation No 17.

16 The Commission accepts that no member of the Ford group occupies a dominant position within the meaning of Article 86 of the Treaty in relation to the sale of cars in the common market or in a substantial part of it. It admits, furthermore, that Ford AG's refusal to supply right-hand drive cars to German dealers, even if it results from concerted action within the Ford Group, constitutes neither an agreement between undertakings nor a decision by associations of undertakings nor a concerted practice within the meaning of Article 85 of the Treaty. Consequently it acknowledges that it could not have taken action against the refusal if there had not existed, between Ford AG and its dealers, a dealer agreement which was in certain respects contrary to Article 85. It says that there is such an agreement in this case and that the refusal to supply affects the commercial relations between Ford AG and its dealers and therefore forms part of the context in which that agreement falls to be examined for the purposes of the possible grant of an exemption under Article 85 (3). Since that refusal produces the same economic effects as an export ban and therefore' partitions the market the Commission would have been justified in refusing exemption in respect of the agreement in question or in granting exemption subject to the condition that supplies be resumed. If such an exemption had been granted the refusal to supply would have amounted to an abuse which would have enabled the Commission to adopt a decision under Article 8 (3) of Regulation No 17. In those circumstances the adoption of an analogous interim measure pending the final decision on exemption of the agreement is in conformity with the principles laid down by the Court in its order of 17 January 1980. Moreover the Commission is of the opinion that it has satisfied the conditions stated by

1160

FORD ν COMMISSION

the Court in the aforementioned order and denies that it failed to have due regard for the essential rights guaranteed to the applicants and their dealers by the provisions of Community law.

17 With regard to the parties' arguments, as set out above, it is appropriate first to examine whether, in adopting the contested interim measure, the Commission kept within the limits of its powers as established by the provisions of Community law and by the interpretation placed on those provisions by the Court in its order of 17 January 1980.

18 In that order the Court did not examine in detail the form and nature of the interim measures which the Commission may adopt. As the order makes clear, the power to adopt such measures is based on Article 3 (1) of Regulation No 17, which the Commission also mentioned in the references in the preamble to the contested decision.

19 That provision states that "Where the Commission, upon application or upon its own initiative, finds that there is infringement of Article 85 or Article 86 of the Treaty, it may by decision require the undertakings . . . concerned to bring such infringement to an end." As the Court stated in the aforementioned order the protective measures which the Commission may adopt as interim measures are those which appear indispensable in order to prevent the exercise of the power to make decisions given by Article 3 from becoming ineffectual or even illusory because of the action of certain undertakings. It follows that the interim measures must come within the framework of the final decision which may be adopted by virtue of Article 3.

20 In this case the main proceedings relate to the dealer agreement. It is solely in relation to that agreement that the Commission is in a position to make a finding that there is an infringement of Article 85(1) and the final decision which the Commission may adopt under Article 3 (1) is that which requires Ford AG to bring the operation of that agreement to an end.

21 The contested interim decision does not relate to that agreement but solely to Ford AG's refusal to supply right-hand drive cars to German dealers and

1161


that refusal, according to the Commission, does not infringe either Article 85 or Article 86 of the Treaty. The measure ordered by that decision therefore does not come within the framework of a final decision which may be adopted. In view of its unequivocal wording and in particular of its express order to Ford AG to refrain from taking any measures having the same effect as the circular, the decision ordering interim measures cannot be interpreted in the manner in which the Commission submitted, in the course of the proceedings before the Court, that it should be interpreted, namely as allowing the company to maintain its refusal to supply on condition that it ceases to operate the dealer agreement.

22 Even on the assumption that the Commission, when adopting in pursuance of Article 6 and 8 of Regulation No 17 a decision in application of Article 85 (3) of the Treaty, may regard the refusal to supply as a circumstance which prevents an exemption from being granted in respect of the dealer agreement or may subject the grant or continuation of such an exemption to the requirement that supplies be resumed, it would still have no authority to convert that requirement, by means of a decision ordering interim measures, into a separate, enforceable order which leaves no choice to the undertaking concerned.

23 It must be pointed out that although, by adopting the contested decision, the Commission exceeded the limits of its powers, it was nevertheless not deprived of all possibility of reacting, immediately and in such a way as to influence Ford AG's conduct, to the circular which that company sent to its dealers. In particular the Commission may, Under Article 15 (6) of Regulation No 17, reserve the possibility of imposing a fine where an agreement which has been notified continues in operation if it informs the undertakings concerned that after preliminary examination it is of the opinion that the conditions for the application of Article 85 (1) of the Treaty are satisfied and that an application of Article 85 (3) is not justified.

24 The applicants' submission of lack of competence must therefore be upheld and the contested decision must be declared void without there being any need to rule on the other submissions put forward in the actions.

1162

FORD ν COMMISSION

Costs

25 Article 69 (2) of the Rules of Procedure provides that the unsuccessful party shall be ordered to pay the costs. Since the Commission has failed in its submissions, it must be ordered to pay the costs, including the costs incurred in the proceedings relating to the application for the adoption of interim measures and the costs incurred by the intervening parties, James A. Laidlaw (Holdings) Limited and Stormont limited. The Bureau Européen des Unions de Consommateurs, which intervened in support of the conclusions of the Commission, must bear its own costs.

On those grounds,

T H E COURT

hereby:

1. Declares that Commission Decision No 82/628 of 18 August 1982 relating to a proceeding under Article 85 of the EEC Treaty (IV/ 30.696 — Distribution system of Ford-Werke AG — Interim measure) is void;

2. Orders the Commission to pay the costs, including the costs incurred in the proceedings relating to the application for the adoption of interim measures and the costs incurred by the intervening parties, James A. Laidlaw (Holdings) Limited and Stormont Limited. The Bureau Européen de Unions de Consommateurs shall bear its own costs

Mertens de Wilmars Koopmans Bahlmann Galmot

Pescatore Mackenzie Stuart Bosco Due Everling

Delivered in open court in Luxembourg on 28 February 1984.

P. Heim

Registrar J. Mertens de Wilmars

President

1163

Documents

In Joined Cases 228 and 229/82,