SALONIA v POIDOMANI AND GIGLIO

Transcription

1 SALONIA v POIDOMANI AND GIGLIO have repercussions on the distribution of those products. Such an agreement is therefore capable of affecting, as far as the products in question are concerned, trade between Member States. However, it escapes the prohibition laid down by Article 85 (1) of the EEC Treaty if it has no appreciable effect on such trade. 5. In the case of newspapers and periodicals, an assessment of the appreciability of the effects which a distribution agreement may have in the territory of a Member State on the market in such publications from other Member States is stricter than in the case of other products. In order to determine whether an exclusive distribution agreement for national newspapers and periodicals is capable of having an appreciable effect on the market in such publications from other Member States, it is necessary to consider first whether that market may employ for the sale of newspapers in the area concerned, channels of distribution other than those governed by the agreement and, secondly, whether demand for the aforesaid products is rigid inasmuch at is shows no substantial variations as a result of the entry into force and the termination of the agreement in question. 6. A selective distribution clause restricting the supply of the products covered by the agreement in question to approved licence-holders alone does not infringe Article 85 (1) or the first paragraph of Article 86 of the EEC Treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises on connexion with the requirements for the distribution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion. 7. An exclusive distribution agreement concluded between trade-union associations, each of which has a large membership, does not constitute an agreement "to which only two undertakings are party" within the meaning of Article 1 (1) of Regulations Nos 19/65 and 67/67 and does not therefore come within the categories of agreements which, under the aforesaid regulations, may be exempted from the application of Article 85 (1) of the EEC Treaty. In Case 126/80 REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunale Civile, Ragusa, for a preliminary ruling in the action pending before that court between MARIA SALONIA, Ragusa, and GIORGIO POIDOMANI, Ragusa, FRANCA BAGLIERI, NEE GIGLIO, Ragusa, 1565

2 JUDGMENT OF CASE 126/80 on the interpretation of Articles 85 and 86 of the EEC Treaty, THE COURT composed of: J. Mertens de Wilmars, President, P. Pescatore and Lord Mackenzie Stuart (Presidents of Chambers), A. O'Keeffe, G. Bosco, A. Touffait, O. Due, U. Everling and A. Chloros, Judges, Advocate General: G. Reischl Registrar: A. Van Houtte gives the following JUDGMENT Facts and Issues I Facts and written procedure By writ of 21/22 September 1978, Mrs Maria Salonia commenced proceedings against Mr Giorgio Poidomani and Mrs Franca Baglieri, née Giglio, as proprietors of warehouses for the distribution of newspapers and periodicals in Ragusa, on the ground that, in spite of several requests, they had not delivered newspapers and periodicals to her undertaking although the plaintiff was in possession of a proper licence for the retail of newspapers and periodicals in general. The plaintiff considered that the defendants' conduct was manifestly unlawful on the ground that it was a characteristic case of unfair competition within the meaning of Article 2598 of the Civil Code and claimed that the court should order that conduct to the brought to an end by supplying journals to the plaintiff's undertaking and order the defendants to make good the damage incurred by the plaintiff as a result of the refusal to supply. The defendants, who defended the action, do not contest the facts on which the proceedings against them are based, but contest on the other hand that their conduct was unlawful. In fact, they maintain that they were under no obligation to supply newspapers since the licence provides simply for the 1566

3 SALONIA v POIDOMANI AND GIGLIO possibility of being supplied. They state moreover that publishers supply only those persons who have entered into a contractual relationship with them, which is best described in the National Agreement and Rules Regulating the Resale of Daily Newspapers and Periodicals entered into on 23 October 1974 between the Federazione Italiana Editori Giornali [Italian Federation of Newspaper Publishers] and the Federazione Sindacale Unitaria Giornalai [United Federation of Trade Unions of Newsagents]. They also explain that the agreement in question which prohibits, in communes with over inhabitants, the supply of publications for sale except to retailers in possession of a licence issued by an Inter-Regional Joint Committee in accordance with that agreement, is absolutely lawful in so far as the case-law of the Corte Suprema di Cassazione [Supreme Court of Cassation] defined it as a contract for the consignment of goods on sale or return which, as such, is governed by the principle of freedom of choice. Since the parties in question had adopted these viewpoints, the court, taking the view that the rules contained in the agreement were decisive for the purpose of giving a ruling and that they raised certain questions on the interpretation of Articles 85 and 86 of the EEC Treaty, stayed the proceedings by order of 12/17 May 1980 and requested the Court of Justice of the European Communities to give a preliminary ruling under Article 177 of the EEC Treaty on the following questions: "1. Does the National Agreement of 23 October 1974 Regulating the Resale of Daily Newspapers and Periodicals constitute a national agreement protecting the market in the distribution and sale of all types of newspapers, national and foreign, is it an infringement of the prohibition on agreements laid down by Article 85 of the Treaty and, having regard to the special provisions governing admission to the newspaper trade, the minimum requirements, the obligations and penalties imposed upon retailers, does the agreement lead to a distortion of the conditions of competition? 2. Is not the said Agreement incompatible with and does it not therefore come within the prohibition laid down by Article 85 (1) of the Treaty to the extent to which it creates discrimination against retailers, in spite of the proper licence for the sale of newspapers issued to them by the competent administrative authority, merely because they do not agree to obtain a licence to engange in the retail trade, the issue of which is, under the provisions of the said Agreement, left to the discretion of the Inter- Regional Joint Committees (and now the National Committee for the Distribution of Daily Newspapers and Periodicals [Commissione Nazionale per la Diffusione dei Quotidiani e Periodici]? 3. Does not the Agreement interfere with freedom of competition, in which the choice expressed by consumers determines the number of sales outlets for newspapers, in the same way as the rules regulating the market applied by the Netherlands Association of Dealers in Bicycles and Related Goods, which contain principles and restrictions similar to those of the Agreement on daily newspapers and which were prohibited by the Commission (Decision of 2 December 1977, Official Journal L 20 of 25 January 1978)? 1567

4 JUDGMENT OF CASE 126/80 4. May the clauses prohibiting supply for sale, contained in Article 2 or the Agreement in question and Article 1 of the Rules Governing the Functioning of the Joint Committees, be regarded as satisfying objective criteria such as to preclude any abuse and may they be exempted under Article 85 (3) even if they were laid down for the purpose of contributing to an improvement in distribution? 5. Does the fact that supplies are cut off from retailers who, like Mrs Salonia, have not obtained the licence required by the said Agreement, thus preventing such categories of persons from obtaining the products for sale in another way, preclude reliance upon the exemption provided for by Regulations 19 and 67 and, if such exemption has been granted, does that fact not lead to an assumption that the benefit thereof has been revoked? 6. Does not the conduct laid down in and governed by the Agreement in question constitute an abuse of a dominant position?" In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, observations were submitted by the Commission of the European Communities, represented by Sergio Fabro, a member of its Legal Department, acting as Agent. The written statements of case lodged by Mrs Bagheri and by the Federazione Italiana Editori Giornali were not accepted, the first because the period laid down in Article 20 had expired and the second because the Federazione Italiana Editori Giornali was not a party in the main action. After 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 Observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC The Commission first of all examines this case in the light of the Italian legislation on competition. The Italian Civil Code of 1942, at present in force, does not contain provisions intended to protect the interests of private individuals as against those of traders, as is the case with the anti-trust law of western countries. Only Article 2957 of that code lays down, by way of exception, the principle of non-discrimination, stating that "any person who runs an undertaking in the manner of a legal monopoly is under an obligation to negotiate with any person who requests it the services forming the object of the undertaking, whilst complying with the principle of equality of treatment". This situation has not been altered at all by the Italian Constitution of 1948, which was adopted at a period at which it was impossible to foresee the successive development which would bring Italy up to the level of the principal industrialized countries. In fact, the provisions of the Constitution do not specifically concern the field of competition, whilst permitting the legislature to legislate, if it so desires, in this matter. However, no law aiming to regulate competition has been introduced until now into the Italian legal order. At present, the Italian legislation authorizes the authority acting under powers conferred by public law to intervene in the private economy for social or political reasons but refrains on the other hand from interfering with relationships between traders, whilst adhering scrupulously in this respect to the principle of the freedom of private enterprise. 1568

5 SALONIA v POIDOMANI AND GIGLIO In these circumstances, the application brought by the plaintiff based on Article 2598 of the Civil Code is unlikely to overcome the principle of freedom of choice in entering into contracts. However, even if that application were based on Article 2597, it would be necessary to point out that in this case a de facto monopoly is involved and not a de jure monopoly and that the case-law of the Corte Suprema di Cassazione has always precluded the application by analogy of Article Moreover, there is no doubt that the agreement in question infringes the principle of free access to the market which seems to be guaranteed by Article 41 of the Constitution. It is therefore necessary to conclude that in the present state of Italian legislation and case-law on competition, this case is difficult to resolve. Dealing next with the dispute from the point of view of Community law, the Commission points out that the various questions put by the court making the reference raise problems of law which are either identical or very closely linked and that it is therefore necessary to examine them jointly. It emphasizes that whether or not Community law is applicable in this case depends on the reply which will be given to the question whether the agreement entered into in Italy between newspaper publishers and distributors may affect trade between Member States within the meaning of Article 85 (1) of the EEC Treaty. According to the case-law of the Court, this reply cannot be abstract and it is necessary to take into account the existing or at least foreseeable effects of a restriction on competition on intra- Community trade. A restriction having an insignificant or inappreciable effect on the market thus escapes the prohibition laid down in Article 85 (1). Moreover, a restriction must not be considered in isolation but taking into account in each case the general situation of the market in question, so that even an insignificant agreement may, in the context of several identical agreements relating to a large number of persons concerned on the territory of the same State, be considered as capable of affecting trade between Member States. Is should also be emphasized that for Article 85 (1) to be applicable it is not necessary for the undertakings which implement a restriction on competition to be situated in several Member States, since it is also possible for undertakings situated in a single Member State directly to affect intra-community trade, as follows for example from the judgment given by the Court in Case 8/72 (Vereeniging van Cementhandelaren, [1972] ECR 977). In order to come within the prohibition laid down in Article 85 (1), an agreement must moreover have as its object or effect "the prevention, restriction or distortion of competition". In this case too, any influence whatever, however insignificant, is nevertheless insufficient. Several decisions of the Commission and in the case-law of the Court in fact contain the concept that restriction on competition is not prohibited if, because of the weak position of the persons concerned on the market, it affects the market so little that its effect is not appreciable. The Commission explains that, using this concept as a starting-point, it has sought to define in specific terms this concept of "appreciable effect". With this end in 1569

6 JUDGMENT OF CASE 126/80 view it has adopted certain criteria according to which an agreement entered into between undertakings is not covered by the provisions of Article 85 (1) where the products which it concerns do not represent, in the part of the common market in which the agreement takes effect, more than 5 % of the volume of business and where the annual turnover achieved by the undertakings which are parties to the agreement does not exceed 15 million units of account or, where the agreements are made between commercial undertakings, 20 million units of account. These criteria were made public by the Commission in its communication of 2 June 1970 (Official Journal C 64) concerning agreements of minor importance which are not covered by the provisions of Article 85 (1) of the EEC Treaty. It is however clear that these criteria can only be indicative. It is in fact possible that in special cases an agreement exceeding the above-mentioned quantitative limits does not appreciably affect either intra-community trade or competition whereas an agreement of minor importance might have such an effect. The agreement which forms the subjectmatter of the main action, in other words the National Agreement Regulating the Resale of Daily Newspapers and Periodicals, is a typical reciprocal exclusive dealing agreement and as such undoubtedly comes within the prohibition laid down in Article 85 (1). There is, moreover, no question of examining the possibility of granting it an exemption within the meaning of Article 85 (3), since that agreement has never been notified. The case is not however as simple as it seems at first sight. First of all, although it is true that the agreement monopolizes sales of newspapers (the word "newspaper" means in fact not only the daily newspapers but also periodicals of all kinds), solely Italian newspapers are in fact involved. However, because of the little demand for foreign newspapers in Italy, foreign publishers have no interest in establishing their own distribution network and prefer to use the normal existing distribution network, so that in practice foreign newspapers are also subject to the restrictions resulting from the agreement. It is therefore necessary to see whether or not the adverse effect on trade in foreign newspapers in Italy is appreciable. Although the categories concerned are in agreement that the present system is not sufficient to develop sales appropriately, it is difficult to calculate ' the increase which might result for Italian newspapers from liberalizing that system or increasing sales points and, above all, to calculate the increase which would result for foreign newspapers, the purchase of which meets very varied needs. In any case, it is not possible to state that there is close inter-dependence between sales of Italian newspapers and sales of foreign newspapers. Even if it were possible to calculate in each country of the Community the relationship between the sale of national newspapers and the sale of foreign newspapers, the different percentages which would be observed would not enable a significant comparison to be made since each 1570

7 SALONIA v POIDOMANI AND GIGLIO national market has its own characteristics (for example, in Belgium many French newspapers are sold in the French-speaking part of the country, whereas Netherlands newspapers are hardly sold in the Dutch-speaking part). In such a situation, it is quite difficult to state whether or not the restriction on intra-community trade in newspapers and periodicals implemented by the agreement in question may be considered to be appreciable. It if considers it to be appropriate for the purpose of giving judgment in this case, the national court might perhaps order an expert report. In the Commission's opinion, having regard to the special situation of the market in foreign newspapers in Italy, a percentage lower than 5 % might objectively have appreciable effects on intra-community trade. In fact, on a market which is already difficult per se, the effect of a distortion in competition, even slight, might be that certain traders quite simply do not enter the market in question. In those circumstances, traders have a tendency to accept the market share which they have obtained without seeking to increase it, which would require of them inordinate and unprofitable efforts. It follows therefore that even a minimal restriction may have an appreciable effect on the market. Editori Giornali and the Federazione Sindacale Unitaria Giornalai must be considered each as a single undertaking. An agreement entered into between several undertakings is always of greater economic importance and cannot therefore come within the category of agreements which may be presumed not to infringe the Treaty. It is, moreover, impossible to apply Article 1 (2) of Regulation No 67/67, although the agreement is one to which undertakings of a single Member State are parties and concerns the resale of products within that State, because that agreement affects trade between Member States. Finally, the Commission states that the agreement in question cannot be exempted as an agreement of minor importance. Although it is not able, in the present state of affairs, to define the restriction quantitatively for the purpose of applying the percentage of the volume of business, the Commission considers that, in view of the special nature of this case, the percentage quoted may, for the purposes of being appreciable, be lower than that laid down in its communication of 2 June It remains to examine the question submitted in the order for reference concerning the possibility of obtaining for the agreement the exemption laid down by Regulation No 19/65 and Regulation No 67/67. It follows from those regulations that one of the conditions for obtaining the exemption is that the agreements should be entered into between two undertakings. In this case, it is impossible, even having recourse to a wide interpretation, to maintain that the Federazione Italiana On the basis of the foregoing considerations, the Commission considers that the questions put by the Tribunale Civile, Ragusa, may be answered as follows : "The National Agreement of 23 October 1974 Regulating the Resale of Daily Newspapers and Periodicals entered into in Rome between the Federazione Italiana Editori Giornali and the Federazione Sindacale Unitaria Giornalai can only come within the prohibition laid 1571

8 JUDGMENT OF CASE 126/80 down in Article 85 (1) of the Treaty if it appreciably affects trade in foreign newspapers in Italy. In the present state of affairs, the Commission is not able to establish whether or not that restriction is appreciable. In view of the foregoing, the Commission considers in any case that, in view of the special nature of the market in foreign newspapers in Italy, a percentage lower than 5 % (contrary to what was laid down in its communication on agreements of minor importance of 2 June 1970) may be considered as appreciable. In any case, the agreement in question does not come within the block exemptions laid down by Regulation No 19/65 and Regulation No 67/67. Moreover, the agreement cannot form the subject-matter of the declaration of inapplicability laid down in Article 85 (3) of the Treaty, since the conditions laid down for the application of Article 85 (3) are not fulfilled". Ill Oral procedure Mrs Bagheri, represented by Riccardo Luzzatto of the Milan Bar, and the Commission of the European Communities, represented by Sergio Fabro, a member of its Legal Department, acting as Agent, submitted oral argument at the sitting on 3 February Mrs Bagheri considered that the reference for a preliminary ruling submitted to the Court by the Tribunale Civile, Ragusa, was inadmissible. She observed first of all that it was impossible to discern any issue of Community law in the proceedings pending before the national court. Even though the Agreement concluded on 23 October 1974 between the newspaper publishers and the distributors might be open to doubt as regards its compatibility with Community law, nevertheless none of the parties to the case had relied on the agreement in support of its submissions. The defendants had referred to the agreement solely in order to point out that it imposed no obligation on them to deliver newspapers and periodicals to the plaintiff and that it was therefore devoid of any importance for the purposes of the solution to the dispute. She observed, secondly, that the national court was asking the Court of Justice to give a ruling on an agreement the contracting parties to which are not parties to the main action and could not have intervened in that action. Since the signatories to the agreement could not intervene in the proceedings before the Court of Justice, they had no opportunity to express their views on the conformity of the agreement with the provisions of Community law. A comparable situation was considered by the Court in the case of Foglia v Novello where a reference for a preliminary ruling was quite correctly declared inadmissible. She pointed out in conclusion that if the Court were to rule on the questions referred to it, its ruling would in any event be inutiliter data. It was necessary, in her view, to emphasize yet again that the solution to the dispute did not depend on a appraisal of the 1974 Agreement in the light of Community law. Furthermore, the agreement was no longer in force when the facts of the case occurred since it had been repudiated on 11 May 1976 by the Newsagents' Federation with effect from 31 March

9 SALONIA v POIDOMANI AND GIGLIO In any event, Mrs Bagheri examined the questions submitted by the national court. In her opinion, these questions essentially amounted to asking whether agreements between undertakings which all belong to the same Member State come within the scope of Article 85 of the EEC Treaty. It was possible to infer from certain provisions of Regulations Nos 17 and 67/67 that such agreements were generally regarded as incapable of affecting trade between Member States. However, in exceptional circumstances, even agreements restricted to undertakings in a single Member State might have adverse effects on intra-community trade. That was not the case of the agreement in question which applied exclusively to Italian publications distributed in Italy and did not contain any rules governing the distribution of foreign publications, which were, moreover, put on the market in accordance with different systems. The system defined in the 1974 Agreement could not therefore hinder trade between Member States in any way. Any influence which that system might have on sales of foreign newspapers in Italy was considered by the Commission merely as a theoretical possibility and had by no means been proved. In reply to the question put to it by the Court, the Commission of the European Communities in the first place produced two tables setting forth the turnover of Italian newspaper publishers between 1972 and 1979 and Italian imports of foreign newspapers between 1972 and 1977 respectively. The Commission then observed that the Agreement of 23 October 1974 was no longer in force and had been replaced by a new agreement which no longer contained any restrictive clauses of the type incorporated in the previous agreement. The Commission wondered, however, whether during the period in which it was applied the previous agreement might not, if only indirectly, have hindered the sale of foreign newspapers in Italy. As the result of an inquiry conducted by its departments in October 1980, the Commission had come to the conclusion that demand for foreign newspapers in Italy was not elastic and that the entry into force of the new distribution agreement had not led to any variations in sales. Since the market in question was a very small and restricted one, it was quite conceivable that an increase in the number of sales outlets would by no means result in an increase in sales of foreign newspapers and periodicals in Italy. In those circumstances, the conclusion to be drawn was that the Agreement of 24 October 1974 had not given rise to the slightest restriction on sales of foreign newspapers in Italy. As regards the admissibility of the application, the Commission took the view that the Court should, in accordance with its case-law, give a ruling on the questions which the national court had considered it necessary to submit to it for the purposes of the solution to the case. The Advocate General delivered his opinion at the sitting on 25 March

10 JUDGMENT OF CASE 126/80 Decision 1 By order of 12 May 1980, received at the Court on 27 May 1980, the Tribunale Civile, Ragusa, referred to the Court, under Article 177 of the EEC Treaty, several preliminary questions on the interpretation of the provisions of the Treaty relating to competition and, in particular, of Article 85, in order to enable it to assess the compatibility with the requirements of the Treaty of certain clauses contained in the National Agreement Regulating the Resale of Daily Newspapers and Periodicals (hereinafter referred to as "the national agreement") concluded on 23 October 1974 between the Italian Federation of Newspaper Publishers [Federazione Italiana Editori Giornali] and the United Federation of Trade Unions of Newsagents [Federazione Sindacale Unitaria Giornalai]. 2 These questions were raised in connexion with a dispute between the holder of a licence issued by the administrative authorities for the retail selling of newspapers and periodicals in general and the proprietors of the warehouses for the distribution of newspapers and periodicals in Ragusa, concerning the refusal of the latter in 1978 to deliver newspapers and periodicals to the said licence-holder. 3 In support of their refusal, the warehouse proprietors contended that they were under no obligation to supply newspapers and periodicals to holders of a retail-selling licence issued by the administrative authorities since such a licence affords licence-holders no more than a possibility of being supplied. They maintained that at the time the distribution system for newspapers and periodicals in Italy was governed by the above-mentioned national agreement and that the plaintiff in the main action did not meet the requirements of Article 2 of that agreement. They emphasized in this connexion that under that provision, in communes with over inhabitants, publishers might supply their publications for sale only to holders of a licence issued by an Inter-Regional Joint Committee which entitles them to receive from the distributors publications intended for sale. 1574

11 SALONIA v POIDOMANI AND GIGLIO 4 The Tribunale Civile, Ragusa, hearing the case at first instance, took the view, on the basis of Judgment No 2387 of 4 September 1962 of the Court of Cassation, that the before-mentioned rules were not contrary to Italian domestic law and, in particular, were not contrary to the provisions of Article 2598 of the Civil Code. However, it did not rule out the possibility that the clauses of the national agreement prohibiting publishers of newspapers and periodicals from delivering these products to sellers who had not obtained the trade licences might prove to be incompatible with the rules of competition contained in the EEC Treaty and in order to clarify this point it referred the following questions to the Court: "1. Does the National Agreement of 23 October 1974 Regulating the Resale of Daily Newspapers and Periodicals constitute a national agreement protecting the market in the distribution and sale of all types of newspapers, national and foreign, is it an infringement of the prohibition on agreements laid down by Article 85 of the Treaty and, having regard to the special provisions governing admission to the newspaper trade, the minimum requirements, the obligations and penalties imposed upon retailers, does the agreement lead to a distortion of the conditions of competition? 2. Is not the said Agreement incompatible with and does it not therefore come within the prohibition laid down by Article 85 (1) of the Treaty to the extent to which it creates discrimination against retailers, in spite of the proper licence for the sale of newspapers issued to them by the competent administrative authority, merely because they do not agree to obtain a licence to engage in the retail trade, the issue of which is, under the provisions of the said Agreement, left to the discretion of the Inter- Regional Joint Committees (and now the National Committee for the Distribution of Daily Newspapers and Periodicals [Commissione Nazionale per la Diffusione dei Quotidiani e Periodici]? 3. Does not the Agreement interfere with freedom of competition, in which the choice expressed by consumers determines the number of sales outlets for newspapers, in the same way as the rules regulating the market applied by the Netherlands Association of Dealers in Bicycles and Related Goods, which contain principles and restrictions similar to those of the Agreement on daily newspapers and which were prohibited by the Commission (Decision of 2 December 1977, Official Journal L 20 of 25 January 1978)? 1575

12 JUDGMENT OF CASE 126/80 4. May the clauses prohibiting supply for sale, contained in Article 2 of the Agreement in question and Article 1 of the Rules Governing the Functioning of the Joint Committees, be regarded as satisfying objective criteria such as to preclude any abuse and may they be exempted under Article 85 (3) even if they were laid down for the purpose of contributing to an improvement in distribution? 5. Does the fact that supplies are cut off from retailers who, like Mrs Salonia, have not obtained the licence required by the said Agreement, thus preventing such categories of persons from obtaining the products for sale in another way, preclude reliance upon the exemption provided for by Regulations 19 and 67 and, if such exemption has been granted, does that fact not lead to an assumption that the benefit thereof has been revoked? 6. Does not the conduct laid down in and governed by the Agreement in question constitute an abuse of a dominant position?" The jurisdiction of the Court 5 The defendants in the main action allege that in the present case the Court has not been validly seised, under Article 177 of the Treaty, of a request for a preliminary ruling. They maintain, in the first place, that the questions referred to the Court bear no relation to the real subject-matter of the dispute since neither the plaintiff nor the defendants have relied on any rule of Community law in support of their arguments. They contend, moreover, that the questions submitted relate to an agreement to which none of the parties to the case is a signatory. Finally, they point out that the interpretation of the Treaty sought by the national court serves no useful purpose since the National Agreement of 23 October 1974 was no longer in force when the facts giving rise to the action occurred and it could not therefore at that time constitute the legal basis for the refusal on the part of the newspaper distributors to supply the plaintiff. 6 As the Court stated in its judgment of 19 December 1968 in Case 13/68 Salgoil [1968] ECR 453, Article 177 of the Treaty, which is based on a distinct separation of functions between national courts and the Court of Justice, does not allow the latter to criticize the reasons for the reference. Consequently, a request from a national court may be rejected only if it is quite obvious that the interpretation of Community law or the examination 1576

13 SALONIA v POIDOMANI AND GIGLIO of the validity of a rule of Community law sought by that court bears no relation to the actual nature of the case or to the subject-matter of the main action. 7 However, that is not so in this case. In the first place, the fact that the parties to the main action failed to raise a point of Community law before the national court does not preclude the latter from bringing the matter before the Court of Justice. In providing that reference for a preliminary ruling may be submitted to the Court where "a question is raised before any court or tribunal of a Member State", the second and third paragraphs of Article 177 of the Treaty are not intended to restrict this procedure exclusively to cases where one or other of the parties to the main action has taken the initiative of raising a point concerning the interpretation or the validity of Community law, but also extend to cases where a question of this kind is raised by the national court or tribunal itself which considers that a decision thereon by the Court of Justice is "necessary to enable it to give judgment". 8 Similarly, the fact that neither the plaintiff nor the defendants to the main action are parties to the national agreement forming the subject-matter of the questions on the interpretation of the Treaty referred to the Court of Justice by the national court does not call in question the Court's jurisdiction since the application of Article 177 of the Treaty is subject to the sole requirement that national courts must be provided with all the relevant elements of Community law which are necessary to enable them to give judgment. 9 Finally, although it is true that the agreement in question was repudiated by one of the parties with effect from 31 March 1977, with the result that it was no longer in force at the time when the facts giving rise to the case occurred, or when the main action was commenced, that is to say on 21 and 22 September 1978, nevertheless the defendants in the main action themselves did not rule out, in their oral argument, the possibility that certain clauses of the agreement might have continued to be applied in practice after 31 March Furthermore, it is clear from the order referring the matter to the Court that in the main action the defendants had relied on the provisions of the above-mentioned national agreement and, more particularly, on those of Article 2 in order to have the application dismissed. 1577

14 JUDGMENT OF CASE 126/80 10 For those reasons, the objection raised by the defendants in the main action must be dismissed. Substance 11 The purpose of the first and third questions submitted by the national court is, in the first place, to establish whether the terms of an agreement, which is national in its scope, and which restricts the supply of newspapers and periodicals merely to retailers approved by a trade body comprising the representatives of the national newspaper publishers' and newsagents' associations, constitute an infringement of the rules of competition under Article 85 of the EEC Treaty. 12 According to that article, an agreement which "may affect trade between Member States" and which has as its "object or effect" to harm "competition within the common market" is prohibited as incompatible with the common market. This applies to an agreement which, as the Court stated in its judgment of 6 May 1971 in Case 1/71 Cadillon [1971] ECR 351, makes it possible to foresee, on the basis of all the objective factors of law or of fact, with a sufficient degree of probability that it may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States in such a way that it might hinder the attainment of the objectives of a single market between States and which has as its object or effect the restriction or distortion of competition within the common market. 13 In the present case, the agreement referred to by the national court provides for the exclusive distribution in Italy of Italian newspapers and periodicals and involves, inter alia, the application of a selective distribution clause contained in Article 2 whereby only approved retailers have access to the supply of newspapers and periodicals. 1 4 Such an agreement, which extends throughout the territory of a Member State may by its very nature have the effect of reinforcing the partitioning of the market on a national basis, thereby impeding the economic interpénétration which the Treaty is designed to bring about and protecting national production. 1578

15 SALONIA v POIDOMANI AND GIGLIO 15 Although it is true that in the present case the sole subject-matter of the agreement in question is the distribution of national newspapers and periodicals and that the agreement is not concerned with the distribution of newspapers and periodicals from other Member States, the fact remains that a closed-circuit distribution system applying to most of the sales outlets for newspapers and periodicals on national territory may also have repercussions on the distribution of newspapers and periodicals from other Member States. 16 Having regard to these factors therefore, it is impossible to rule out in principle the possibility that an agreement such as that referred to by the national court may, in view of its content and its scope, affect, as far as the distribution of newspapers and periodicals is concerned, trade between Member States within the meaning of Article 85 (1) of the Treaty. 17 However, it should be recalled that such an agreement escapes the prohibition laid down by Article 85 if it has no appreciable effect on trade between Member Sates. Although, in the case of newspapers and periodicals, an assessment of the appreciability of the effects which a distribution agreement may have on the market is stricter than in the case of other products, it is necessary nevertheless to take into account, for the purpose of determining whether an agreement is capable of having an appreciable effect on the market in newspapers and periodicals from other Member States, first the fact that this market may employ, for the sale of newspapers in the area concerned, channels of distribution other than those governed by the agreement and, secondly, that demand for the aforesaid products is rigid inasmuch as it shows no substantial variations as a result of the entry into force and the termination of the agreement in question. 18 In this connexion, the fact that the statistics produced by the Commission during the written procedure and supplemented at the sitting reveal that the demand for newspapers and periodicals from other Member States has not been subject to substantial variations between 1972 and 1979 constitutes one of the factors which have to be assessed. 19 It is for the national court to determine, on the basis of all the relevant information which it may have at its disposal, whether the agreement in fact satisfies the above-mentioned conditions and thus comes within the prohibition laid down by Article 85 (1). 1579

16 JUDGMENT OF CASE 126/80 20 Having regard to those facts, the answer to the first and third questions should therefore be that an exclusive distribution agreement for newspapers and periodicals such as that referred to by the national court comes within the prohibition laid down by Ariele 85 (1) of the Treaty only if it proves capable of having an appreciable effect on trade between the Member States. The second and sixth questions 21 In its second question, the national court asks whether the clause in the contested agreement which provides that only retailers in possession of a trade licence issued by the Inter-Regional Joint Committees are allowed to sell Italian newspapers and periodicals creates discrimination contrary to the Treaty. 22 In its sixth question, it asks whether such a rule is capable of constituting an abuse of a dominant position, prohibited by the first paragraph of Article 86 of the Treaty. 23 The purpose of these two questions is essentially to ascertain whether the agreement to which the national court refers is compatible with the provisions of the Treaty relating to competition in view of the fact that Article 2 of the agreement contains a clause providing for the application of a criterion of selective distribution. 24 As the Court has held, in particular in its judgment of 25 October 1977 in Case 25/76 Metro [1977] ECR 1875, selective distribution systems constitute an aspect of competition which accords with Article 85 (1), provided that retailers are chosen on the basis of objective criteria of a qualitative nature relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that said criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion. 25 In the case of an agreement such as that referred to by the national court, it is necessary to take account of those of its provisions which define the criteria governing the choice of approved retailers, such as the tenth 1580

17 SALONIA v POIDOMANI AND GIGLIO paragraph of Artide 3 and Artide 4 of the contested national agreement which provide that the licence shall be granted as a rule to persons who "possess the aptitude to pursue the occupation of newsagent". 26 In the present case, it is for the national court to determine, in the light of all these factors, whether genuine conditions exist which are capable of justifying the application, in the context of the agreement with which it is concerned, of the contested selective distribution criterion. 27 The answer to the second and sixth questions must therefore be that a selective distribution clause such as that contained in the national agreement referred to by the national court, restricting the supply of the products covered by the' agreement to approved licence-holders alone, does not infringe Article 85 (1) or the first paragraph of Article 86 of the Treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion. The fourth question 28 In its fourth question, the national court asks whether the clauses of the contested national agreement and in particular those contained in the Rules Governing the Functioning of the Inter-Regional Joint Committees may qualify for exemption under Article 85 (3) of the Treaty if it is established that their purpose is to contribute to an improvement in distribution. 29 Article 4 (1) of Regulation No 17 of the Council of 6 February 1962 (Official Journal English Special Edition , p. 87) provides that "agreements, decisions and concerted practices of the kind described in Article 85 (1) of the Treaty which come into existence after the entry into force of this regulation and in respect of which the parties seek application of Article 85 (3) must be notified to the Commission. Until they have been notified, no decision in application of Article 85 (3) may be taken". 1581

18 JUDGMENT OF CASE 126/80 30 It is common ground that the contested agreement, which was concluded after the entry into force of the aforesaid regulation, has not so far been notified to the Commission. In these circumstances, it has not been possible for any decision pursuant to Article 85 (3) to be taken in regard to the agreement. 31 It is therefore necessary to conclude that the agreement referred to by the national court could not, in the absence of notification to the Commission in accordance with Article 4 (1) of Regulation No 17 of the Council of 6 February 1962, be the object of a declaration of inapplicability under Article 85 (3) of the Treaty. The fifth question 32 In its fifth question, the national court asks whether the contested agreement may qualify for block exemption under Regulation No 19/65 of the Council of 2 March 1965 and under Regulation No 67/67 of the Commission of 22 March Article 1 (1) of Regulation No 19/65 of the Council (Official Journal English Special Edition , p. 35) provides that in accordance with Article 85 (3) of the Treaty, Article 85 (1) does not apply to categories of agreements "to which only two undertakings are party" and which display certain characteristics. 34 The same provision is contained in Article 1 (1) of Regulation No 67/67 of the Commission (Official Journal English Special Edition p. 10). Therefore it follows from these provisions that an agreement may qualify for block exemption under the aforesaid Regulations Nos 19/65 and 67/67 only on condition that it is an agreement "to which only two undertakings are party". 35 It is undisputed that the national agreement referred to by the national court was concluded between the Italian publishers' association and the Italian newsagents' association. Since the parties to the agreement are trade-union associations, both of which have a large membership, they cannot be regarded as "two undertakings" within the meaning of the aforesaid Regulations Nos 19/65 and 67/67, with the result that the condition contained in Article 1 (1) of those regulations does not appear to have been met in the present case. 1582

19 SALONIA v POIDOMANI AND GIGLIO 36 The answer to the fifth question should therefore be that since the agreement referred to by the national court is not an agreement "to which only two undertakings are party" within the meaning of Article 1(1) of Regulation No 19/65 of the Council of 2 March 1965 and of Regulation No 67/67 of the Commission of 22 March 1967, it does not come within the categories of agreements which, under the aforesaid regulations, may be exempted from the application of Article 85 (1) of the Treaty. Costs 37 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable and as the proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court. On those grounds, THE COURT in answer to the questions referred to it by the Tribunale Civile, Ragusa, by order of 27 May 1980, hereby rules: 1. An exclusive distribution agreement for newspapers and periodicals such as that referred to by the national court comes within the prohibition laid down by Article 86 (1) of the Treaty only if it proves capable of having an appreciable effect on trade between Member States. 2. A selective distribution clause, such as that contained in the national agreement referred to by the national court, restricting the supply of the products covered by the agreement to authorized licence-holders alone, does not infringe Article 85 (1) or the first paragraph of Article 86 of the Treaty if it appears that the authorized retailers are selected on the basis of objective criteria relating to the capacity of the retailer and his staff and the suitability of his trading premises in connexion with the requirements for the distribution of the product and that such criteria are laid down uniformly for all potential retailers and are not applied in a discriminatory fashion. 1583

20 OPINION OF MR REISCHL CASE 126/80 3. The agreement referred to by the national court could not, in the absence of notification to the Commission in accordance with Article 4 (1) of Regulation No 17 of the Council of 6 February 1962, be the object of a declaration of inapplicability under Article 85 (3) of the Treaty. 4. Since the agreement referred to by the national court is not an agreement "to which only two undertakings are party" within the meaning of Article 1 (1) of Regulation No 19/65 of the Council of 2 March 1965 and of Regulation No 67/67 of the Commission of 22 March 1967, it does not come within the categories of agreements which, under the aforesaid regulations, may be exempted from the application of Article 85 (1) of the Treaty. Mertens de Wilmars Pescatore Mackenzie Stuart O'Keeffe Bosco Touffait Due Everling Chloros Delivered in open court in Luxembourg on 16 June A. Van Houtte Registrar J. Mertens de Wilmars President OPINION OF MR ADVOCATE GENERAL REISCHL DELIVERED ON 25 MARCH Mr President, Members of the Court, Mrs Maria Salonia is the proprietor of a retail business dealing in stationery, books, newspapers, perfumes and haberdashery in Ragusa. Since 23 February 1978, she has been in possession of the requisite licence issued by the authorities. On 17 April 1978, and again on 20 April, she requested Mr Giorgio Poidomani and Mrs Franca Bagheri, née Giglio, as proprietors of warehouses for the supply newspapers and periodicals in Ragusa, to supply her with newspapers and periodicals but met with a refusal. On 21 September 1978, Mrs Salonia instituted 1 Translated from the German. 1584