Important legal notice

61989C0051

European Court reports 1991 Page I-02757

Opinion of the Advocate-General

Mr President, Members of the Court, 1. In the applications which have given rise to these proceedings the United Kingdom (Case 51/89), France (Case 90/89) and Germany (Case 94/89) seek the annulment of Council Decision 89/27/EEC of 16 December 1988 adopting the second phase of the programme on cooperation between universities and industry regarding training in the field of technology (Comett II)(1) on the ground that its legal basis is insufficient.

According to the applicant governments, the Comett II decision should have been based on Article 235 of the Treaty, as indeed was done in the case of the first Comett programme,(3) of which the contested decision constitutes the second phase.

It is more than obvious that such a dispute over the correct legal basis is not of a purely formal nature. Since Articles 128 and 235 contain different rules regarding decision making in the Council, the exclusion of Article 235, and thus of the requirement of a unanimous vote, could have repercussions on the content of the contested decision;(4) an incorrect choice of legal basis may thus constitute a breach of essential procedural requirements such as to impeach the validity of the measure.

3. The applicants challenge the selection of Article 128 alone as the correct legal basis; they submit that that article, which refers to the adoption of general principles for implementing a common vocational training policy, allows the Community institutions to coordinate the national policies in that regard but not to administer independent training schemes under a programme such as Comett II. In particular, they claim that such a programme is operational in nature, has important financial and budgetary implications, and includes projects which fall within the field not of vocational training but of research; those factors make it impossible to regard Article 128 as a sufficient legal basis for the adoption of the programme.

In the light of those considerations the Court therefore concluded that the Erasmus decision(6) did not exceed "the limits of the powers conferred on the Council by Article 128 of the Treaty in the area of vocational training", since in substance it did no more than provide for "Community information projects and promotional activity" and impose "on Member States obligations of cooperation" (paragraph 19).

Having regard to the foregoing, I do not think there is anything in the contested decision that can put in question the conclusions at which the Court arrived in the Erasmus judgment.

Moreover, in view of that judgment the applicant governments, at the stage of the reply and in the oral procedure, did not persist with these submissions, but simply sought the annulment of the contested decision on the ground that, like the Erasmus decision, it goes beyond the ambit solely of vocational training and concerns research as well.

That submission must be rejected, since it finds no support either in the wording of Article 128, which refers simply to "a common vocational training policy" without being more specific, or in any convincing arguments.

The expression "vocational training" cannot be restricted to initial training; it is clear that a training programme which did not include continuing education would be robbed of much of its utility. Training is important throughout a person' s career precisely because it meets a need for continued adaptation to the requirements of working life and to occupational developments, especially as a result of economic and technological restructuring.

I should also observe that Decision 63/266/EEC, referred to above, includes continuing education among the objectives of vocational training (see the first principle, third paragraph, the second principle, subparagraphs (f) and (g), and the ninth principle, second paragraph) and that Community programmes such as Eurotecnet(7) and Force,(8) both of which are based on Article 128 alone and were not challenged by any Member State, are directed precisely towards the advancement of continuing education.

6. That being the case, it remains to be established whether the contested decision is concerned exclusively with vocational training or, as the applicants claim,(9) also relates to research, so as to entail the need to rely on both Article 128 and Article 235 as a legal basis.

Here it is necessary to be more specific.

As I have just stated, the applicant governments submit that the contested decision should have been based also on Article 235 since it relates to research and goes beyond the field of vocational training. In that regard I should observe first of all that, as the Court has frequently pointed out, "it follows from the very wording of Article 235 that its use as the legal basis of a measure is justified only where no other provision of the Treaty gives the Community institutions the necessary power to adopt the measure in question".(10) It is well known, in so far as it is relevant here, that the Single European Act inserted in the Treaty a new title on research and development (Articles 130f to 130q) and that in the Erasmus judgment the Court stated that before the entry into force of the Single European Act research activities could be based only on Article 235, thus clearly implying - as indeed is obvious - that with effect from that date such activities find a solid foundation in the specific provisions granting powers in that regard, that is to say those laid down in Title VI of the Treaty.

In those circumstances it is thus frankly difficult to understand what led the applicants, given that there are specific provisions concerning research, to argue that the contested decision would still require Article 235 as a legal basis for research projects.

It seems to me instead that if it were to be thought that the contested decision contains elements or projects in the fields of research or technological development the decision should have as its legal basis, in addition to Article 128, the provision of Title VI which grants the power to adopt legislation.

I should add that such a conclusion leaves unchanged the terms of the dispute with which we are concerned inasmuch as, even on that hypothesis, it is not purely formal in character. Article 130q, the provision which would on this hypothesis be the appropriate legal basis, lays down rules different from those in Article 128 with regard both to the voting procedure and to the participation of the European Parliament. Consequently, if it were to be concluded that the correct legal basis for the contested decision was Articles 128 and 130q, the decision would be invalid for breach of essential procedural requirements.

7. And so we come finally to the problem of defining the contested decision from a legal point of view, examining first of all the objective and the content of the measure.(11)

The objective of the decision is quite clear from Article 1, which describes Comett II as a programme for "intra-Community cooperation between universities and industry regarding initial and continuing training in the field of, in particular, advanced technology"; it is thus an action programme unequivocally aimed at encouraging vocational training.

That conclusion is challenged by the applicants, who refer to a number of provisions of the decision which show, they say, that it is also aimed at furthering research activities.

Reference is made in particular to Article 3, according to which the programme in issue, "through the training projects it supports, ... will contribute to the utilization and exploitation of the results, methods and tools of technology developed by the Community policy for research and development" and "facilitate innovation and technology transfer as well as the balanced economic and social development of the Community" (see also the thirteenth recital in the preamble to the decision).

I do not think it can be argued that a programme with such effects necessarily entails research activities, as the United Kingdom submits. It seems clear to me that that provision, as it is worded, simply calls for the utilization of the results of research (which has already been carried out); that research thus constitutes a precondition for the training envisaged by the Comett II programme and not its objective.

In other words, a vocational training programme in the field of advanced technology necessarily entails the optimization of human resources, the reinforcement of the scientific bases of industry and a spur to innovation, precisely because it provides industry with a highly qualified workforce which is thus able to apply and develop the technological achievements already made. These are thus natural and logical consequences which do of course make plain the existence of a connection between a programme of this kind and research and development policy, but which equally clearly mean that the programme cannot in itself have the objective of encouraging research or impinge on such an objective in any way, except to the extent inherent in any programme of vocational training in the field of technology.

I do not think, moreover, that the fact that in Article 5(10) the Commission is required to ensure "Comett II is consistent with other Community research and development projects already programmed" can be considered decisive. Such a provision cannot be read as meaning that the Comett II programme itself is thus defined as a research programme; it should instead be read as meaning that it is necessary to ensure its consistency with research programmes, not only by avoiding duplication of aspects of such programmes which may in some way concern training but also in order to achieve the best possible coordination between two policies which, although quite separate, are nevertheless connected.

Such an interpretation is confirmed by the fifth recital in the preamble to the decision, in which reference to the decisions establishing research and development programmes is followed by the assertion that the technological and industrial cooperation brought about by those programmes "must be supported by parallel efforts in the field of vocational training".

The United Kingdom argues that the projects envisaged in Point 4(B)(a), in particular subparagraphs (ii) and (iii), in so far as they call for the allocation of grants, very probably concern scientific research work.

The United Kingdom' s complaint seems to be not so much that the function of these grants - which in the Council' s view are exclusively for training purposes - is to provide an incentive for research work but rather that there is a possibility that they may be used for such purposes; that is to say, that they may go beyond what is expressly provided for and stray into the research sector.

Indeed, this is the main element on which the applicants' arguments focus: the Comett II programme does not as such concern research and development policy, but could potentially do so, given the natural and inevitable influence which a programme of that kind may have on research and development activities.

I think that view was fully confirmed during the oral procedure, in which the applicants, in particular the representatives of the United Kingdom and the French Government, specifically insisted on the point that Comett II was not a mixed programme (vocational training plus research) but a training programme which might have some effects in the research field.

My answer is in the affirmative: I think the mere possibility that the projects contemplated as part of the Comett II programme may have repercussions on the research sector cannot justify the conclusion that the programme in question goes beyond the ambit of vocational training policy and thus prevent the Council from adopting it on the basis of Article 128 alone.

That conclusion cannot, I think, be affected by the fact that the Court took a different view with regard to the Erasmus decision, for the simple reason that, contrary to what the applicants submit, it is not possible merely to transpose the Court' s reasoning with regard to the Erasmus programme to the Comett II programme, given the difference in the objectives and content of the two programmes.

In that regard I should observe first of all that the Erasmus programme is restricted to universities: it is intended solely for university lecturers and students, and its objective, in addition to mobility for students, is "to promote greater cooperation between universities".

It is precisely because of those features that in the Erasmus judgment the Court, after pointing out that the concept of vocational training includes university studies, with the sole exception of courses of study "intended for persons wishing to improve their general knowledge rather than prepare themselves for an occupation",(12) nevertheless went on to state that scientific research is characteristically one of the functions off a university: indeed, a proportion of university staff devotes its time exclusively to research, and research constitutes an essential element in the work of most university teachers and of some students.

On that premise, and in view of the absence of any express reservation as regards scientific research, the Court thus came to the conclusion in relation to the Erasmus programme that "at least some of the initiatives planned are aimed at the spheres of both research and vocational training"(13) and that consequently Article 235 of the Treaty was required as a basis for its adoption.

10. Such a conclusion cannot be applied to the Comett II programme. Unlike the Erasmus programme, Comett II, as I have already stated, concerns the development of relations between universities and industry in the field of vocational training. It follows that teachers and researchers who benefit from the programme do so in their capacity as teachers and not as researchers. Moreover, the transnational exchanges between universities and industry provided for in Point 4(B) of the annex are at most indicative of the fact that the programme is restricted, with regard to its effects, to the exploitation and dissemination of the results of scientific research, and does not itself encompass research activities.

As I have already stated, the dissemination and optimization of research activities resulting from the application of the Comett II programme constitute merely the natural consequence, if not the necessary complement, of any vocational training initiative in the field of advanced technology.

11. It follows from all the foregoing considerations that the Council was correct to base itself on Article 128 alone in adopting the contested decision.

I therefore propose that the Court dismiss the applications and order the applicants to pay the costs, including those of the interveners.

(*) Original language: Italian.

(1) OJ 1989 L 13, p. 28.

(2) OJ, English Special Edition 1963-1964, p. 25.

( 3) Council Decision 86/365/EEC of 24 July 1986 adopting the programme on cooperation between universities and enterprises regarding training in the field of technology (OJ 1986 L 222, p. 17).

( 4) See the judgment of 26 March 1987 in Case 45/86 Commission v Council [1987] ECR 1493, at paragraph 12.

( 5) Judgment of 30 May 1989 in Case 242/87 Commission v Council [1989] ECR 1425; see also the judgment of 30 May 1989 in Case 56/88 United Kingdom v Council [1989] ECR 1615.

( 6) Council Decision 87/327/EEC of 15 June 1987 adopting an action scheme for the mobility of university students (OJ 1987 L 166, p. 20).

( 7) Council Decision 89/657/EEC of 18 December 1989 establishing an action programme to promote innovation in the field of vocational training resulting from technological change in the European Community (OJ 1989 L 393, p. 29).

( 8) Council Decision 90/267/EEC of 29 May 1990 establishing an action programme for the development of continuing vocational training in the European Community (OJ 1990 L 156, p. 1).

( 9) In that regard it may be relevant to observe, without wishing to draw any conclusions, that the United Kingdom and France put forward such a submission only at the stage of the reply, that is to say after the Court had stated in the Erasmus judgment that the contested decision did not concern solely vocational training but also scientific research, and that the Council therefore did not have the power to adopt it on the basis of Article 128 alone but was obliged, prior to the entry into force of the Single European Act, to base the measure also on Article 235.

( 10) See the judgment of 26 March 1987 in Case 45/86 Commission v Council [1987] ECR 1493, at paragraph 13.

( 11) See the judgment of 29 March 1990 in Case 62/88 Hellenic Republic v Council [1990] ECR 1527.

( 12) Judgment of 2 February 1988 in Case 24/86 Blaizot [1988] ECR 379, at paragraph 20.

( 13) Erasmus judgment, Case 242/87, at paragraph 36.

56 . On the other hand, retroactive withdrawal of the block exemption is precluded . This appears to be justified by the fact that block exemption is based directly on legislation and not, as in the case of an individual exemption, on an administrative decision . In that respect the legal effectiveness of a block exemption is stronger than that of an individual exemption .

The fact that an authorizing regulation and four of the more recent block-exemption instruments have included infringement of Article 86 among the grounds for withdrawal of the exemption confirms the finding that Article 86 also remains applicable during the currency of a block exemption .

It cannot be inferred from those special provisions that Article 86 cannot be applied in the sphere of the other block-exemption regulations until the block exemption is withdrawn . As I have already stated in connection with individual exemption with regard to the corresponding Article 5(3 ) of the regulation on competition in the air-transport sector, the aim of such provisions is simply to introduce an additional sanction for infringements of Article 86 - in this case withdrawal of the benefit of the block exemption . Even in the case of an agreement, decision or concerted practice which is void under national law for infringing Article 86, that additional sanction is not redundant since the revocation of the exemption with respect to Article 85 has some significance of its own . The special provisions therefore assume that Article 86 is applicable concurrently with a block exemption . ( 46 )

57 . However, the applicant considers that block-exemption regulations have been used by the legislature to foster certain types of agreements . That aim of the legislature would be undermined by application of Article 86 . Against this, it must be held, in common with the Commission, that the adoption of block-exemption regulations serves only to promote administrative simplification . It does not appear to me to be true that agreements, decisions and restrictive practices exempted from the prohibition laid down in Article 85(1 ) are generally desirable from the point of view of competition policy . Exemption merely restores the freedom of contract of the undertakings concerned, it has no management function in regard to competition policy . ( 47 )

58 . Consequently, I should like to set down as the result of my examination of the first argument that it is not logically or legally inconsistent to assess the applicant' s conduct against the prohibition set out in Article 86 even though the exclusive licence which it obtained was subject to Commission block-exemption Regulation No 2349/84 .

( 2 ) Acquisition of the patent licence as an abuse of a dominant position

59 . The second aspect to be investigated in this first part of my Opinion is concerned with whether the Commission was right to regard the mere acquisition of the exclusive licence by the applicant as an infringement of Article 86 . Admittedly the applicant has not contested the findings of fact made by the Commission, but at the hearing it expressed the view that the facts as found disclosed no infringement of Article 86 . As a result the contested decision must also be considered in that respect .

( a ) The elements making up an abuse of a dominant position

60 . In this connection I would first take up a point which arose in the discussion at the hearing . The question raised was whether Article 86 is to be applied in two ways and has two types of significance depending on whether or not a block exemption is involved . I take the view that it is clear from my analysis so far that the prohibition set out in Article 86 applies equally in both situations . As far as the legal consequences of an infringement of the prohibition are concerned, we have seen, however, that the Community legislature has dealt with them differently in different block-exemption regulations and, in particular, has restricted the Commission' s power to impose sanctions . ( 48 ) On the basis of Article 87 the legislature is entitled to implement such differentiation, which only affects the consequences which secondary legislation attaches to an infringement of Article 86 . Where it does not do so, as here in the case of Regulation No 2349/84 on patent licensing agreements, the application of Article 86 continues to be governed by the general provisions for its implementation, namely Regulation No 17 in this case .

61 . However, the applicant concludes on the basis of the Court' s judgment in the Ahmed Saeed case ( 49 ) that there is a substantive particularity in this case as regards the application of Article 86 . It takes the view that conduct consisting solely in the conclusion of an agreement exempted under Regulation No 2349/84 is not a sufficient basis to ground a charge of abuse, and that an additional element is necessary . It maintains on the basis of the judgment in Ahmed Saeed that the additional element is that the undertaking occupying the dominant position on the market must have imposed the exempted agreement on the other party to the agreement .

I would first observe that the applicant is selective in quoting from the judgment on which it relies : the Court states that an abuse of a dominant position on the market may be held to exist in particular "where such imposed tariffs must be regarded as unfair conditions of transport with regard to competitors or with regard to passengers ". That means that the Court of Justice did not regard an undertaking in a dominant position using its power to impose contractual conditions as the sole, indeed not even a sufficient, criterion for making out an abuse . Rather, the reasonableness of the content of the contract which is imposed plays a decisive role . This shows that behind the requirement for an "additional element", which the applicant is trying to infer from the judgment in the Ahmed Saeed case, there is in reality a general question, namely that of the conditions under which the conduct of an undertaking in a dominant position is to be regarded as an abuse of that position .

62 . The Court of Justice has gradually evolved guidelines with respect to that basic question in connection with Article 86 : first, it interpreted Article 86 in the light of Article 3(f ), according to which the Community has the task of instituting a system "ensuring that competition in the common market is not distorted ". ( 50 ) In the judgment in Continental Can the Court of Justice laid down as the first decisive element of abusive conduct the fact that the undertaking' s conduct strengthens its dominant position and thereby substantially fetters the - in any event, weakened - residual competition . According to that judgment, which the Commission relies on in the decision in this case, ( 51 ) the finding of an abuse depends on the restraint of competition to which the conduct of the undertaking in a dominant position - in that case, the acquisition of an 80% holding in a competitor - gives rise . ( 52 )

63 . If a restraining effect on competition only is allowed to suffice in order to characterize the conduct of an undertaking in a dominant position as abusive, the danger will arise that Article 86 will be applied to all the profit-making activities of the said undertaking . That would at least come close to prohibiting dominant positions, which is not provided for in the Treaty . Consequently, Article 86 must be considered more closely in this regard .

Since Article 86 does not prohibit the existence of a dominant position per se, an undertaking in a dominant position may also act in a profit-oriented way and strive to expand its business activities . It may reinforce its dominant position on the market through competition and drive less efficient competitors from the market, even if that results in its market share reaching 100 %. ( 53 ) The EEC Treaty does not require the undertaking in a dominant position to act in a way which makes no economic sense and is against its legitimate interest . If it did, Community law would conflict with other obligations to which an undertaking in a dominant position - like any other undertaking - is subject . I am thinking of, for instance, the company-law obligation on management organs to use the capital entrusted to them by the shareholders in order to make a profit and undertakings' responsibility for safeguarding jobs .

64 . Abuse is - according to the judgment in Hoffmann-La Roche - an objective concept ( 54 ) which does not imply that the use of the economic power bestowed by the dominant position is the means whereby the abuse has been brought about . ( 55 ) Accordingly, steps which an undertaking not in a dominant position might also take - such as, for example, the acquisition of a patent licence, the acquisition of a holding in another undertaking or the conclusion of a sole purchasing agreement - are not excluded from assessment under Article 86 . Contrary to the view taken by the applicant, it is not necessary in order for its conduct to be described as an abuse for it to have used its market power in order to impose the conclusion of the licensing agreement . ( 56 ) Even undertakings' conduct which is neutral in terms of value may conflict with Article 86 where it is of such a kind as to lead to undesirable effects with respect to the Community' s rules on competition .

65 . Accordingly, Article 86 confers on the undertaking in a dominant position special responsibility "not to allow its conduct to impair genuine undistorted competition on the common market ". ( 57 ) In order to avoid that special obligation of the undertaking in a dominant position from conflicting with the principle that dominant positions as such are not prohibited, it is necessary to have additional characteristics whereby abusive conduct can be differentiated from means of normal competition . Where are those characteristics to be found?

66 . An initial answer is supplied by the development by the Court of Justice of the concept of abuse as expressed in the two-part definition set out in the judgment in Hoffmann-La Roche . According to that definition, in addition to a restraint of competition the undertaking in a dominant position must have used methods "different from those governing normal competition in products or services based on traders' performance ". ( 58 ) The Court of Justice considered as being such methods, for example, the sole purchasing agreements which Hoffmann-La Roche had concluded with some of its customers .

67 . The question arises, however, as to whether only methods different from those governing normal competition come under consideration . In order to answer that question let us return once again to the content of Article 86 :

The provision contains four examples of abuses of a dominant position . The first two examples are concerned primarily about protecting parties to contracts with undertakings in dominant positions and consumers against exploitation of their dependence on the dominant undertaking, whilst the prohibition in subparagraph ( d ) on making the conclusion of contracts subject to the acceptance of supplementary obligations is clearly aimed at protecting competitors as well as contracting parties and example ( c ) prohibits discrimination as between the trading partners of the undertaking in a dominant position which would have an adverse impact on competition . The common feature shared by the first three examples is that the conduct to which they refer pursues the legitimate end of making profits through disproportionate means . Cases of abuse not expressly mentioned can be inferred from those examples . They point to limits which the undertaking in the dominant position must respect even in the case of activities which fall outside the examples, ( 59 ) namely the principle of proportionality ( 60 ) and the prohibition of discrimination .

68 . In this case, the principle of proportionality is of primary importance, since the complaint relating to the acquisition of the exclusive licence(and only the exclusive licence ) implies a complaint of disproportionate conduct . Applied to the conduct of an undertaking in a dominant position, that principle has the following meaning : the undertaking in a dominant position may act in a profit-oriented way, strive through its efforts to improve its market position and pursue its legitimate interests . But in so doing it may employ only such methods as are necessary to pursue those legitimate aims . In particular it may not act in a way which, foreseeably, will limit competition more than is necessary .

69 . The Court of Justice has assessed the conduct of undertakings in a dominant position in terms of the principle of proportionality in this way in a series of decisions .

Thus, in BRT v Sabam and Finior ( 61 ) the Court of Justice held that conditions imposed by a copyright-management association in contracts intended to protect members' rights were unfair and therefore an abuse because they encroached more severely on members' freedom to exercise their copyrights than was necessary in order effectively to protect those rights .

Similar considerations are to be found in the judgment in the Suiker Unie case, ( 62 ) where it was held that where an undertaking occupying a dominant position agrees clauses with its trade representatives which prohibit competition, this may constitute an abuse if the scope of the prohibition is enlarged "to such an extent that it no longer corresponds to the nature of the legal and economic relationship in question" ( that is to say, the relationship of the undertaking with its trade representatives ).

70 . The application of the principle of proportionality is especially clear in the United Brands case . In that well-known case the Court of Justice first declared that a prohibition imposed by the applicant on the resale by customers of green bananas was an abuse because it infringed that principle . The Court of Justice acknowledged that it was lawful for the applicant to pursue a policy of quality when choosing its sellers but that the practice adopted "raised obstacles, the effect of which went beyond the objective to be attained" and which were therefore prohibited under Article 86 . In the same judgment, the Court of Justice recognized that an undertaking in a dominant position was entitled to adopt sanctions against trading partners where they acted contrary to its commercial interests . Nevertheless, such sanctions must be proportionate to the threat which the conduct of the trading partner poses to the interests of the undertaking occupying a dominant position . ( 63 ) United Brands' action in discontinuing deliveries to a customer because that customer had taken part in an advertising campaign for one of its competitors was not proportionate in that sense .

71 . Only recently the Court of Justice decided that proportionality was the yardstick for assessing whether the royalties charged by the French copyright-management company Sacem constituted an abuse because Sacem invariably gave rights of access to the whole of its repertoire and did not allow licensees to have access to just that category of works in which they were interested against payment of a commensurately smaller royalty . The Court of Justice stated that that conduct, which pursued the legitimate aim of protecting the interests of authors, composers and publishers of music, would be exceptionable only if other methods might be capable of achieving the same aim without a resultant increase in the expenses incurred by Sacem for management and monitoring . ( 64 )

According to that same judgment, the same considerations determine whether contracts concluded with users of recorded music in accordance with such a practice can be regarded as restrictive of competition for the purposes of Article 85(1 ). ( 65 ) Here can be seen the importance of the criterion of proportionality for assessing conduct both under Article 85 and under Article 86 .

72 . That close substantive connection between the two provisions is also borne out by the judgment in Hoffmann-La Roche . There the Court of Justice admittedly did not expressly examine whether the conduct of which the undertaking in a dominant position was accused was proportionate yet, as Vogel has shown, ( 66 ) it referred indirectly to the principle of proportionality . In considering the exclusive purchasing contracts concluded with its customers by the undertaking in a dominant position the judgment states that "such agreements could only possibly be admissible in the context of, and subject to the conditions laid down in, Article 85(3 ) of the Treaty ". ( 67 ) Those conditions include the proportionality of the agreement, which consists, according to Article 85(3)(a ), in the fact that the undertakings concerned must not have had imposed on them "restrictions which are not indispensable to the attainment of these objectives [that is to say, the objectives referred to in Article 85(3 ) ]". Therefore, contrary to the view taken by the applicant, the additional element does not necessarily have to be inferred from circumstances external to the agreement, it may instead also be inherent in the content of the agreement itself where it constitutes disproportionate conduct by the undertaking in a dominant position .

73 . Admittedly in the present case there is also a special legal problem inasmuch as the subject-matter of the agreement at issue is a patent licence . It must therefore be considered whether it is compatible with the case-law of the Court of Justice relating to the application of Article 86 to industrial property rights for the applicant' s conduct to be assessed in terms of the aforementioned criteria .

Only recently, in its judgment in the Maxicar case, the Court of Justice confirmed the case-law (68) to the effect that the mere fact of securing the original benefit of an exclusive right granted by law - in that case protective rights in respect of ornamental models for car bodywork components - cannot be regarded as abusive conduct within the meaning of Article 86. (69)

Instead, in that instance, too, (70) the Court distinguishes between the acquisition of the right and its exercise. Only the latter is capable of degenerating into an abuse, (71) for instance in the event of an arbitrary refusal to supply, the fixing of prices at an unfair level or a decision curtailing production. (72) There is always an additional element on top of the acquisition of the protective right. However, that additional element cannot simply be the fact that competition from other manufacturers with respect to the protected product has been eliminated, since that effect is inseparable from the existence of the protective right. (73)

74. Nevertheless, I do not consider that these principles, which the Court of Justice has developed in regard to the original acquisition of industrial property rights, can be transposed directly to the derived acquisition of an exclusive licence. Where a patent or registered design is obtained by its originator, the undertaking is protecting its own development work from imitation by third parties. An undertaking occupying a dominant position may also protect itself in that way, even when in so doing, as in the Maxicar case, it drives out from the market undertakings whose business previously consisted in imitating the products in question. (74)

In contrast, the acquirer of a patent license procures for himself the development work carried out by others. That is legitimate, but it distinguishes his legal position from that of the original proprietor of the protective right. It is to the latter that the exclusive entitlement to the substance of that right belongs and it is intended to allow him to obtain the reward for his creative effort. (75) However, as far as the licensee is concerned, it is a question, not of reward for the efforts and risks which he himself incurred in developing the protected item (he pays that reward to the inventor), but of the most profitable employment of an investment. Consequently, unlike the industrial property right itself, the licence is not necessarily exclusive. Those differences justify not extending to the licensee the special position which the proprietor of an industrial property right enjoys in the context of Article 86.

The fact, therefore, that an inventor occupying a dominant position on the market may exclude third parties from exploiting his own invention without his conduct constituting an abuse does not signify that undertakings occupying a dominant position may, by acquiring an exclusive licence, invariably exclude their potential competitors from using the research findings made by third parties.

(b) The establishment of an infringement in the contested decision

75. We saw in the first part of my discussion that Article 86 can also be applicable to an agreement which is the subject of a block exemption. After that I showed that Article 86 is fulfilled where conduct of an undertaking in a dominant position which restricts competition is in addition disproportionate. That also applies to the derived acquisition of a patent licence by the undertaking occupying a dominant position. Against that legal background it must now be examined whether the Commission was right to hold that there was an infringement of Article 86.

In paragraph 60 of the contested decision, the Commission claims that the abuse of the dominant position by the applicant consisted in the acquisition of the exclusive licence, which had the effect of strengthening the dominant position, further weakening existing competition and rendering even more difficult the entry of any new competitors onto the market. Consequently, in the result the Commission was right in law to base its decision on disproportionate conduct on the part of the applicant which restricted competition, even though it refers in the decision only to the judgment in Continental Can and does not expressly take into account the point of view of proportionality which the Court developed in subsequent decisions. (76) A further question arises as to whether the findings of fact set out by the Commission in paragraphs 18, 22 and 23 of the contested decision bear out the legal conclusions reached therein.

76. (aa) It first must be considered whether conduct on the part of the applicant restricting competition has been made out: the acquisition of the exclusive licence strengthened the applicant's dominance of the market vis-à-vis all its competitors, because they did not have access to the technology in question. Even before it acquired the exclusive licence, the applicant's share of the market in aseptic filling machines was around 91.8%; the exclusive licence for the alternative sterilization process belonged to its potential competitor, Liquipak, which was endeavouring to break into the market dominated by the applicant.

After its acquisition, the exclusive licence belonged to the applicant; the alternative technology protected by the patent was thereby taken out of reach of all Tetra's potential competitors. That the applicant acquired the licence in connection with its take-over of Liquipak, which is not at issue in these proceedings, makes no difference to this outcome. Even the acquisition of the licence alone would have prevented all potential competitors of the applicant from using the alternative sterilization process in order to gain access to the market.

77. The Commission also found in paragraph 18 (and paragraph 27) of the contested decision that as a result of the acquisition of the exclusive licence the applicant's competitor Elopak was excluded from the market, at least temporarily. The Commission stated at the hearing that that constituted the abuse carried out by the applicant.

At the hearing the applicant argued that the findings set out in the decision with regard to the position and conduct of Elopak were not unequivocal and did not support the claim that Article 86 had been infringed. Whether it is permissible under Article 42 of the Rules of Procedure of the Court of Justice (under Article 11 of the Council decision of 24 October 1988 (77) those rules are, at present, applicable in this court), given that a defective statement of reasons was not raised as an issue, for that part of the decision to be addressed only at the hearing seems to me to be doubtful, as is plain from my question at the hearing. Even if that submission were to be admitted as an additional argument with regard to the ground of the application relating to the infringement of Article 86, the following would have to be taken into account.

The Commission's findings that the applicant strengthened its dominant position vis-à-vis all competitors and at least considerably delayed Elopak's entry onto the market clearly point to conduct on the part of the applicant which restricted competition. That outcome would be unaffected - and I would point this out in the alternative - if this court should uphold the applicant's claims with regard to the findings of fact made with regard to Elopak's conduct. Even if the Court of First Instance takes no account of that area, which is to some extent in dispute and has not been fully clarified in the course of the proceedings, the finding remains that by acquiring the licence the applicant further strengthened its market power vis-à-vis all competitors. That restricting effect on competition itself is enough to satisfy Article 86, without there being any need to establish additional, specific effects on the conduct of a particular competitor. It is enough that the applicant took exclusive possession of the alternative technology and thereby excluded all potential competitors from using it. In that way alone it increased the barriers to entry onto the market and made it more difficult for potential competition to come about.

78. (bb) In addition, the acquisition of the exclusive licence constituted a disproportionate method. Granted, the utilization of technical progress through the acquisition of patent licences is part of competition with regard to efficiency, in which the applicant as an undertaking occupying a dominant position is entitled to participate. However, it was not necessary for the purposes of the applicant's legitimate aim of obtaining access to technological innovations in order to improve its efficiency for it to deploy a method which was so plainly and directly restrictive of competition. Rather, the Commission rightly assumed that a non-exclusive licence would also have enabled the applicant to use the patented process in order to improve its own products, but without at the same time impeding new competitors' access to the market on which it occupied a dominant position.

It follows that the actual content of the agreement shows the disproportionality of the conduct adopted by the applicant, which as an undertaking in a dominant position was not entitled to enter into an agreement having such a content. This also shows specifically that, contrary to the view taken by the applicant, not only an aspect outside the agreement can be relevant as an "additional element".

79. The fact that the exclusive patent licensing agreement fell within a block-exemption regulation does not alter the disproportionate nature of the applicant's conduct: perusal of the preamble to Regulation No 2349/84 shows that the abstract check on proportionality carried out by the legislature did not take into account situations such as the one at issue in this case. Under normal market conditions, exclusive licences serve to disseminate new products or manufacturing processes. Their exclusivity can be justified on the ground that because of the risks regularly associated with the introduction of new products or manufacturing processes, investment in such innovations necessitates a special incentive. The protection secured by the exclusivity of the licence facilitates the licensee's access to the market. As a result it helps to improve supply and increase the number of production facilities and promotes the dissemination of technical progress. (78)

Those considerations cannot justify in this case the acquisition of the exclusive licence by the applicant. On the contrary, its conduct has repercussions which conflict with the aims of Regulation No 2349/84 in so far as it impedes other undertakings' access to the market and impedes any increase in the number of production facilities.

80. Lastly, the assessment of the applicants' conduct as disproportionate is unaffected by the fact that the licensor, British Technology Group, was in agreement with the transfer of the exclusive licence. The special responsibility borne by Tetra as an undertaking occupying a dominant position debars it from acting in ways which restrict competition disproportionately, even where such conduct is in the interest of the other party to the agreement. (79)

81. It can therefore be held in answer to the applicant's first argument that, in itself, the acquisition of an exclusive licence by an undertaking in a dominant position does not constitute an abuse within the meaning of Article 86. However, if in addition, as in this case, that conduct further adversely affects competition on the market in which the undertaking is dominant and the conduct is disproportionate to the legitimate aims of the said undertaking, the conditions laid down in Article 86 are satisfied.

II - Infringement of the principle of legal certainty

82. The applicant's second argument is that it would be contrary to the principle of legal certainty for Article 86 to be applied to conduct covered by a block-exemption regulation. Just as withdrawal of exemption may only be effective prospectively, Article 86 may likewise only be applied to its conduct ex nunc. If that were not so, undertakings in a dominant position and parties to agreements with such undertakings could never benefit from block exemption, the chief advantage of which lies in the fact that the parties can rely on an agreement whose content is exempted being permissible and effective.

83. Legal certainty, like the related principle of legitimate expectations, is one of the general principles of Community law, recognized by the established case-law of the Court of Justice. (80) Under the two principles the application of the law in an individual case must be predictable. (81) The principle of legal certainty plays a role chiefly in the interpretation of the applicable law and can limit unexpected application of the law so as to avoid legal relationships which were established in good faith from being called into question after the event. (82) That principle proved to be of relevance for the application of the competition rules laid down in the Treaty as long ago as 1962 when the Court of Justice in the Bosch case based the doctrine of the provisional validity of subsisting cartels on the principle of legal certainty and, as a result, considerably limited the direct applicability of Article 85(1) and (2). (83) Recently in cases concerning the air-transport sector the Court of Justice again had recourse to the rules developed at that time. (84)

84. The principle of legitimate expectations relates primarily to changes in the legal situation or in an existing practice with regard to the application of the law by Community institutions and is particularly important where traders have acted in reliance on the state of affairs obtaining until then and have suffered disadvantages as a result of the change which has occurred. (85) In both cases, it is necessary to balance the interests founded on legitimate expectations, on the one hand, against the principle that the administration must act in accordance with the law (86) and against the margin for manoeuvre left to the Community institutions. Only special, unreasonable hardships may, exceptionally, justify the principle that the administration must act in accordance with the law and the discretion of the legislature having to give way to the requirements of legal certainty.

85. The applicant's second argument therefore turns on whether undertakings occupying a dominant position are exposed to unreasonable uncertainty as a result of Article 86 being applied to their conduct, even though it was covered by a block exemption, before the block exemption has been withdrawn with prospective effect. As I shall explain in more detail in two stages, it appears to me that the principle of legal certainty was not infringed in this case. In the first place, the application of Article 86 in a case like that of the applicant is generally predictable. But, secondly, there was in the applicant's case additionally no adverse effect on a legal relationship which was founded in good faith on the non-applicability of Article 86.

(1) Predictability of the application of Article 86

(a) Predictability despite the block exemption

86. The application of Article 86 was generally predictable for the applicant. This follows from three considerations.

We have seen that in the case of a block exemption the legislature adopts a general, abstract provision which does not and cannot cover conditions on the actual market. An undertaking can therefore not rely on the legislature's assessment being valid for the market in which it occupies a dominant position. Where, as in this case, a patent licensing agreement is involved, the agreement must be measured against Regulation No 2349/84, including paragraph 27 of the preamble, which reads as follows:

"Agreements which come within the terms of Articles 1 and 2 and which have neither the object nor the effect of restricting competition in any other way need no longer be notified. Nevertheless, undertakings will still have the right to apply in individual cases for negative clearance under Article 2 of Council Regulation No 17 or for exemption under Article 85(3)."

Consequently, the contracting parties are clearly put on notice that their agreement may also have restrictive effects on competition which are not covered by the block exemption, and that they must consider whether it is appropriate, having regard to such effects, to apply for individual exemption or negative clearance. Depending on their position on the market they also have reason to consider the possibility of an infringement of Article 86. The outcome of the examination carried out by the undertakings concerned on the conclusion of the agreement will be influenced by their size and position on the market. Consequently, if the licence is subsequently transferred to another undertaking, that undertaking cannot rely on the agreement's continuing to be unobjectionable. As a result, that undertaking is in the same position as an undertaking concluding such an agreement for the first time and, like such an undertaking, must check that the agreement is permissible in terms of competition law.

87. Second argument: Neither can the fact that the benefit of group exemption may only be withdrawn prospectively be construed by the undertakings concerned as meaning that until the benefit of exemption is withdrawn they do not need to reckon with the application of Article 86 to their conduct.

Admittedly, the applicant points out that the idea behind block exemption is to enable agreements which on the basis of a general, abstract assessment comply with the requirements of Article 85(3) to be concluded effectively under the civil law without a demanding individual examination being carried out. (87) In the applicant's view, the parties to such an agreement should be able to rely on their agreement's effectiveness until such time, if any, as the benefit of the exemption is withdrawn. It considers that it is true that Article 86 does not expressly provide that contracts which infringe that article are null and void, but that consequence might arise under national law. It maintains that this is unreasonably hard, not only on the undertaking in a dominant position which is a party to the agreement, but also on the other party, which is often not guilty of any infringement of Article 86.

As we have seen, the possibility of the application of Article 86 is predictable for the undertaking occupying a dominant position, even before the benefit of exemption is withdrawn. It is therefore not entitled to assume that the legal consequences of infringements of Article 86 are conclusively settled by the possibility that the benefit of exemption will be withdrawn. Moreover, I admit that the infringement of Article 86 by an exempted agreement regularly also fulfils the conditions for withdrawal of exemption. (88) On the other hand, the grounds for withdrawing the benefit of exemption extend far beyond abuses within the meaning of Article 86 and include less severe effects on competition as well. It can therefore not be concluded from the fact that provision is made for the withdrawal of exemption for various types of "less important" cases that an infringement of Article 86 can have no more extensive legal consequences. As a result, the undertaking cannot rely on Article 86 being "precluded". (89)

88. Third argument: The applicant considers that, in view of the difficulties in delimiting the relevant market and ascertaining what constitutes a dominant position on the market, no undertaking can be certain whether or not its conduct in concluding an exempted agreement constitutes an abuse. However, undertakings occupying dominant positions are invariably confronted with those problems of definition independently of the existence of a block exemption; despite this the Treaty places them under a duty to make their conduct comply with Article 86. In that connection, it is appropriate to point to the special responsibility of the undertaking in a dominant position to take account of the requirements of competition, which the Court of Justice referred to in the judgment in the Michelin case. (90) A block exemption does not alter that special situation of the undertaking in a dominant position which limits its scope for action in comparison with less powerful undertakings.

However, if the abuse is also characterized by the fact that the prohibited conduct of the undertaking in a dominant position is a disproportionate method of pursuing its legitimate economic interests, in accordance with the case-law of the Court of Justice which I have analysed and the practice adopted by the Commission in taking its decisions, then undertakings occupying a dominant position have a criterion which enables them to distinguish between agreements constituting an abuse and agreements to which they may accede without infringing the rules on competition .

As we know, the applicant did not contest the Commission' s findings with regard to the delimitation of the relevant market and to its dominant position in these proceedings and it did not claim that it was ignorant of the chief circumstances on which the Commission bases itself in that regard . The applicant therefore had to reckon on the fact that the whole of its business conduct was liable to be assessed in the light of Article 86 .

91 . The applicant also had to reckon on the fact that its acquisition of the exclusive patent licence was liable to be regarded as an abuse of a dominant position . It could not have remained ignorant of the restrictive effects on competition directly resulting from that transaction . They arose - without any change in the substance of the agreement - because the applicant as an undertaking in a dominant position acceded to the agreement . In that situation, paragraph 27 of the preamble to Regulation No 2349/84 should have given it cause to consider whether the conditions for exemption really were fulfilled .

Finally, it was also obvious that the acquisition of the exclusive licence was not necessary in order to protect the applicant' s legitimate interests . In so far as it was simply a question of its utilizing the sterilization process developed by the British Technology Group in manufacturing its machines, it was plain that a simple licence would also have been sufficient for that purpose .

( b ) Additional legal certainty afforded by the possibility of negative clearance

93 . The applicant considers that the effort involved deprives block exemption of any benefit . It takes the view that the procedure for the grant of negative clearance takes too long and does not give rise to the necessary legal certainty : negative clearance is not binding on the national courts and does not preclude the imposition of a fine on the parties . By applying Article 86 to exempted conduct the Commission undermines the system of block exemptions, whose purpose is to make individual examinations superfluous .

94 . It must be conceded to the applicant that the procedure for the grant of negative clearance is to a certain extent at odds with the aim of administrative simplification pursued by the system of block exemption . On the other hand, the system of block exemptions is not intended, as we have just seen, to immunize agreements against an application of Article 86 and provide the parties with legal certainty also in that respect . Neither is the grant of negative clearance in any way alien to that system, as witness in particular paragraph 27 of the preamble to the regulation on patent licensing agreements, which expressly reserves the relevant undertakings' right to apply for negative clearance .

95 . The objection of the duration of the procedure weighs more heavily . It can be a hardship for the parties for them to be unsure for a relatively long time as to whether or not the Commission considers an agreement existing between them to be an abuse . However, any applicant for negative clearance must accept a fairly long period of legal uncertainty during the procedure for the grant of clearance . This is also true for undertakings occupying a dominant position .

96 . The parties take the view that an application for negative clearance would not have protected Tetra against the imposition of a fine . Different views are taken on this question in the literature . But it must be pointed out in that connection that in this case the Commission - in my view, rightly - did not impose a fine . Consequently, undertakings can probably rely on the Commission to make cautious use of its power to impose fines in cases of the sort at issue; although it must be observed that this court' s decision in these proceedings should eliminate previous uncertainties about the legal situation . Furthermore, fines in this area are also amenable to full review by this court .

The applicant' s final claim in this connection, to the effect that negative clearance does not guarantee legal certainty because it is not binding on the national courts, will be considered in the context of its third argument .

( 2 ) Impairment of a legal relationship established in good faith on the basis of the exemption

97 . The further question as to whether, contrary to a general principle of Community law, a legal relationship established in good faith on the basis of the exemption has been impaired, has already been answered to a large degree in the discussions so far . I shall therefore confine myself to two supplementary remarks, as follows . The original licensing agreement between the National Research and Development Council and Novus Corp ., to which the applicant acceded, was concluded in 1981, that is to say long before Regulation No 2349/84 entered into force . As a result, the agreement benefited from exemption after the event and without intervention on the part of the contracting parties; it is therefore not possible to claim that the legal relationship was established in good faith on the basis of the exemption .

98 . When the applicant negotiated with the British Technology Group and acquired the licence in 1986, the block-exemption regulation was, however, already in force, but only combined with Article 86 . The abuse to which the Commission' s charge relates concerns only one aspect of the legal relationship between the applicant and the licensor, namely the exclusive nature of the licence granted . In that respect the applicant could have known that Article 86 was liable to be applied and hence it is not possible to maintain that there was good faith on its part .

99 . It must be conceded that the other party to the agreement with the undertaking in the dominant position does not necessarily know about its dominance of the market and hence about the possible application of Article 86 . This point made by the applicant is a significant one but it does not mean that Article 86 is partially inapplicable ( where the party which is not in a dominant position on the market was acting in good faith ). Article 86 turns only on the conduct of the undertaking in the dominant position . The solution of such cases must be left to the national law applicable in the particular case, since Article 86 does not deal with the consequences in civil law of an infringement .

III - Threat to the uniform application of Community law

Consequently, neither an administrative letter nor negative clearance from the Commission prevents the national courts from reviewing conduct in the light of the same legal provisions which the Commission employed and reaching a different decision . The view expressed by the Commission in its opinion is merely a factor which the courts may take into account when taking their decision .

As a legal provision a block-exemption regulation is also binding on the national courts and authorities, although they do have an interpretative jurisdiction in connection with the application of such a regulation . For instance, they may hold that a particular agreement does not comply with the block-exemption regulation and is therefore caught by the prohibition set out in Article 85(1 ). The danger of inconsistency can be countered by recourse to the procedure of the preliminary ruling under Article 177, as is illustrated by the case-law of the Court of Justice with respect to the earlier Regulation No 67/67 .

C - Conclusion

107 . I have explained the reasons which have led me to take the view that the contested Commission decision does not infringe Articles 85 and 86 . I propose that the Court should decide as follows :

"1 . The application is dismissed .

2 . The applicant is ordered to pay the costs ."

(*) Original language : German .

( 1 ) OJ 1988 L 319, p . 1; corrected version in OJ 1989 C 215, p . 1 .

( 2 )

Hereinafter all articles cited without any reference to the relevant treaty are articles of the EEC Treaty .

( 3 ) Regulation No 2349/84 ( OJ 1984 L 219, p . 15 ).

( 4 )

Decision 88/501/EEC ( OJ 1988 L 272, p . 27 ).

( 5 )

See the judgments in Case 13/61 Kledingverkoopbedrijf de Geus en Uidenbogerd v Robert Bosch GmbH [1962] ECR 45, at p . 52 and in Joined Cases 209 to 213/84 Ministère public v Asjes and Others [1986] ECR 1425, at p . 1469 .

( 6 ) Judgment in Case 27/76 United Brands v Commission [1978] ECR 207, at p . 298 .

( 7 ) Judgment in Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, at p . 541 .

( 8 ) Judgment in Case 6/72 Europemballage Corporation and Continental Can Company v Commission [1973] ECR 215, at p . 246, paragraph 25 .

( 9 )

The question is contested in the literature : see for example Deringer : EWG-Wettbewerbsrecht, Kommentar, paragraph 8 on Article 85(3 ); aliter Koch in Grabitz : Kommentar zum EWG-Vertrag, paragraph 66 preceding Article 85 .

( 10 )

Judgment in Case 2/56 Geitling v High Authority [1957] ECR 3, at p . 20 .

( 11 ) OJ, English Special Edition, 1965-66, p . 35 .

( 12 )

Judgment in Case 32/65 Italy v Council and Commission [1966] ECR 563, at p . 592 ( French version; the reference for the English version is [1966] ECR 389, at p . 407 ).

( 13 ) Case 85/76, cited above, at p . 550, paragraph 116; likewise the Opinion of Mr Advocate General Reischl in Case 7/82 Gesellschaft zur Verwertung von Leistungsschutzrechten v Commission [1983] ECR 483, at p . 525 .

( 14 ) Judgment in Case 66/86 Ahmed Saeed Flugreisen and Another v Zentrale zu Bekaempfung unlauteren Wettbewerbs [1989] ECR 803, at p . 849, paragraph 37 et seq .

( 15 )

Judgment in Case 395/87 Ministère public v Tournier [1989] ECR 2521 .

( 16 ) Case 6/72, cited above, at p . 245, paragraph 25 .

( 17 ) Judgment in Case 172/80 Zuechner v Bayerische Vereinsbank [1981] ECR 2021, at p . 2030 et seq ., paragraph 10 .

( 18 )

Case 6/72 Continental Can, cited above, at p . 246, paragraph 25; see also the Opinion of Mr Advocate General Roemer, cited above, at p . 257 .

( 19 ) Opinion of 28 April 1988 in Case 66/86, paragraph 41 .

( 20 ) Case 85/76 Hoffmann-La Roche, cited above, at p . 550, paragraph 116 .

( 21 )

Second Opinion, of 17 January 1989, of Mr Advocate General Lenz in Case 66/86 Ahmed Saeed and Another v Zentrale zur Bekaempfung unlauteren Wettbewerbs, paragraph 18 .

( 22 )