28September*2006 - Europa

ORDER OF 28. 9. 2006 — CASE C-552/03 P

ORDER OF THE COURT (Sixth Chamber)

28 September 2006*

In Case C-552/03 P,

APPEAL under Article 56 of the Statute of the Court of Justice, brought on24 December 2003,

Unilever Bestfoods (Ireland) Ltd, formerly Van den Bergh Foods Ltd, establishedin Dublin (Ireland), represented by M. Nicholson and M. Rowe, Solicitors, and by M.Biesheuvel and M. De Grave, advocaten, with an address for service in Luxembourg,

applicant,

the other parties to the proceedings being:

Commission of the European Communities, represented by W. Wils, B. Dohertyand A. Whelan, acting as Agents, with an address for service in Luxembourg,

defendant at first instance,

* Language of the case: English.

I - 9094

UNILEVER BESTFOODS v COMMISSION

Masterfoods Ltd, established in Dublin, represented by P. Collins and M. Levitt,Solicitors,

Richmond Ice Cream Ltd, formerly Richmond Frozen Confectionery Ltd,established in Northallerton (United Kingdom), represented by I. Forrester QC,with an address for service in Luxembourg,

interveners at first instance,

THE COURT (Sixth Chamber),

composed of J. Malenovský, President of Chamber, J.-P. Puissochet (Rapporteur) andU. Lõhmus, Judges,

Advocate General: J. Kokott,Registrar: R. Grass,

after hearing the Advocate General,

makes the following

Order

1 By its appeal, Unilever Bestfoods (Ireland) Ltd, formerly Van den Bergh Foods Ltdand previously named HB Ice Cream Ltd (‘HB’), requests the setting aside of thejudgment of the Court of First Instance of the European Communities in Case

I - 9095

ORDER OF 28. 9. 2006 — CASE C-552/03 P

T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653 (‘the judgmentunder appeal’), by which that Court dismissed its application for annulment ofCommission Decision 98/531/EC of 11 March 1998 relating to a proceeding underArticles 85 and 86 of the EC Treaty (Case Nos IV/34.073, IV/34.395 and IV/35.436- Van den Bergh Foods Limited) (OJ1989 L 246, p. 1) (‘the contested decision’). HBalso requests the Court to annul the contested decision or, in the alternative, to referthe case back to the Court of First Instance for judgment.

Facts

2 The facts of the case, together with the contested decision, the procedure and formsof order sought before the Court of First Instance are summarised in paragraphs 2 to40 of the judgment under appeal, to which reference is made. The main points areapparent from the paragraphs of the judgment set out below:

‘2. [HB], a wholly-owned subsidiary of Unilever plc, is the principal manufacturerof ice cream products in Ireland, particularly single-wrapped ice creams forimmediate consumption (hereinafter “impulse ice creams”). For a number ofyears HB has supplied ice cream retailers with freezer cabinets, in which itretains ownership, and which are supplied free of charge or at a nominal rent,provided that they are used exclusively for HB ice creams (hereinafter “theexclusivity clause”). Pursuant to the standard terms of the freezer agreements,they can be terminated at any time on two months’ notice on either side. HBmaintains the cabinets at no cost to the retailer, save in cases of negligence.

3. Masterfoods Ltd (hereinafter “Mars”), a subsidiary of the US corporation MarsInc., entered the Irish ice cream market in 1989.

I - 9096


4. In the summer of 1989 many retailers with freezer cabinets supplied by HBbegan to stock and display Mars products. This led to a demand by HB that theycomply with the exclusivity clause.’

3 As a result, a dispute arose between Mars and HB and proceedings were broughtbefore the Irish courts which gave rise inter alia to a reference for a preliminaryruling from the Supreme Court (Ireland), which was the subject of a judgment of theCourt of Justice in Case C-344/98 Masterfoods and HB [2000] ECR I-11369.

4 By the judgment under appeal, the Court of First Instance also held as follows:

‘9. In parallel to those proceedings before the Irish courts, on 18 September 1991Mars lodged a complaint [against HB] with the Commission [of the EuropeanCommunities] under Article 3 of Regulation No 17 [of the Council] of6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty(OJ, English Special Edition 1959-1962, p. 87). The complaint related to theprovision by HB, to large numbers of retailers, of freezer cabinets to be usedexclusively for HB products.

10. On 22 July 1992, Valley Ice Cream (Ireland) Ltd also lodged a complaint againstHB with the Commission.

11. On 29 July 1993, the Commission issued a statement of objections to HB inwhich it concluded that HB's distribution arrangements infringed Articles 85and 86 of the [EC] Treaty [now Articles 81 EC and 82 EC] … .

I - 9097

ORDER OF 28. 9. 2006 — CASE C-552/03 P

12. Following negotiations with the Commission, HB, while contesting theCommission's view, proposed changes to its distribution arrangements, with aview to qualifying for an exemption under Article 85(3) of the Treaty. Thosechanges were notified to the Commission on 8 March 1995 and in a pressrelease of 10 March 1995 the Commission stated that, at first sight, the newdistribution arrangements might enable HB to obtain an exemption. On15 August 1995 a notice pursuant to Article 19(3) of Regulation [No] 17 waspublished in the Official Journal of the European Communities (OJ 1995 C 211,p. 4).

13. On 22 January 1997 the Commission sent HB a new statement of objections inwhich it expressed the view that the changes had not achieved the expectedresults of free access to sales outlets … . HB replied to those objections.

14. On 11 March 1998 the Commission adopted the contested decision.

…

15. In the contested decision the Commission states that HB's distributionagreements containing the exclusivity clause are incompatible with Articles85 and 86 of the Treaty. It defines the relevant product market as the market forsingle-wrapped items of impulse ice cream and the relevant geographic marketas Ireland (recitals 138 and 140). It states that HB's position on the relevantmarket is particularly strong, as is shown by its market share over many years(see paragraph 21 below). That strength is further illustrated by the degree ofboth numeric (79%) and weighted distribution (94%) of the relevant HB

I - 9098


products during August and September 1995 and by the strength of the brandand the breadth and popularity of its range of products. HB's position on thatmarket is further reinforced by the strength of Unilever's position, not only onthe other ice cream markets in Ireland (take-home and catering), but also in theinternational ice cream markets and the markets for frozen foods and consumerproducts generally (recital 141).

16. The Commission observes that the network of HB's distribution agreementsrelating to freezer cabinets installed in outlets has the effect of restricting theability of retailers who are parties to those agreements to stock and offer for salein their outlets impulse products from competing suppliers, in circumstanceswhere the only freezer cabinet or cabinets for the storage of impulse ice creamin place in their outlets have been provided by HB, where the HB freezer cabinetor cabinets is or are unlikely to be replaced by a cabinet owned by the retailerand/or supplied by a competitor, and where it is not economically viable toallocate space to the installation of an additional cabinet. It considers that theeffect of this restriction is that the competing suppliers are precluded fromselling their products to those outlets, thereby restricting competition betweensuppliers in the relevant market (recital 143). … The assessment of thisrestrictive effect was made against the background of the effect of all similarnetworks of freezer cabinet agreements operated by other ice cream suppliers inthe relevant market, as well as in the light of any further relevant marketconditions (recitals 144 and 145).

17. The Commission then quantified the restrictive effect of HB's distributionagreements in order to show their significance. It observes that the restrictiveeffect of the networks of agreements for the supply of freezer cabinets reservedexclusively for the supplier's products are the result of the space constraintsinevitably experienced by retail outlets. …

18. The Commission states that only a small proportion of retail outlets in Ireland,17% according to the Lansdowne survey, have freezer cabinets which are not

I - 9099

ORDER OF 28. 9. 2006 — CASE C-552/03 P

subject to an exclusivity clause. … As regards the other outlets, 83% accordingto the Lansdowne survey, in which the suppliers have installed freezer cabinets,the Commission considers that other suppliers cannot have direct access tothem for sale of their products without first overcoming substantial barriers. Itsubmits that “newcomers to the outlet are foreclosed” from them and that

“although this foreclosure is not absolute, in the sense that the retailer is notcontractually precluded from selling other suppliers’ products, the outlet can besaid to be foreclosed in so far as entry thereto by competing suppliers isrendered very difficult” (recital 149).

19. The Commission finds that in some 40% of all outlets in Ireland the only freezercabinet/s for the storage of impulse ice cream in place in the outlet has or havebeen provided by HB (recital 156). It observes that “a supplier who wishes togain access for the sale of his impulse ice cream products to a retail outlet (thatis, a new entrant to the outlet) in which at least one supplier-exclusive freezercabinet is in place can only do so if that outlet has a non-exclusive cabinet ... orif he can persuade the retailer either to replace an in situ supplier-exclusivefreezer cabinet or to install an additional freezer cabinet alongside the in situsupplier-exclusive cabinet/s” (recital 157). It considers (recitals 158 to 183), onthe basis of the Lansdowne survey, that it is unlikely that retailers will adopt oneor other of those measures if they have one (or more) freezers supplied by HBand concludes that 40% of the outlets in question are de facto tied to HB (recital184). Other suppliers are therefore foreclosed from access to those outlets,contrary to Article 85(1) of the Treaty.

20. The contested decision also finds that the agreements containing the exclusivityclause cannot be exempted under Article 85(3) of the Treaty, as they do notcontribute to an improvement in the distribution of the products (recitals 222 to238), do not allow consumers a fair share of the resulting benefit (recitals 239and 240), are not indispensable to the attainment of those benefits (recital 241)

I - 9100


and afford HB the possibility of eliminating a substantial part of competition onthe relevant market (recitals 242 to 246).

21. As regards the application of Article 86 of the Treaty, the Commission takes theview that HB has a dominant position on the relevant market, in particularbecause it has for a long time had a share in volume and value of over 75% ofthat market (recitals 259 and 261).

22. The Commission states that “HB abuses its dominant position in the relevantmarket... in that it induces retailers ... who do not have a freezer cabinet for the

storage of impulse ice cream either procured by themselves or provided byanother ice cream supplier than HB to enter into freezer-cabinet agreementssubject to a condition of exclusivity” and that “the inducement takes the form ofan offer to supply the freezer cabinets to retailers, and to maintain them, at nodirect charge to the retailer” (recital 263).’

The judgment under appeal

5 Paragraph 41 of the judgment under appeal states that HB raised seven pleas in lawagainst the contested decision: ‘first, manifest errors of assessment of the facts,resulting in errors of law; second, infringement of Article 85(1) of the Treaty; third,infringement of Article 85(3) of the Treaty; fourth, infringement of Article 86 of theTreaty; fifth, infringement of the right to property, by failing to observe generalprinciples of law and Article 222 of the EC Treaty [now Article 295 EC]; sixth,infringement of Article 190 of the EC Treaty (now Article 253 EC); and, seventh,failure to observe fundamental principles of Community law and infringement ofessential procedural requirements’.

I - 9101

ORDER OF 28. 9. 2006 — CASE C-552/03 P

6 The Court of First Instance examined together the first two pleas relied on by HB, bywhich the latter criticised the Commission for having made a series of manifesterrors in its analysis of the existence and the degree of foreclosure of the relevantmarket arising by virtue of the distribution agreements entered into by thatcompany with retailers in Ireland (‘the distribution agreements’).

7 In paragraph 80 of the judgment under appeal, the Court of First Instance held thatit had, in the first place, to determine whether the Commission had adequatelyproved that the exclusivity clause in reality imposed purchasing exclusivity on somesales outlets and whether the Commission had correctly quantified the degree offoreclosure of the relevant market which it gave rise to. The Court of First Instancestated that it was necessary, in the second place, to determine, as appropriate,whether the degree of foreclosure is sufficiently high to constitute an infringementof Article 85(1) of the Treaty. In that regard, the Court of First Instance held inparagraph 82 of the judgment that it could not confine itself to looking at the effectsof the exclusivity clause, considered in isolation, referring only to the contractualrestrictions imposed by the distribution agreements. In paragraph 83 of thejudgment, it held:

'...it is appropriate, in accordance with the case-law, to consider whether all thesimilar agreements entered into in the relevant market and the other features of theeconomic and legal context of the agreements at issue, show that those agreementscumulatively have the effect of denying access to that market to new competitors. If,on examination, that is found not to be the case, the individual agreements makingup the bundle of agreements cannot impair competition within the meaning ofArticle 85(1) of the Treaty. If, on the other hand, such examination reveals that it isdifficult to gain access to the market, it is then necessary to assess the extent towhich the agreements at issue contribute to the cumulative effect produced, on thebasis that only those agreements which make a significant contribution to anypartitioning of the market are prohibited ([Case C-234/89] Delimitis [[1991] ECRI-935], paragraphs 23 and 24, and [Case T-7/93] Langnese-Iglo v Commission [[1995]ECR II-1533], paragraph 99).’

I - 9102


8 Relying on unchallenged survey data on which the Commission had based itsfindings, the Court of First Instance held in paragraph 86 of the judgment underappeal that only 17% of the retail sales outlets for impulse ice cream had freezercabinets belonging to the retailer, in which ice cream of any brand could therefore bestocked. In the other outlets, which represent 83% of the total, the freezers are theproperty of the ice cream suppliers, in which only ice cream of the supplier's brandcould be stocked. Furthermore, according to the documents on which the Court ofFirst Instance based its judgment, over 60% of the freezer cabinets belonging to asupplier come from HB.

9 The Court of First Instance also held, in paragraph 87 of the judgment under appeal,that the majority of sales of impulse ice cream were made in outlets which weresmall in area and which, having regard to their limited space, would find it verydifficult to install another freezer. The Court of First Instance rejected HB'sarguments seeking to show that the Commission had overestimated the spaceconstraints. In paragraphs 89 and 90 of the judgment, it confirmed theCommission's finding that the provision of freezers by HB ‘free of charge’, thepopularity of its products, the breadth of its range and the benefits produced by thesale of those products did not encourage retailers which had only one or a numberof freezer cabinets belonging to HB to alter their situation, emphasising in thatregard the dominant position held by that company on the market.

10 In order to confirm that the exclusivity clause gave rise to a restriction oncompetition, the Court of First Instance, in paragraphs 93 to 98 of the judgmentunder appeal, relied on various items of factual evidence, in particular the fact thatMars had succeeded, in the year in which retailers had paid little observance to theclause, in achieving a 42% share of the market by volume, only for it to fall to under20% following an injunction granted against Mars by the High Court (Ireland) in1990, prohibiting that company from inducing retailers to stock its ice creams infreezer cabinets belonging to HB. It thus stated in paragraph 98:

'... the Commission rightly held, having regard to the specific features of the productin question and the economic context of this case, that the network of HB's

I - 9103

ORDER OF 28. 9. 2006 — CASE C-552/03 P

distribution agreements together with the supply of freezer cabinets “withoutcharge” subject to the condition of exclusivity, have a considerable dissuasive effecton retailers with regard to the installation of their own cabinet or that of anothermanufacturer and operate defacto as a tie on sales outlets that have only HB freezercabinets, that is to say 40% of sales outlets in the relevant market. Despite the factthat it is theoretically possible for retailers who have only an HB freezer cabinet tosell the ice creams of other manufacturers, the effect of the exclusivity clause inpractice is to restrict the commercial freedom of retailers to choose the productsthey wish to sell in their sales outlets.’

11 In paragraphs 99 to 104 of the contested judgement, the Court of First Instance alsorejected the various arguments put forward by HB seeking to show that theproportion of sales outlets foreclosed to ice cream competition from ice cream otherthan HB's was not 40%, as the Commission held in the contested decision, but only6% and did not lead to an appreciable restriction of competition on the relevantmarket.

12 In paragraph 105 of the judgment, the Court of First Instance added:

As to HB's argument alleging that the freezer cabinet exclusivity imposed by theexclusivity clause cannot be regarded as an outlet exclusivity because the retailershave the option of terminating their distribution agreements with HB at any time,the Court considers that this possibility in no way precludes the effectiveenforcement of the agreements in question during the period in which that optionis not used. Consequently, in assessing the effects of the distribution agreements onthe relevant market, the Court must take their actual duration into consideration(see, by analogy, Langnese-Iglo v Commission, paragraph 111). … However, as theCommission has shown, … HB's distribution agreements are terminated on averageevery eight years. It follows that the argument to the effect that it is possible toterminate the HB distribution agreements is unsound, since the possibility of sodoing does not in fact operate to reduce the degree of foreclosure of the relevantmarket.’

I - 9104


13 The Court of First Instance also rejected HB's argument that no finding of aninfringement of Article 85(1) of the Treaty could be made until it had beenestablished that, applying a ‘rule of reason’, any restriction on the freedom ofconduct of the retailers does indeed constitute a restriction on competition.

14 In addition, in paragraphs 108 to 111 of the judgment under appeal, the Court ofFirst Instance held that, over and above the identified part of the network ofdistribution agreements involving around 40% of all sales outlets on the market, thenetworks of agreements put in place on the relevant market by suppliers of icecream other than HB also foreclose that market by imposing similar conditions onretailers, even though those suppliers do not have either the same position or thesame popularity as HB on the relevant market. The Court of First Instanceaccordingly held that the true position is that those networks of agreements affect83% of sales outlets in that market.

15 The Court of First Instance also found in paragraphs 113 to 118 of the judgmentunder appeal that, as well as the degree of dependence which the networks ofagreements give rise to, other evidence of the economic and legal context of thoseagreements, such as, in particular, the expense involved in acquiring a stock offreezer cabinets for installation in outlets which will ensure that the supplier'sproducts can achieve stable distribution levels, and the fact that the other suppliersof impulse ice cream hold only very small shares in the relevant market, show thatthe distribution agreements are liable to have an appreciable effect on competitionfor the purposes of Article 85(1) of the Treaty and contribute significantly to aforeclosure of the relevant market.

16 The Court of First Instance accordingly rejected the first two pleas relied on by HBin support of its application.

I - 9105

ORDER OF 28. 9. 2006 — CASE C-552/03 P

17 As regards the third plea raised by HB, alleging errors of law in the application ofArticle 85(3) of the Treaty, the Court of First Instance held in paragraph 138 of thejudgment under appeal that the Commission had analysed the distributionagreements in the light of each of the four conditions laid down by that provision.

18 As regards the first of those conditions, according to which agreements capable ofbeing exempted from the prohibition laid down by Article 85(1) of the Treaty, mustcontribute ‘to improving the production or distribution of goods or to promotingtechnical or economic progress’, the Court of First Instance stated in paragraph 139of the judgment under appeal:

'... the improvement cannot be identified with all the advantages which the partiesobtain from the agreement in their production or distribution activities. Theimprovement must in particular display appreciable objective advantages of such acharacter as to compensate for the disadvantages which they cause in the field ofcompetition (Joined Cases 56/64 and 58/64 Consten and Grundig v Commission[1966] ECR 299, at 348, and Langnese-Iglo, paragraph 180).’

19 The Court of First Instance held in paragraphs 140 and 141 of the judgment underappeal that the Commission had consequently rightly taken into consideration thebarriers to the relevant market resulting from the exclusivity clause, and theconsequent weakening of competition, when it assessed the distribution agreementsin the light of the first condition laid down by Article 85(3) of the Treaty. Inparagraph 142 of the judgment, the Court of First Instance stated that the benefitsensured by the agreements are the result of the provision to retailers of freezercabinets ‘free of charge’ and can be achieved without the exclusivity clause.

I - 9106


20 The Court of First Instance also held in paragraph 143 of the judgment under appealthat the Commission's analysis to the effect that, were the power to impose anexclusivity clause to be restricted, it appeared unlikely that HB would definitelycease to supply freezer cabinets to retailers, was not vitiated by a manifest error ofassessment.

21 The Court of First Instance accordingly held in paragraph 144 of the judgmentunder appeal that the first of the conditions laid down by Article 85(3) of the Treatywas not satisfied and rejected the third plea relied on by HB in support of itsapplication.

22 As regards HB's fourth plea, alleging errors of law in the application of Article 86 ofthe Treaty, the Court of First Instance confirmed in paragraph 156 of the judgmentunder appeal the Commission's analysis that that company is an unavoidable partnerfor many retailers on the relevant market and that it had a dominant position on thatmarket. It accordingly noted in paragraph 158 of the judgment that HB had a specialresponsibility not to allow its conduct to impair genuine undistorted competition onthe common market.

23 In paragraph 159 of the judgment under appeal, the Court of First Instance heldthat, while the provision of freezer cabinets on a condition of exclusivity constitutesa standard practice on the relevant market which cannot be prohibited in the normalsituation of a competitive market, the analysis is otherwise where, because of thedominant position held by one of the traders, competition is restricted on thatmarket. It accordingly held that the Commission was right to find that HB wasabusing its dominant position on the relevant market by inducing retailers to acceptagreements for the provision of freezer cabinets subject to an exclusivity clause.

I - 9107

ORDER OF 28. 9. 2006 — CASE C-552/03 P

24 In paragraph 161 of the judgment under appeal, the Court of First Instance rejectedthe argument based on the Opinion of Advocate General Jacobs in Case C-7/97Bronner [1998] ECR I-7791, because the Commission did not claim in the contesteddecision that HB's freezer cabinets were an ‘essential facility’ and the decision doesnot require HB to transfer an asset or to conclude contracts with persons whom ithas not selected.

25 In paragraph 162 of the judgment under appeal, the Court of First Instance alsorejected HB's argument that, in considering Article 86 of the Treaty, theCommission merely ‘recycled’ facts constituting an infringement of Article 85(1)of the Treaty.

26 As regards the fifth plea, alleging errors of law committed by the Commissionrelating to respect for rights to property and infringement of Article 222 of theTreaty, the Court of First Instance held in paragraph 171 of the judgment underappeal that the contested decision does not deprive HB of its rights to property in itsstock of freezer cabinets and does not prevent it from exploiting those assets byrenting them out on commercial terms, and also held that the decision does notcontain any undue limitation on the exercise of its rights to property.

27 In addition, the Court of First Instance, in paragraph 172 of the judgment underappeal, rejected HB's argument based on the disadvantages linked to the impositionof a separate fee for the use of the freezer cabinets belonging to that company. TheCourt of First Instance also rejected HB's argument that it is disadvantaged incomparison with its competitors, who would be able to continue to make freezercabinets available to retailers without charge, pointing out that, unlike thedistribution agreements of its competitors, those of HB contribute significantly tothe foreclosure of the relevant market and also operate in the context of a dominantposition of one of the parties.

I - 9108


28 The Court of First Instance rejected the sixth plea relied on by HB in support of itsapplication, alleging infringement of Article 190 of the Treaty. In particular, it statedin paragraph 178 of the judgment under appeal that the Commission had givensufficient reasons in law for its decision to revise its initial favourable view containedin its notice of 15 August 1995, because the amendments proposed by HB to itsdistribution system had not brought about the expected results in terms of freeaccess to sales outlets.

29 The Court of First Instance also rejected the seventh plea relied on by HB in supportof its application, alleging failure to respect the fundamental principles ofCommunity law.

30 In that regard, in paragraphs 193 and 194 of the judgment under appeal, the Courtof First Instance first of all rejected HB's argument relating to infringement oflegitimate expectations, stating in particular that the Commission had not given HBspecific assurances as to the consequences of the commitments notified by the letterof 8 March 1995 and that the notice of 15 August 1995 merely indicated apreliminary position of the Commission, which was subject to change, particularly inorder to take account of the observations of third parties.

31 In paragraphs 197 to 200 of the judgment under appeal, the Court of First Instancealso rejected HB's claims that the principles of subsidiarity, sincere cooperation andlegal certainty had been infringed.

32 The Court of First Instance held in paragraph 202 of the judgment under appeal thatthe contested decision does not contain any undue or disproportionate limitation onHB's property rights in its freezer cabinets, nor does it constitute an arbitrary ordiscriminatory impairment of HB's ability to compete with other suppliers. Inparagraph 205 of the judgment, the Court of First Instance also rejected HB'sargument that Article 4 of the contested decision, which requires that that companyimmediately cease the infringements established and refrain from taking anymeasure having the same object or effect, is disproportionate.

I - 9109

ORDER OF 28. 9. 2006 — CASE C-552/03 P

33 Lastly, in paragraph 207 of the judgment under appeal, the Court of First Instancerejected HB's argument based on infringement of essential procedural requirementsand an inadequate statement of reasons in the contested decision, as well as theargument relating to the need to extend the negotiations in order to find a solutionto the breakdown in the ‘1995 settlement’.

34 The Court of First Instance accordingly dismissed the action brought by HB in itsentirety and ordered HB to pay the Commission's costs. It also ordered Mars andRichmond Ice Cream Ltd (‘Richmond’) to bear their own costs.

Forms of order sought

35 By its appeal, HB claims that the Court should:

— set aside, in whole or in part, the judgment under appeal, except for paragraph 3of the operative part of the judgment, which orders Mars and Richmond to beartheir own costs;

— annul, in whole or in part, the Commission's decision or, in the alternative, referthe case back to the Court of First Instance for judgment, and

— order the Commission to pay the costs of both sets of proceedings.

I - 9110


36 The Commission contends that the appeal should be dismissed as inadmissible andunfounded and that HB should be ordered to pay the costs of these proceedings.

37 Mars and Richmond also contend that the appeal should be dismissed and that HBshould be ordered to pay the costs.

The appeal

38 Under Article 119 of the Rules of Procedure, where the appeal is, in whole or in part,clearly inadmissible or clearly unfounded, the Court may at any time, acting on areport from the Judge-Rapporteur and after hearing the Advocate General, byreasoned order dismiss the appeal.

The first ground of appeal, alleging infringement of Article 85(1) of the Treaty

39 By its first ground of appeal, HB contests the finding of the Court of First Instancethat the exclusivity clause is liable to have an appreciable effect on competition andto contribute to the foreclosure of the relevant market. The plea is divided into twoparts. In the first part, HB submits that the analysis by the Court of First Instance ofthe effect of the exclusivity clause on competition is incorrect and that the judgmentunder appeal is inadequately reasoned in that regard. In the second part, it arguesthat the Court of First Instance erred in its analysis of the assessment of thecontribution made by HB's competitors to the foreclosure of the market.

I - 9111

ORDER OF 28. 9. 2006 — CASE C-552/03 P

The first part of the first ground of appeal

— Arguments of the parties

40 HB contests the finding of the Court of First Instance that the exclusivity clausegives rise to a distortion of dealer choice.

41 HB contends that the fact that the option given to retailers to terminate distributionagreements is rarely exercised by them in practice is irrelevant to the inquiry intothe restrictive effect on competition of the exclusivity clause. It refers inter alia toDelimitis in that regard.

42 HB contests the ‘objective and specific evidence’ on which the Court of FirstInstance relied in paragraphs 93 to 95 of the judgment under appeal in order todemonstrate the existence of demand in Ireland for the ice creams of othermanufacturers where they are available and the fact, referred to in paragraph 97 ofthe judgment, that a considerable number of retailers are prepared to stock impulseice creams from various manufacturers, provided that they may stock them in oneand the same freezer. HB also claims that the reasoning in this regard is inadequate.It goes on to state that the evidence presented by Richmond at the hearing beforethe Court of First Instance regarding its experience on the United Kingdom marketwas submitted too late and, accordingly, is not only inadmissible but also inaccurateand irrelevant to the analysis of the relevant market.

43 HB also claims that there is a contradiction between paragraph 92 of the judgmentunder appeal, which states that the retailers do stock ice creams of other brandsalongside those of HB in the same freezer whenever they are free to do so, and

I - 9112


paragraph 94 of the judgment, which refers to a survey stating that almost 40% ofretailers would be prepared to stock ice creams other than those of HB if theexclusivity clause were no longer included in the distribution agreements, whichmeans, according to HB, that 60% of retailers indicated that they would not bewilling to stock ice creams from manufacturers other than HB if the exclusivityclause were not to exist.

44 HB argues that the cancellation of the exclusivity clauses does not, as the Court ofFirst Instance suggests in paragraphs 89 and 111 of the judgment under appeal, inany way imply the termination of the distribution and supply agreements enteredinto with the retailers concerned.

45 HB also argues that the judgment under appeal is inadequately reasoned by reasonof a failure to examine the system of bonuses it provides to retailers possessing theirown freezer cabinet (the ‘bonus scheme’). In its reply, it submits that the existence ofsuch a bonus scheme is not presented as a separate ground of appeal, but as part of abroader plea put forward against the contested decision, namely that theCommission and the Court of First Instance wrongly failed to take proper accountof the opportunities for competitors to gain access to the market. In its reply and atthe hearing before the Court of First Instance, HB stressed the importance to beattached to that argument.

46 The Commission, Mars and Richmond take the view that HB's arguments are purelyfactual and, accordingly, inadmissible, as well as being unfounded.

47 Mars and Richmond observe that Delimitis provides that it is the actual duration ofthe distribution agreements which must be appraised under Article 85(1) of theTreaty. Richmond also states that the Court of First Instance did not find merelythat it was open in theory to retailers to stock the competing products in their salesoutlet, but rightly examined whether there were real and concrete opportunities forcompetitors to gain access to the relevant market.

I - 9113

ORDER OF 28. 9. 2006 — CASE C-552/03 P

48 Richmond contends that the calculation of its market share in the United Kingdomis correct.

49 The Commission points out that the bonus scheme has been in place since 1995 inorder to meet objections on its part, because it had challenged the fact that HBinvoiced the cost of a freezer cabinet to all retailers, without making any distinctionas to whether they did, or did not, use a freezer cabinet belonging to that company.

50 The Commission and Richmond maintain that, prior to this stage of theproceedings, HB has never put forward the bonus scheme as a justification, perse, for the annulment of the contested decision and that such an argument isaccordingly inadmissible. The Commission adds that the true position is that theexistence of the bonus scheme was used by HB only in support of its argument thatit did not tie the supply of ice creams to the provision of freezers, an argumentwhich was addressed by the Court of First Instance in paragraphs 113 and 114 of thejudgment under appeal. Mars observes that the references made by HB to thedecision and the application merely concern the factual operation of the bonusscheme and do not contain any legal arguments.

51 The Commission and Richmond point out that the Court of First Instance is notrequired to provide a full response to every point put forward by each of the parties.The Commission refers in that regard to Case C-221/97 P Schröder and Others vCommission [1998] ECR I-8255, paragraph 24, and Case C-274/99 P Connolly vCommission [2001] ECR I-1611, paragraph 121).

52 Mars also argues that the bonus scheme does not produce the result claimed by HBin terms of the opening up of the relevant market and that Delimitis does notrequire the Commission or the Court to consider the position in relation to outletswhich are not foreclosed. Richmond also maintains that the bonus granted underthat scheme was insufficient to operate as an incentive to retailers to buy their ownfreezer cabinet.

I - 9114


— Findings of the Court

53 The effects of an agreement on competition have to be assessed in the legal andeconomic context in which it occurs and where it might combine with others tohave a cumulative effect on competition (see, inter alia, Case 23/67 Brasserie deHaecht [1967] ECR 407, 415, and Delimitis, paragraph 14).

54 It follows that, as the Court of First Instance states in paragraph 84 of the judgmentunder appeal, the contractual restrictions on retailers must be examined not just in apurely formal manner from the legal point of view but also by taking into accountthe specific economic context in which the distribution agreements operate.

55 Accordingly, the Court of First Instance did not err in law when it held in paragraph105 of the judgment under appeal that, since the possibility of terminating thedistribution agreements does not in any way preclude the effective enforcement ofthose agreements during the period in which that option is not used, it is necessaryto take into account the actual duration of those agreements in assessing theireffects on the relevant market.

56 HB's argument in that regard is accordingly manifestly unfounded.

57 Moreover, it is not the task of the Court of Justice in an appeal to rule on theassessment of the facts and evidence by the Court of First Instance, save where therehas been a clear distortion of those facts and evidence by that Court (see, to thateffect, inter alia Case C-470/00 P Parliament v Ripa di Meana and Others [2004]ECR I-4167, paragraph 40 and the case-law cited).

I - 9115

ORDER OF 28. 9. 2006 — CASE C-552/03 P

58 By challenging the various items of factual evidence on which the Court of FirstInstance relied in paragraphs 93 to 95 of the judgment under appeal in order todetermine the effect of the exclusivity clause on the relevant market, HB calls intoquestion the assessment of the facts by that Court, without going on to demonstratethat it made incorrect findings in relation to those facts or distorted the evidence inthat regard.

59 Furthermore, the question whether the cancellation of the exclusivity clause does, ordoes not, mean in practice that the distribution agreements are terminated is also aquestion of fact.

60 It follows that HB's arguments in relation to those points are manifestlyinadmissible.

61 Nor does HB put forward any serious grounds to support the conclusion that thereis a contradiction between paragraph 92 of the judgment under appeal, which statesthat the retailers do stock ice creams of other brands alongside those of HBwhenever they are free to do so, and paragraph 94 of the judgment, which bases thatstatement inter alia on the finding that a significant proportion of the retailers,namely almost 40% of them, claimed in the B & A survey that they would stock awider range of products if the exclusivity clauses were abolished.

62 It follows that that argument of HB is manifestly unfounded.

63 As regards, lastly, HB's argument relating to the failure of the Court of First Instanceto consider the bonus scheme, it should be noted that, as the Commission rightlyobserves, that Court was not obliged to respond in detail to every argumentadvanced by the parties, particularly if the argument was not sufficiently clear andprecise and was not adequately supported by evidence (see, inter alia, Connolly vCommission, paragraph 121).

I - 9116


64 In that regard, the documents in the case do not show that the bonus schemeconstituted an essential argument on HB's part before the Court of First Instance inorder to show that the exclusivity clause had no anti-competitive effect.

65 Furthermore, although HB stresses the importance of the bonus scheme for retailershaving their own freezer cabinet, it provides no detailed information to show thatthe existence of that scheme might have changed the assessment by the Court ofFirst Instance of the effect of the exclusivity clause on the relevant market.

66 The Court of First Instance cannot therefore be criticised for failing to provide amore detailed response to an argument which must be regarded as irrelevant, havingregard to the analysis made by the Court of First Instance of the effect which theexclusivity clause had on the commercial freedom of the retailers to select theproducts made available at their sales outlets.

67 That argument is accordingly manifestly inadmissible.

68 It follows that the first part of the first ground of appeal must be rejected as being inpart manifestly inadmissible and in part manifestly unfounded.

The second part of the first ground of appeal

— Arguments of the parties

69 HB contends that the Court of First Instance wrongly assessed the effect of thedistribution agreements entered into by HB's competitors on the foreclosure of the

I - 9117

ORDER OF 28. 9. 2006 — CASE C-552/03 P

relevant market. It argues that it was not open to the Court of First Instance to findthat the network of agreements in place on that market affects 83% of the salesoutlets, since 27% of them are demonstrably not foreclosed, inasmuch as theretailers have chosen to take freezer cabinets belonging to more than onemanufacturer. HB also states that the Court of First Instance was not entitled toput its distribution agreements on the same footing as those of its competitors,since, in particular, the latter do not enjoy the same position or the same popularityon the market. It states that the Court of First Instance should have considered theduration, contractually and in practice, of those agreements. HB also contests thestatement that it had conceded that 83% of retail shops in Ireland were foreclosed.

70 In its reply, HB submits that the significant exaggeration by the Court of FirstInstance of the cumulative effect of foreclosure of the market resulting from thenetwork of distribution agreements amounts to a distortion of the evidence.

71 HB contests the finding of the Court of First Instance that there was no objectivelink between the exclusive use of freezer cabinets and the supply of impulse icecream. It states that that finding contradicts the finding set out in paragraph 143 ofthe judgment under appeal that the provision of those freezer cabinets in a largenumber of sales outlets, covering the entire geographic market, produces anobjective benefit. HB also contends that the practice of charging rent to retailerswhich use its freezer cabinets in Northern Ireland involves payment of a nominalsum which, more often than not, is not even collected and, accordingly, that apractice of that kind cannot support the finding of the Court of First Instance thatHB could charge rent in the same way to retailers in Ireland, rent which couldreimburse the costs in providing and maintaining a freezer cabinet.

72 HB also contests the finding of the Court of First Instance in paragraph 113 of thejudgment under appeal that, in the context of the relevant market, the supplier must

I - 9118


be ready to offer a freezer cabinet without charge and to service it, arguing that theCourt of First Instance fails to have sufficient regard, first, to the fact that in 17% ofthe sales outlets the retailers had their own freezer cabinets and, secondly, to theexistence of the bonus scheme for the Irish retailers which stock ice creamsmanufactured by HB, but which do not install cabinets belonging to that company.

73 Lastly, HB contends that the Court of First Instance did not establish to the requisitestandard that the weak market shares held by its competitors are attributable in partto the exclusivity clause and that it also erred in law in holding that the policy ofexclusive use of the freezer cabinets belonging to HB represents a barrier to theentry of those competitors into the market.

74 The Commission maintains that HB's arguments are based on assessments of factand must be considered to be inadmissible. It adds that they are, in any event,unfounded.

75 It argues that the finding by the Court of First Instance in paragraph 111 of thejudgment under appeal that the network of agreements in place on the relevantmarket affects 83% of the outlets reflects the fact that only 17% of retailers own theirown freezer cabinet, which is relevant to the question whether a barrier to entry intothat market exists.

76 The Commission denies that there is an objective link between the exclusive use of afreezer cabinet belonging to HB and the supply of ice cream and maintains that HB'sarguments are inconsistent inasmuch as HB contends that that exclusive use iscrucial, while conceding that it is possible to supply ice cream without such anexclusivity clause. The Commission states that the advantages of the widespreadavailability of impulse ice cream are due to the provision of a freezer cabinet and notto the exclusivity clause. It also argues that it is implausible to maintain that a

I - 9119

ORDER OF 28. 9. 2006 — CASE C-552/03 P

company such as HB cannot require its retailers to pay an economic rent for the useof its cabinets.

77 The Commission considers that the contested decision established the existence of acausal link between the exclusivity clause and the weak market share of HB'scompetitors on the relevant market. It refers in particular in that regard to recitals143 to 184 and 185 to 200 of the contested decision.

78 Mars and Richmond essentially put forward the same arguments as theCommission.

79 Mars also contends that HB fails to show that, notwithstanding the existence ofnetworks of distribution agreements relating to the exclusive use of freezer cabinetsbelonging to HB, which affect 83% of the outlets on the reference market, there arereal and concrete opportunities for suppliers to penetrate that market or to expandtheir presence there.

80 Mars contests HB's argument that the existence of an objective link between theexclusivity clause and the supply of ice cream may justify the conclusion that thatclause is not a barrier to the entry of competitors into that market. It argues that anypossible benefit in terms of the wider availability of impulse ice cream must beassessed in the context of the overall effect of a network of distribution agreements.

81 Mars considers that the finding by the Court of First Instance relating to the weakmarket shares held by HB's competitors is based on the analysis undertaken in thejudgment under appeal of the adverse effects of the exclusivity clause.

I - 9120


82 It maintains that HB does not put forward any legal argument in support of thecontention that the Court of First Instance distorted the evidence by significantlyexaggerating the degree of foreclosure of the relevant market.

83 Richmond states that, contrary to what HB contends, the Court of First Instance didnot find that 83% of the sales outlets on the market were ‘foreclosed’ to competition,but that the networks of distribution agreements in place on the market ‘affect’ thoseoutlets. It accordingly contends that that argument must be rejected as beingwithout purpose. It also maintains that the fact that suppliers other than HB are lesspopular than the latter on the relevant market does not necessarily mean that thelevel of foreclosure attributable to them will be lessened.

— Findings of the Court

84 The effects of an agreement on competition must be assessed in the context inwhich it occurs and where it might combine with others to have a cumulative effecton competition (Brasserie de Haecht, page 416, and Delimitis, paragraph 14).

85 In order to assess whether a number of contracts impede access to the market inquestion, it is necessary to define the nature and extent of all similar contracts tyinga large number of outlets to a number of national producers. The effect of thosenetworks of contracts on access to the market depends specifically on the number ofoutlets thus tied to producers in relation to those which are not so tied, the durationof the commitments entered into and the quantities of goods to which thosecommitments relate (see, to that effect, Delimitis, paragraph 19).

I - 9121

ORDER OF 28. 9. 2006 — CASE C-552/03 P

86 In paragraph 111 of the judgment under appeal, the Court of First Instance held thatthe Commission had been right to take into account, when analysing whether theremight be a cumulative effect, not only the distribution agreements entered into byHB, but also the agreements relating to freezer cabinets subject to an exclusivityclause entered into by other suppliers in Ireland. According to the Court of FirstInstance, the fact that those suppliers make freezer cabinets available to retailers,under conditions similar to those offered by HB, and with the same constraints interms of space, demonstrates that the difficulties encountered in the outletsequipped only with freezer cabinets belonging to HB in persuading retailers toreplace those cabinets or to install additional freezer cabinets apply also to anyfreezer cabinet subject to a condition of exclusivity, even if the other suppliers donot have the same position or the same popularity as that company on the relevantmarket.

87 In challenging that analysis, HB is in truth seeking to call into question theassessment of the facts undertaken by the Court of First Instance. Moreover, HBputs forward nothing to show that that Court distorted the facts or evidence relatingto the characteristics of the agreements of suppliers other than HB.

88 It follows that that part of the second part of the first ground of appeal put forwardby HB is manifestly inadmissible.

89 Furthermore, HB puts forward no clear evidence to show that the Court of FirstInstance erred in law in holding that the payment of a separate rental for theprovision of freezer cabinets to retailers in Northern Ireland is relevant in assessingwhether it would be possible to charge a rental for similar agreements entered intoby HB with retailers in Ireland. It must also be pointed out that the Court of FirstInstance did not in fact base its findings solely on the practice followed by HB inNorthern Ireland, but also held in paragraph 114 of the judgment under appeal thatHB had not established to the requisite legal standard that it would be impractical to

I - 9122


impose a separate rental in respect of the supply of freezers in Ireland, a point whichHB does not contest.

90 Similarly, HB fails to put forward anything which might call into question thefinding by the Court of First Instance in paragraph 113 of the judgment underappeal that, in the context of the relevant market, a supplier must be ready to offer afreezer cabinet without charge and to service it. In any event, the fact, noted by HB,that retailers have their own freezer cabinet in 17% of outlets does not go to showthat there has been any distortion of the facts and evidence submitted to the Courtof First Instance in that regard. Furthermore, HB merely refers to the existence ofthe bonus scheme without putting forward anything which would show that theCourt of First Instance erred in law by failing to take that scheme into considerationin its analysis in that regard.

91 Lastly, the Court of First Instance gave reasons for its finding that the weak marketshares held by HB's competitors are, at least in part, attributable to the latter'spractice of making freezer cabinets available to retailers with an exclusivity clause,when it held that the market share held by Mars, together with those of Valley andLeadmore, fell during the years preceding the adoption of the contested decision.Furthermore, HB puts forward nothing to show that the Court of First Instanceerred in law in failing to give detailed consideration to the causal relationshipbetween the exclusivity clause and the weak market share of HB's competitors, andthe other possible factors, unspecified, moreover, by HB, which might explain thesmall size of that market share.

92 In actual fact, in making those assertions, HB is seeking to call into question theassessment of the facts by the Court of First Instance.

I - 9123

ORDER OF 28. 9. 2006 — CASE C-552/03 P

93 It follows that the second part of the first ground of appeal relied on by HB insupport of its appeal is manifestly inadmissible and, accordingly, that that groundmust be rejected in its entirety.

The second ground of appeal, alleging infringement of Article 85(3) of the Treaty

Arguments of the parties

94 HB argues that the Court of First Instance erred in law in the application of the firstcondition laid down by Article 85(3) of the Treaty, by wrongly applying the burdenof proof.

95 It considers that it has demonstrated that the exclusivity clause confers an advantageon retailers, in the form of wider geographical availability of impulse ice cream, andthat that advantage would no longer be realised to the same extent if the clause wereto be prohibited.

96 HB argues that it is for the Commission in such a case to prove that the objectivebenefit of the distribution agreements is outweighed by their negative effects oncompetition and that the Commission may rely only on proof that is sufficientlyprecise and coherent.

97 HB contests in particular the Commission's finding that, even if the exclusivityclause were to be prohibited, it is unlikely that, save in a small number of cases, thatcompany would cease to provide freezer cabinets to its customers. HB submits thatthe judgment under appeal is also inadequately reasoned in that regard.

I - 9124


98 The Commission argues that this ground is tantamount to challenging anassessment of the facts by the Court of First Instance, namely the manner in whichHB would conduct itself if the exclusivity clause were to be prohibited, and that itmust accordingly be held to be inadmissible.

99 The Commission submits that the plea is also unfounded. It is for the undertakingwhich seeks to benefit from an exemption under Article 85(3) of the Treaty to showthat all of the conditions laid down by that provision have been satisfied and that it isnot enough to find that certain advantages exist for an exemption to be granted,since case-law requires it to be demonstrated that the advantages conferred by theagreement outweigh the disadvantages. It refers in that regard to Consten andGrundig v Commission. According to the Commission, HB was therefore obliged toshow that the restrictions imposed by the distribution agreements were aprerequisite of the benefits obtained and that those benefits outweighed thedisadvantages in terms of competition. The Commission considers that HB hasfailed to discharge the burden of proof in that regard.

100 The Commission also refers to recitals 222 to 247 of the contested decision, whichcontain an analysis of the various cumulative conditions laid down by Article 85(3)of the Treaty, and notes that HB has not challenged the finding that the distributionagreements do not allow consumers a fair share of the benefits arising under them.

101 Mars and Richmond essentially put forward arguments similar to those of theCommission.

I - 9125

ORDER OF 28. 9. 2006 — CASE C-552/03 P

Findings of the Court

102 As the Court of First Instance rightly pointed out in paragraph 136 of the judgmentunder appeal, where an exemption is being applied for under Article 85(3) of theTreaty, it is for the undertakings concerned in the first place to present to theCommission the evidence intended to establish that the agreement in question fulfilsthe conditions laid down by that provision (see, inter alia, Joined Cases 43/82 and63/82 VBVB and VBBB v Commission [1984] ECR 19, paragraph 52).

103 The onus was therefore on HB to prove that the exclusivity clause satisfied thecumulative conditions laid down by Article 85(3) of the Treaty. As regards the firstof those conditions, HB was required in particular to establish that the exclusivityclause contributed to improving the production or distribution of the goods inquestion, so that, were restrictions to be imposed on the possibility of implementingthat clause, such an improvement could no longer be realised.

104 In paragraph 143 of the judgment under appeal, the Court of First Instancerecognised that the wide availability in outlets of freezer cabinets intended for thesale of impulse ice creams, covering the entire geographic market and consistingmainly of HB's cabinets, could be considered an objective advantage in thedistribution of those products. However, the Court of First Instance also held that, ifthe power to impose an exclusivity clause were to be restricted, it is unlikely that HBwould definitely cease to supply freezer cabinets to retailers, except in a smallnumber of cases. The Court of First Instance observed in particular that HB had notshown that the Commission committed a manifest error in taking the view thatbusiness reality for a company such as HB, which wishes to maintain its position onthe relevant market, is to be present in the maximum number of outlets possible. Italso observed that, contrary to what HB contends, the Commission did not merely

I - 9126


assume continuity of provision by HB of freezer cabinets on the market, but carriedout a prospective analysis of the operation of the market after the adoption of thecontested decision.

105 It is therefore apparent from the judgment under appeal that the Commission setout in detail why the exclusivity clause did not contribute to improving theproduction or distribution of impulse ice creams and that HB has failed to show thatthe first condition laid down by Article 85(3) of the Treaty was satisfied.

106 It follows that the burden of proof was not wrongly applied by the Court of FirstInstance and that the ground of appeal alleging the incorrect application of Article85(3) of the Treaty is manifestly unfounded.

The third ground of appeal, alleging infringement of Article 86 of the Treaty


107 HB contends that the reasoning of the Court of First Instance is contradictory inthat it recognises that the object of the exclusivity clause is not to restrictcompetition (paragraph 80 of the judgment under appeal), that it constitutes astandard practice on the relevant market (paragraph 159 of the judgment underappeal) and that it was adopted at the retailers’ request (paragraph 160 of thejudgment), but then goes on to hold that there has been an abuse of a dominantposition within the meaning of Article 86 of the Treaty. HB also maintains that theCourt of First Instance failed to give adequate reasons for reaching a different

I - 9127

ORDER OF 28. 9. 2006 — CASE C-552/03 P

conclusion from that of the High Court, which accepted that the exclusivity clausehad a commercial justification.

108 HB also argues that the Court of First Instance erred in law in two respects inapplying Article 86 of the Treaty and that its analysis is, as a result, also inadequatelyreasoned.

109 First, HB considers that the Court of First Instance does not explain the reasonsunderlying its finding that the exclusivity clause distorts retailer choice and that thatpart of the reasoning of the Court of First Instance is ‘derivative’ of its findings inrelation to Article 85(1) of the Treaty. HB contends that the exclusivity clauseconstitutes a normal business practice, which is not, per se, either restrictive ofcompetition or abusive and was effectively challenged by the Court of First Instanceonly on the basis of its alleged effects of foreclosure of the relevant market. It followsthat it is only Article 85 of the Treaty, and not Article 86 thereof, which should bethe relevant basis for review.

110 HB adds that, inasmuch as the supply of a freezer cabinet creates an opportunity forthe sale of impulse ice creams which would not exist in the absence of such a supply,it is wrong to conclude that that practice constitutes an abuse.

111 HB takes the view that the evidence submitted to the Court of First Instance did notwarrant the inference that the distribution agreements prevented retailers fromexercising their freedom of choice so as to stifle demand for competing brands.

I - 9128


112 It submits that the judgment under appeal is contradictory in that, in paragraph 108,the Court of First Instance held that the fact that 40% of sales outlets are affected bythe distribution agreements is not a sufficient basis for finding that competition isdistorted, whereas that Court held in paragraph 160 of the judgment that HB had infact distorted competition in breach of its special responsibility by tying 40% of thesales outlets.

113 Secondly, HB maintains that the Court of First Instance erred in law in holding thatthe scope of the Bronner judgment is confined to cases of essential facilities. Itessentially argues that, while the effect of that judgment is that it is only where adistribution system may be considered an essential facility that the owner may becompelled to allow third parties to have access to it, the judgment also means that,where such a system is not an essential facility, the duty on the owner to facilitatecompetition by allowing third parties to have access to the system should be lessonerous. HB considers that the Commission therefore cannot impose on thecompany, whose stock of freezer cabinets is acknowledged not to constitute anessential facility, a duty to promote competition and to facilitate access by thirdparties that is at least commensurate to that imposed on the owners of essentialfacilities, by allowing its competitors to have access to a significant proportion of itsstock of freezer cabinets.

114 HB also contends that the Court of First Instance erred in law in paragraph 161 ofthe judgment under appeal, when it held that the implementation of the contesteddecision would not require that company to transfer assets or to enter into contractswith persons with whom it has not chosen to contract, because it is required tomake assets, that is to say spaces for freezer cabinets, available to competitors whichit has not selected.

115 HB also argues that the contested decision is vitiated by a failure to state adequatereasons in that regard.

I - 9129

ORDER OF 28. 9. 2006 — CASE C-552/03 P

116 The Commission replies that those arguments are partly unfounded and partlyinadmissible.

117 It states first of all that the role of the Court of First Instance is to review thelawfulness of the contested decision in the light of the reasons contained in it andthe arguments of the parties and that it is not bound by the judgment of a nationalcourt.

118 The Commission next argues that HB does not explain why the Court of FirstInstance erred in holding that the analysis of Article 86 of the Treaty in thecontested decision did not merely ‘recycle’ the analysis of Article 85.

119 The Commission lastly adds that, inasmuch as that argument seeks to establish thatcommon business practices which induce foreclosure of a substantial part of therelevant market, when entered into by a dominant undertaking, can be analysed onlyunder Article 85 of the Treaty, to the exclusion of Article 86, it represents a new pleawhich is accordingly both inadmissible and manifestly unfounded.

120 The Commission contends that HB's arguments that, first, the provision of freezercabinets creates sales opportunities and, secondly, the reasoning of the Court of First

I - 9130


Instance is contradictory, are inadmissible in that they involve a review of theeconomic appraisal of the facts.

121 It also states that the Court of First Instance did not hold that the practices of adominant undertaking which result in the application of the exclusivity clause to40% of sales outlets would not constitute, per se, an abuse, but that it is clearlyabusive for such an undertaking to seek to establish exclusivity for its products insuch a large proportion of available outlets, representing a similar proportion of thetotal sales of those products. In those circumstances, HB's argument is whollyunfounded.

122 The Commission is of the view that HB's argument relating to ‘essential facilities’ ismanifestly unfounded in so far as the ice creams produced by that company aredistributed through independent retailers to whom HB supplies freezer cabinets inexchange for payment. In that context, the Commission states that it is not a case ofHB retaining assets for its own use and that the abuse arises from the latter's attemptto control the use to which the freezers are put by those independent retailers. Itadds that the Court of First Instance was right to point out that the contesteddecision does not require HB to transfer any assets or to enter into contracts withpersons whom it has not selected.

123 According to the Commission, Article 86 of the Treaty prohibits a practice whicharises from the manner in which goods or services are marketed by an undertakingin a dominant position, where the practice deprives the purchaser, or restricts hispossible choice, of sources of supply and has the effect of hindering the maintenanceof the degree of competition still existing in the market or the growth of thatcompetition or where there is a risk that competitors will be eliminated. It refers inthat regard in particular to Case 85/76 Hoffmann-La Roche v Commission [1979]ECR 461 and to Case C-333/94 P Tetra Pak v Commission [1996] ECR I-5951,paragraph 44.

I - 9131

ORDER OF 28. 9. 2006 — CASE C-552/03 P

124 Mars notes that the Court of First Instance recognised in paragraph 96 of thejudgment under appeal, as the Commission had also found, that the Unilever Group,which is HB's parent company, regarded the maintenance of the exclusivity clausefor the use of the freezer cabinets as crucial to HB's commercial success and that itsobjective was to restrict competition. It refers in that regard to the documentsmentioned in recitals 65 to 68 of the contested decision, which are cited by theCourt of First Instance in paragraph 96 of the judgment under appeal.

125 Mars also maintains that the fact that a practice is standard on the market or thatthe exclusivity clause is entered into at the request of retailers does not mean that noabuse exists within the meaning of Article 86 of the Treaty. It refers in that regard toHoffmann-La Roche v Commission, paragraph 89, as well as to Case C-62/86 AKZOv Commission [1991] ECR I-3359, paragraph 149, and Case C-310/93 P BPBIndustries and British Gypsum v Commission [1995] ECR I-865.

126 Mars argues that the Court of First Instance provided sufficient reasons in supportof its finding that the exclusivity clause distorts retailer choice and refers inparticular to paragraphs 92, 102 and 160 of the judgment under appeal in thatregard. It also argues that there can be no contradiction between the analysis by theCourt of First Instance under Article 86 of the Treaty and paragraph 108 of thejudgment, since that paragraph forms part of the self-standing and independentanalysis of Article 85 of the Treaty.

127 Mars and Richmond contend that Bronner is irrelevant in the present case, as thelatter does not involve third party access to ‘essential facilities’. Richmond alsopoints out that the abuse established in the contested decision is different, because itrelates to the practices carried out by HB in order to induce retailers to use itsfreezer cabinets and not to the fact that retailers who have not subscribed to theexclusivity clause cannot use those cabinets. Mars and Richmond also argue that thedecision does not require HB to transfer assets or to enter into contracts withpersons with whom that company would not have chosen to contract. Richmond

I - 9132


adds that the Commission has the power to order positive action to bring aninfringement to an end.


128 It must be pointed out that the Community Courts cannot be bound by a finding ofa national court that an exclusivity clause is compatible with Community law.

129 The concept of abuse of a dominant position is an objective concept relating to thebehaviour of an undertaking in a dominant position which is such as to influence thestructure of a market where, as a result of the very presence of the undertaking inquestion, the degree of competition is already weakened and which, throughrecourse to methods different from those which condition normal competition inproducts or services on the basis of the transactions of economic operators, has theeffect of hindering the maintenance of the degree of competition still existing in themarket or the growth of that competition (Hoffmann-La Roche v Commission,paragraph 91). In that regard, the Court has held that the fact that agreements wereentered into at the request of the contracting partners of the undertaking in adominant position does not mean that there is not an abuse for the purposes ofArticle 86 of the Treaty (see, inter alia, Hoffmann-La Roche v Commission,paragraph 89).

130 It must also be made clear that the Court of First Instance did not hold in paragraph80 of the judgment under appeal that the object of the exclusivity clause is not torestrict competition on the relevant market, but, in fact, that that clause is not, ‘informal terms’, an exclusive purchasing obligation having such an object.

I - 9133

ORDER OF 28. 9. 2006 — CASE C-552/03 P

131 HB's contention that the judgment under appeal is vitiated by a contradiction mustaccordingly be rejected as manifestly unfounded.

132 Furthermore, it is settled case-law that an appeal must indicate precisely thecontested elements of the judgment which the appellant seeks to have set aside, andalso the legal arguments specifically advanced in support of the appeal (see, interalia, order of 17 September 1996 in Case C-19/95 P San Marco v Commission [1996]ECR I-4435, paragraph 37).

133 In that regard, HB's argument that the finding by the Court of First Instance that thedistribution agreements distort retailer choice is, in truth, ‘derivative’ of the findingsof that Court in relation to Article 85(1) of the Treaty, with the result that it isdevoid of any independent meaning or purpose, does not satisfy the conditionsreferred to in the preceding paragraph. In particular, such an argument does notmake it clear whether HB wishes to challenge an inadequacy of reasoning in thejudgment under appeal, the ‘recycling’ of the analysis of Article 85 of the Treaty orthe very principle of the application of Article 86 to the present case. Nor, as regardsthe last two of these possibilities, does HB put forward legal arguments specificallyadvanced in support of the appeal.

134 That argument of HB must accordingly be held to be manifestly inadmissible.

135 Furthermore, HB's argument that the exclusivity clause does not constitute an abusefor the purposes of Article 86 of the Treaty because it creates an opportunity for thesale of ice creams, which would otherwise not exist, is tantamount to requesting theCourt to reassess the facts and must accordingly be held to be manifestlyinadmissible.

I - 9134


136 Furthermore, there is no contradiction between paragraphs 108 and 160 of thejudgment under appeal, since they involve separate analyses, relating to Articles 85and 86 of the Treaty respectively. In addition, the analysis of the Court of FirstInstance set out in paragraph 160 of the judgment under appeal must be read in itscontext, particularly in conjunction with paragraphs 158 and 159 of the judgment,which emphasise that an undertaking in a dominant position has a specialresponsibility and that competition is already restricted on the relevant market byreason of that dominant position. It follows that this argument of HB is alsomanifestly unfounded.

137 Lastly, HB's contention that the legal principles laid down in Bronner were wronglyapplied is manifestly unfounded, inasmuch as, in any event, as the Court of FirstInstance held in paragraph 161 of the judgment under appeal, the contested decisiondoes not oblige HB to transfer an asset or to enter into agreements with personswith whom it has not chosen to contract. As the Commission observes, unlike thesituation in Bronner, the freezer cabinets are not assets which HB retains for its ownuse, but their enjoyment is voluntarily transferred to independent undertakingswhich pay for the right to use them. Thus, HB's contention that the contesteddecision imposes a duty on it which is at least as onerous as that which applies to theowner of an essential facility is manifestly unfounded. Nor is it the case that theCourt of First Instance based its analysis solely on the finding that no essentialfacility was involved or that it failed to provide adequate reasons in the judgmentunder appeal in that regard.

138 It follows that the third ground of appeal is in part manifestly inadmissible and inpart manifestly unfounded and must be rejected.

I - 9135

ORDER OF 28. 9. 2006 — CASE C-552/03 P

The fourth ground of appeal, alleging infringement of essential proceduralrequirements


139 HB argues first of all that the Court of First Instance infringed Article 48(1) of itsRules of Procedure and the right to a fair hearing by accepting that evidence relatingto Richmond's experience in the United Kingdom be presented by that company atthe hearing, without HB having the opportunity to comment on it and, moreover,without Richmond providing any explanation as to the reasons for its latesubmission of that evidence.

140 HB next states that the fact that the Court of First Instance based its findings on thatcompany's practice of charging a rental for freezer cabinets supplied to retailers inNorthern Ireland infringes its right to a fair hearing, inasmuch as that argument haduntil then been of no particular importance either in the contested decision or in theCommission's written pleading before the Court of First Instance.

141 HB lastly submits that the Court of First Instance wrongly applied the burden ofproof in its analysis of the conditions for the application of Article 85(3) of theTreaty.

142 With respect to the evidence presented by Richmond, the Commission submits thatArticle 48(1) of the Rules of Procedure of the Court of First Instance does not applyto evidence introduced by interveners. It contends that Article 116(6) of those Rules,which permits interveners to submit purely oral observations, would be deprived ofits substance if interveners were unable to submit evidence as part of suchobservations.

I - 9136


143 The Commission argues that, in any event, Article 48(1) of the Rules of Procedure ofthe Court of First Instance merely requires that reasons be given for any delay inpresenting evidence and does not impose a general prohibition on new evidencebeing introduced. Therefore, even if that provision were to apply to interveners, itwould not give rise to any irregularity in the present case, since the evidence waspresented by an intervener which was addressing the Court of First Instance for thefirst time.

144 The Commission and Mars point out that HB had the opportunity at the hearing toreply to the evidence presented by Richmond and that, in any event, the finding bythe Court of First Instance that a significant number of retailers would be preparedto stock ice creams of a brand other than HB in the same freezer cabinet if they werefree to do so, is adequately supported by the other evidence presented to the Courtof First Instance.

145 As regards the fact that HB charges a rental for the supply of freezer cabinets toretailers in Northern Ireland, the Commission argues, first, that HB did not, at anystage in the proceedings, contest the information relating to that practice set out inrecital 127 of the contested decision. The Commission points out that recital 219 ofthe contested decision also refers to the possibility of HB's requiring retailers inIreland to pay rental and that the general issue of the possibility of charging forfreezer use was fully debated between the parties. It also maintains that there is noobligation on the Court of First Instance to intimate in advance the conclusion it islikely to reach or the specific elements of the case file on which it will rely.

146 Mars takes the view that HB's practice of charging rental to retailers in NorthernIreland has no effect on the substance of the judgment under appeal, since thecontested decision was fully and properly reasoned in that regard. It also maintainsthat HB has no basis for arguing that the rules relating to the burden of proof wereinfringed by the Court of First Instance in relation to Article 85(3) of the Treaty.

I - 9137

ORDER OF 28. 9. 2006 — CASE C-552/03 P

147 Richmond submits that the evidence relating to its position on the United Kingdommarket cannot be regarded as new evidence and was presented only in order toillustrate and to reinforce the argument that a significant number of retailers wish,when they are able, to stock a second brand of ice cream in the same freezer cabinet.It states that it is for the Court of First Instance to assess all the evidence submittedto it, save where that evidence has been fundamentally misconstrued, and cites inthat regard Case C-7/95 P Deere v Commission [1998] ECR I-3111, paragraph 118. Itconsiders that Article 116 of the Rules of Procedure of the Court of First Instancepermits interveners to support their arguments, both in the written and the oralprocedure, with evidence and that HB has not challenged the evidence presented byRichmond at the hearing.


148 In accordance with the settled case-law of the Court of Justice, where one of thegrounds adopted by the Court of First Instance is sufficient to sustain the operativepart of its judgment, any defects that might vitiate other grounds given in thejudgment concerned have, in any event, no bearing on that operative part and,accordingly, a plea relying on such defects is ineffective and must be dismissed (see,inter alia, Case C-496/99 P Commission v CAS Succhi di Frutta [2004] ECR I-3801,paragraph 68 and the case-law cited).

149 In the judgment under appeal, the argument based on Richmond's experience in theUnited Kingdom constitutes only one argument of many intended to substantiatethe finding by the Court of First Instance that a significant number of retailers stockice creams of brands other than HB in the same freezer cabinet when they are free todo so.

I - 9138


150 Adequate support for that statement is provided by the other factual evidence onwhich the Court of First Instance relied in paragraphs 93 to 97 of the judgmentunder appeal.

151 HB's argument in that regard must accordingly be rejected as ineffective.

152 Moreover, as the Commission points out, the fact that HB charges retailers inNorthern Ireland rent for the use of freezer cabinets had already been referred to inrecital 127 of the contested decision and the general question of whether thatcompany had the possibility of requiring retailers using its cabinets to pay rent wasthe subject of a wide-ranging debate between the parties. Furthermore, as is stated inparagraph 89 of this order, the Court of First Instance did not rely solely on thepractice followed by HB in Northern Ireland in order to establish that that companyhad the possibility of charging rent to retailers using one of its freezers on therelevant market, but also held in paragraph 114 of the judgment under appeal thatHB had not established to the requisite legal standard that it would be impractical toimpose a separate rental in respect of the supply of freezers in Ireland, a point whichHB does not contest.

153 HB's argument in that regard must accordingly be rejected as manifestly unfounded.

154 Lastly, since, in paragraph 106 of this order, the Court rejected HB's argument thatthe burden of proof had been reversed by the Court of First Instance in relation toArticle 85(3) of the Treaty, there is no need to give that argument furtherconsideration.

I - 9139

ORDER OF 28. 9. 2006 — CASE C-552/03 P

155 The fourth ground of appeal must therefore be rejected as manifestly unfounded.

156 Since none of the grounds relied on by HB in support of its appeal can succeed, theappeal must be dismissed.

Costs

157 Under Article 69(2) of the Rules of Procedure, which applies to appeal proceedingsby virtue of Article 118 thereof, the unsuccessful party is to be ordered to pay thecosts if they have been applied for in the successful party's pleadings. Since theCommission, Mars and Richmond have applied for HB to pay the costs and thelatter has been unsuccessful, it must be ordered to pay the costs of theseproceedings.

On those grounds, the Court (Sixth Chamber) hereby orders:

1. The appeal is dismissed.

2. Unilever Bestfoods (Ireland) Ltd shall pay the costs.

[Signatures]

I - 9140

Date post:	26-Oct-2021
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

28September*2006 - Europa

Documents