61986C0247

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Mr President,

Members of the Court,

1 . The tribunal de grande instance, Strasbourg, wishes to ascertain whether the fact that a telecommunications installer which has a leading share of a regional market in a Member State imposes on its customers standard-form contracts containing certain clauses which are oppressive constitutes an abuse of a dominant position within the meaning of Article 86 of the EEC Treaty .

By summons of 19 July 1982, Société alsacienne et lorraine de télécommunications et d' électronique (" Alsatel ") instituted proceedings against Novasam SA, a Paris-based employment agency, for payment of a penalty amounting to FF 125 834 . Novasam, it claimed, was liable to pay that sum as compensation for terminating before their expiry three contracts for the rental and maintenance of telephone equipment installed by Alsatel at Novasam' s branches in Strasbourg, Mulhouse and Colmar . The defendant objected on the ground, inter alia, that the contracts in question were null and void because some of their clauses were unlawful .

By interlocutory order of 2 May 1985 the tribunal asked the parties to state their views on the conformity of those contracts with national and Community law . Two judgments were then given, one on 17 September and the other on 10 December 1986, in which, in the light of the fact that Alsatel asks its customers to sign contracts for the rental and maintenance of telephone equipment for a term of 15 years, that the contract is automatically extended for a period equivalent to its initial duration if, as a result of modifications to the installation, the initial rental is increased by 25% or more, that as regards all changes, moves, extensions, putting lines into service and, in general, all modifications to the installation the customer may not turn to another supplier, and that as a result of that prohibition Alsatel may, in the event of modifications to the installation, fix the price of additional equipment and lines unilaterally, the national court asks whether, in view of Alsatel' s major share of the regional market, those contracts show an abuse of a dominant position within the meaning of Article 86 of the EEC Treaty .

In these proceedings, written observations were submitted and oral argument was presented by the parties to the main proceedings and the Commission of the European Communities .

2 . I should point out in the first place that in France the market in telecommunications, from the production to the supply of installations and equipment in general, is subject to a State monopoly . In particular, Article L 33 of the Post and Telecommunications Code provides that "no telecommunications installation may be established or used for the transmission of communications except by the Minister for Posts and Telecommunications or with his authorization ".

However, the postal and telecommunications authorities do not operate the monopoly in an exclusive manner but delegate to several firms, within the territorial limits of one or more départements, the manufacture, establishment and maintenance of telephone installations . Obviously, in order to carry on their activities the undertakings concerned - and, in the case of producers, the installations as well - must obtain a specific administrative authorization . Furthermore, whilst "authorized installers" are free to choose any type of installation, provided it is properly licensed, "authorized manufacturers" may put into service only telephone exchanges produced by them .

A subscriber - for instance a company like Novasam - which wishes to equip its headquarters with a telephone exchange may choose between purchasing and renting the installation . For those purposes, according to the information provided by the Commission, it is necessary to distinguish between simple installations, consisting of one or two lines, and complex installations, which are equipped with several lines and have other technical advantages . In order to obtain complex installations it was formerly necessary to turn to authorized installers . For some years, however, the postal and telecommunications authorities have also been providing complex equipment on particularly advantageous terms . The sector in which the public authorities and private undertakings compete is therefore tending to expand ( Commission observations, p . 4 ).

As regards the choice between rental and purchase, it would appear, again according to the Commission, that authorized installers are able to sell installations of any kind and to provide the necessary maintenance . However, rental of equipment and the attendant maintenance service can be offered only by installers whose financial resources permit them to acquire the requisite equipment and to depreciate it over the rental period . For their part, the postal and telecommunications authorities offer only contracts of the latter type .

3 . Let me now turn to the main aspects of the dispute pending before the national court . The reference for a ruling does not throw any light on Alsatel' s legal and economic ties . The Commission, for its part, merely states that Alsatel, along with 15 other undertakings, forms part of a consortium called Intertel, whose object is to guarantee its own members the best business conditions for the procurement of equipment .

The information supplied by Novasam is more significant, though it has been flatly denied by Alsatel . According to Novasam, Alsatel is an agent and affiliate of Télic-Alcatel, a world leader in corporate telecommunications, which in turn is controlled by Compagnie générale d' électricité . The undertakings belonging to that group engage in concerted practices, including the imposition of contracts similar to those which Novasam had to sign .

There is no dispute, on the other hand - at least in this case - as to the nature and the subject-matter of those contracts . They are concerned with the rental and maintenance of three telephone exchanges which, according to the Commission, belong to the simplest category of complex equipment . Those installations, produced largely by authorized manufacturers, are rented out by the postal and telecommunications authorities and by private installers on competitive terms .

4 . In their written observations, Novasam and the Commission ask the Court to consider the dispute not only from the point of view of Article 86 but also in the light of the prohibition laid down by Article 85 of the Treaty . In that regard the Commission admits that in fact it can "detect ... only a degree of parallel conduct between, in particular, installers belonging to the same groups" ( at p . 22 ). However, on the basis of the information available to it ( but not to the national court ), the Commission assumes that the national court could treat the situation described in paragraph 2 as a concerted practice "having as its purpose to fix ... trading conditions (( and )) thereby falling within the category referred to in Article 85 ( 1 ) ( a ). Accordingly, any contractual clause in conformity with that practice would, pursuant to Article 85 ( 2 ), be automatically void" ( at p . 24 ).

Those clauses - the Commission goes on to state - could also be regarded as vertical agreements between undertakings and, in particular, as exclusive supply contracts of a minimum duration of 15 years . On the other hand, as they are not concerned with the supply of products intended for resale, they do not come within the scope of the rules - Regulation No 67/67/EEC of 22 March 1967 ( Official Journal, English Special Edition 1967, p . 10 ) - on exemption for certain categories of agreements, and since they have not been notified pursuant to Article 85 ( 3 ) the only authority which can declare them null and void is the national court .

That contention, as summarized in those terms, is unacceptable . I should point out that in the main proceedings Novasam maintained that Article 85 was applicable to this case and that the national court did not consider it appropriate to ask the Court of Justice for guidance on that point, not even in the decision of 10 September 1986 given by the national court at the express request of the defendant . In those circumstances, therefore, it cannot be thought - and this is borne out by the reasons for the decision - that the national court may have formulated its question incorrectly .

It is clear from the Court' s case-law that a question exhibiting those characteristics may not be corrected or adapted . According to paragraphs 5 to 7 of the Court' s judgment of 9 July 1969 in Case 10/69 Portelange v Smith Corona Marchant (( 1969 )) ECR 309, Article 177 "does not permit (( the Court )) ... to pass judgment on the reasons for requests for interpretation . The question whether the provisions or concepts of Community law whose interpretation is requested are in fact applicable to the case in question lies outside the jurisdiction of the Court of Justice and falls within the jurisdiction of the national court ". It is therefore for the national court - as the Court adds in paragraph 5 of its judgment of 14 February 1980 in Case 53/79 ONPTS v Damiani (( 1980 )) ECR 273 - which is "alone in having a direct knowledge of the facts of the case and of the arguments put forward by the parties, and which will have to give judgment in the case, to appreciate ... the relevance of the question ... raised by the dispute before it and the necessity for a preliminary ruling ...".

If, therefore, the Commission is genuinely convinced that the clauses in question may have an adverse effect on intra-Community trade and deliberately and objectively distort competition on the common market, it has only to raise the matter with the undertakings concerned, solicit their views on the allegations and, if necessary, adopt a decision requiring them to bring the infringement to an end . As everyone is aware, moreover, the decision, whether adverse or otherwise, is subject to direct review by the Court .

As things are, however, to ascertain whether those clauses are contrary to, or compatible with, the prohibition laid down by Article 85 is a matter exclusively for the national court; the file on the case does not permit the Court to lay down any criteria for the guidance of the national court in carrying out that task . Not even the "degree of parallel conduct" referred to by the Commission can be used for those purposes . An assessment of a situation of that kind can be made only on the basis of the nature of the relationship between the undertakings belonging to the group and, as we have seen, the indications provided by the orders for reference and the submissions of the parties are not consistent in that regard . In particular, it is by no means apparent that those undertakings pursue the same strategy on the market in the rental and maintenance of telephone exchanges ( see the judgment of 4 May 1988 in Case 30/87 Bodson (( 1988 )) ECR , at paragraph 20 ). In any event, the national court may, if it sees fit, consider the problem in detail and submit a reference to the Court for a preliminary ruling .

5 . Let me now consider the question submitted within the limits of the wording used in the order for reference . Article 86, as we know, prohibits abusive practices connected with the exploitation by one or more undertakings of a dominant position within the common market or in a substantial part of it . That prohibition, however, applies only in so far as those practices may have an appreciable effect on trade between Member States . In order to apply that provision correctly, therefore, it is necessary : ( a ) to define the relevant market and its territorial extent; ( b ) to ascertain whether one or more undertakings occupy a dominant position on that market and engage in abusive practices; ( c ) to determine whether, as a result of such conduct, intra-Community trade is affected to an appreciable extent .

With regard to the first point, I have stated in paragraph 3 that the relevant market is that in the rental and maintenance of telephone exchanges for business use belonging to the simplest class of complex equipment . As regards the geographical extent of that market, the Commission rightly points out that in that sector installers and manufacturers can operate only with the authorization of the postal and telecommunications authorities and are in direct competition with them . Their conduct should therefore be assessed by reference to the territory covered by the monopoly . In practical terms, however, it follows from the very nature of the service under consideration that installers compete primarily at regional or local level, which means that proof of a dominant position must be furnished in that context .

The national court points out that in the départements in Alsace and Lorraine applications for authorization submitted by Alsatel account for "over one-half of the total", a fact from which, taking into account competition from the postal and telecommunications authorities, the Commission infers Alsatel holds just over one-third of the market in the rental of relatively complex installations . In other words, the postal and telecommunications authorities and Alsatel are more or less in the same position; if that is so, it is clear that Alsatel cannot legitimately be regarded as dominant in economic terms on the regional market or, a fortiori, on the national market .

6 . I could stop at this point . However, the Commission states that this case must be examined from the broader perspective of a dominant position occupied by undertakings collectively and in that regard points out that, viewed as a whole, the market in telephone equipment rentals is divided between two large categories of traders : the postal and telecommunications authorities, who hold one-third of the market, and authorized installers, who hold the remaining two-thirds . Moreover, the Court has consistently held that a dominant position can also exist where several undertakings which belong to the same group or conclude an agreement have between them the power to hinder effective competition . As we have seen, the Commission considers - without being certain - that a degree of "parallel conduct" exists between the companies belonging to the Intertel group .

I should point out once again that the documents before the Court do not contain any information which is capable of substantiating that supposition . On the contrary, the fact that the postal and telecommunications authorities have for some time been competing increasingly vigorously against installers who rent out relatively complex installations, offering subscribers similar services but on more favourable terms, would seem to militate against the Commission' s hypothesis .

In any event, it is for the national court to investigate the reality of that hypothesis with regard to the market in telephone equipment rentals . In considering that issue the national court will have to bear in mind that a dominant position for the purposes of Article 86 is "a position of economic strength enjoyed by an undertaking which enables it to hinder the maintenance of effective competition on the relevant market by allowing it to behave to an appreciable extent independently of its competitors and customers and ultimately of consumers ". Furthermore, that investigation cannot be "limited to the objective characteristics ... of the relevant products (( and services )) ...: the competitive conditions and the structure of supply and demand on the market must also be taken into consideration" ( judgment of 9 November 1983 in Case 322/81 Michelin v Commission (( 1983 )) ECR 3461, at paragraphs 30 and 37 ). Finally, the national court must not disregard the fact that Article 86 is applicable even if the absence or restriction of competition is facilitated by national laws or regulations ( judgment of 4 May 1988 in Case 30/87 Bodson, cited above, at paragraph 26 ).

That brings me to the other two conditions laid down by Article 86 . With regard to the abusive nature of the contested practices ( the clauses imposed on the customer, the duration of the contracts and the rental ), the national court will have to ascertain whether and to what extent those practices are necessary for Alsatel' s activities and for the amortization of the capital invested by it . For those purposes, it may be appropriate to take into consideration the value of the equipment brought into service, the price paid by the user for installation and the relationship between the amount of the rent and the cost of maintenance . Those figures will have to be compared with the corresponding figures in the contracts offered by the postal and telecommunications authorities, bearing in mind that those authorities are financed under the State budget .

Finally, I would remind the Court that the Commission has acknowledged that it does not have at its disposal the essential information needed to establish whether the share of telephone equipment imported from other Member States and sold on the French market is "sufficiently large to permit the conclusion to be drawn that it has an 'appreciable' effect on trade between Member States ". Hence that information as well will have to be gathered by the national court, and the task is far from enviable .

7 . On the basis of the foregoing considerations I suggest that the Court answer the question submitted by the tribunal de grande instance, Strasbourg, by judgments of 17 September and 10 December 1986 in the proceedings pending before it between Alsatel and Novasam as follows :

"The prohibition laid down by Article 86 of the EEC Treaty applies to abusive practices pursued by one or more undertakings which enjoy a position of economic strength within the common market or in a substantial part of it which enables them to hinder the maintenance of effective competition by allowing them to behave to an appreciable extent independently of their competitors and customers and ultimately of consumers . Where those conditions are not met, and where there is no appreciable effect on intra-Community trade, the practices pursued by one or more undertakings, even if they may be considered abusive, fall outside the scope of Article 86 ."

(*) - Translated from the Italian .