61992J0128

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1. ECSC - Scope of the Treaty - Licences for the extraction of unworked coal - Application of provisions relating to agreements, decisions and concerted practices, and to abuse of a dominant position, but not of those relating to pricing practices

(ECSC Treaty, Arts 4(d), 60, 65 and 66(7))

2. ECSC - Provisions relating to agreements, decisions and concerted practices and to abuse of a dominant position - Articles 4(d), 65 and 66(7) - Direct effect - None

(ECSC Treaty, Arts 4(d), 65 and 66(7))

3. ECSC - Provisions relating to agreements, decisions and concerted practices and to abuse of a dominant position - Alleged infringement - Action for damages before a national court in the absence of a Commission decision - Not permissible

(ECSC Treaty, Arts 65 and 66(7))

4. ECSC Treaty - Provisions relating to agreements, decisions and concerted practices and to abuse of a dominant position - Binding force of individual decisions adopted by the Commission - Obligations of the national courts - Power of review of the Community judicature

(ECSC Treaty, Arts 14, 41, 65 and 66(7))

1. Given that both the extraction of unworked coal and the undertakings engaged in production in the coal industry fall within the scope of the ECSC Treaty, the provisions of that Treaty, in particular Article 4(d) prohibiting restrictive practices which tend towards the sharing or exploiting of markets, and Articles 65 and 66(7) concerning agreements, decisions and concerted practices and abuse of a dominant position, but not Article 60 since the prices of the products are not at issue, constitute the legal framework for the examination of licences to extract unworked coal and of their royalty and payment terms.

However, Article 4 applies by itself only in the absence of more specific provisions. If there are such provisions, such as Articles 65 and 66(7), they must, so far as concerns Article 4(d), be considered as a whole and applied together.

2. As Article 4(d) of the ECSC Treaty is not applicable by itself, it cannot have direct effect. Similarly, in view of the Commission' s sole jurisdiction under the fourth paragraph of Article 65 to rule on the compatibility with Article 65 of any agreement prohibited by the first paragraph and to verify under Article 66(7) whether undertakings holding a dominant position are using that position for purposes contrary to the objectives of the Treaty, those provisions do not confer rights which are directly enforceable by private parties in proceedings before the national courts.

3. Since the Commission has sole jurisdiction to find that Articles 65 and 66(7) of the ECSC Treaty on agreements, decisions and concerted practices and on abuse of a dominant position have been infringed, the national courts may not entertain an action for damages in the absence of a Commission decision adopted in the exercise of that jurisdiction.

4. As the Commission has sole jurisdiction, subject to review by the Court of First Instance and the Court of Justice, to adopt decisions on the basis of Articles 65 and 66(7) of the ECSC Treaty on agreements, decisions and concerted practices and on abuse of a dominant position, such decisions, which are binding in their entirety pursuant to Article 14 of the ECSC Treaty, are binding on the national courts, although those courts may ask the Court of Justice to rule on their validity or interpretation.

In Case C-128/92,

REFERENCE to the Court of Justice by the High Court of Justice of England and Wales (Queen' s Bench Division) for a preliminary ruling under Article 41 of the ECSC Treaty and Article 177 of the EEC Treaty in the proceedings pending before that court between

H.J. Banks & Company Limited

and

British Coal Corporation

on the interpretation of Articles 4(d), 60, 65 and 66(7) of the ECSC Treaty and Articles 85, 86 and 232(1) of the EEC Treaty,

THE COURT,

composed of: O. Due, President, G.F. Mancini (Rapporteur), J.C. Moitinho de Almeida, M. Díez de Velasco (Presidents of Chambers), C.N. Kakouris, R. Joliet, F.A. Schockweiler, G.C. Rodríguez Iglesias, F. Grévisse, M. Zuleeg and P.J.G. Kapteyn, Judges,

Advocate General: W. Van Gerven,

Registrar: Lynn Hewlett, Administrator,

after considering the written observations submitted on behalf of:

- H.J. Banks & Company Limited, by Jonathan Hirst QC and Nicholas Green, Barrister, both instructed by Ingledew Botterell, Solicitors,

- British Coal Corporation, by David Vaughan QC, David Lloyd Jones, Barrister, both instructed by Peter Sigler and Rebekah Gershuny, Solicitors,

- the United Kingdom, by John E. Collins, of the Treasury Solicitor' s Department, acting as Agent, and Richard Plender QC,

- the Commission of the European Communities, by Giuliano Marenco, Legal Adviser, and Julian Currall, a member of the Commission' s Legal Service, acting as Agents, assisted by Stephen Kon, Solicitor,

having regard to the Report for the Hearing,

after hearing the oral observations of H.J. Banks & Company Limited, British Coal Corporation, the United Kingdom, represented by Stephen Richards, Barrister, and the Commission of the European Communities, at the hearing on 14 July 1993,

after hearing the Opinion of the Advocate General at the sitting on 27 October 1993,

gives the following

Judgment

1 By order of 25 February 1992, received at the Court on 17 April 1992, the High Court of Justice of England and Wales (Queen' s Bench Division) referred to the Court for a preliminary ruling under Article 41 of the ECSC Treaty and Article 177 of the EEC Treaty a number of questions on the interpretation of Articles 4(d), 60, 65 and 66(7) of the ECSC Treaty and Articles 85, 86 and 232(1) of the EEC Treaty.

2 Those questions were raised in proceedings between H.J. Banks & Company Limited (hereinafter referred to as "Banks"), which is established in the United Kingdom, and British Coal Corporation (hereinafter referred to as "British Coal") concerning an action for damages brought by Banks.

3 Banks is a private company engaged in the production of coal under licences for its extraction issued by British Coal (formerly the National Coal Board), a statutory corporation created by the Coal Industry Nationalization Act 1946, which is vested with title to practically all the United Kingdom' s coal reserves. Pursuant to that Act, British Coal has sole right to work and get coal and to grant licences to third parties. These may be either "royalty licences", whereby the licensee pays a royalty per tonne of coal produced and may sell the coal to third parties, or "delivered licences" whereby the licensee is obliged to sell it to British Coal at a price specified in the agreement.

4 British Coal concluded with the main generators of electricity in England and Wales, namely National Power PLC and PowerGen PLC, contracts providing that British Coal would guarantee for a number of years the supply of coal at fixed prices.

5 In March 1990, the National Association of Licensed Opencast Operators ("NALOO"), of which Banks is a member, lodged a complaint with the Commission of the European Communities based on Articles 85 and 86 of the EEC Treaty and Articles 4, 60, 63, 65 and 66(7) of the ECSC Treaty, relating to those contracts and to the system of licences to extract coal, as regards both the criteria for granting licences to the various producers and the level of royalty imposed. On 23 May 1991 the Commission rejected NALOO' s complaint, whereupon the latter brought an action before the Court of First Instance of the European Communities for the annulment of the Commission' s decision (Case T-57/91 NALOO v Commission). By order of 14 July 1993, the Court of First Instance stayed the proceedings pending the outcome of this case.

6 In February 1991, in parallel with NALOO' s complaint, Banks had brought an action for damages against British Coal before the High Court of Justice. It alleged, in particular, breach of Articles 4(d), 60, 65 and 66(7)) of the ECSC Treaty and, in the alternative, of Articles 85, 86 and 232(1) of the EEC Treaty. Banks contended, first, that the level of royalty set by British Coal under royalty licences was excessive and prevented Banks from making a reasonable profit and, second, that the price paid by British Coal for coal produced under delivered licences was unreasonably low.

7 The High Court of Justice stayed the proceedings and referred to the Court for a preliminary ruling the following questions:

(1) Do Articles 4(d), 60, 65 and/or 66(7) of the ECSC Treaty apply to licences to extract unworked coal and to the royalty and payment terms therein?

(2) If the answer to Question 1 is that such provisions do not apply:

(i) do Articles 85 and 86 of the EEC Treaty apply to the circumstances set out in Question 1?

(ii) is the answer to (i) affected by Article 232(1) of the EEC Treaty?

(3) Are Articles 4(d), 60, 65 and/or 66(7) of the ECSC Treaty directly effective and such as to give rise to rights enforceable by private parties which must be protected by national courts?

(4) Does the national court have the power and/or the obligation under Community law to award damages in respect of breach of the said articles of the ECSC and EEC Treaties for loss sustained as a result of such breach?

(5) To what extent (if at all) do the answers to Questions 3 and 4 depend upon:

(i) a prior determination by the Commission; and/or

(ii) the exhaustion of remedies (if any) in relation thereto available under the ECSC Treaty; and/or

(iii) the completion of the steps or procedures indicated in the relevant provisions?

(6) If the Commission has taken a decision pursuant to a complaint, as it did in the Decision of 23 May 1991, to what extent is a national court bound by that decision:

(i) with regard to the issues of fact decided by the Commission; and,

(ii) with regard to the Commission' s construction of articles of the ECSC Treaty?

Questions 1 and 2

8 The High Court' s first and second questions ask, in essence, which provisions of the ECSC Treaty or the EEC Treaty are relevant to the case before it.

9 Both the extraction of unworked coal and the undertakings concerned fall within the scope of the ECSC Treaty. Annex I to the Treaty, to which Article 81 refers for the definition of the term "coal", expressly refers to hard coal, which is the type of coal at issue in the main proceedings. Furthermore, Article 80 of the Treaty provides that, for the purposes of the Treaty, "undertaking" means any undertaking engaged in production in the coal industry within the European territories of the Member States. That is true both of Banks and of British Coal, since the extraction of coal by them is the first stage in the processing cycle of a more highly-worked product and is carried on within the territory of a Member State.

10 It follows that the legal framework of the main proceedings is the ECSC Treaty.

11 As to which provisions are applicable to the practices of the undertakings in question, Article 4 applies by itself only in the absence of more specific rules; if they have been adopted or are governed by other provisions of the Treaty, texts relating to the same provision must be considered as a whole and applied together (see, in particular, the judgment in Joined Cases 7 and 9/54 Industries Sidérurgiques Luxembourgeoises v High Authority [1956] ECR 175 and the judgment in Case 13/57 Wirtschaftsvereinigung Eisen- und Stahlindustrie v High Authority [1958] ECR 265).

12 Articles 65 and 66(7) give effect to Article 4(d), first, by prohibiting all agreements, decisions and concerted practices, in particular those tending to fix or determine prices, to restrict or control production, technical development or investment, and to share markets, products, customers or sources of supply, and, second, by preventing the use of a dominant position for purposes contrary to the objectives of the Treaty. The licensing system at issue in the main proceedings must therefore be examined in the light of Articles 4(d), 65 and 66(7) of the ECSC Treaty.

13 Article 60 of the Treaty, however, does not apply to licences to extract coal of the kind at issue in the main proceedings. The position of that article in Chapter V of the Treaty shows that it relates only to unfair and discriminatory product pricing practices. British Coal cannot be regarded as engaged in the sale of products, where it grants licences to extract coal.

14 In the light of the foregoing considerations, the answer to Questions 1 and 2 must be that the provisions of the ECSC Treaty, in particular Articles 4(d), 65 and 66(7), but not Article 60, constitute the legal framework for the examination of licences to extract unworked coal and of their royalty and payment terms.

Question 3

15 In order to answer Question 3, it is necessary to see whether Articles 4(d), 65 and 66(7) are clear and unconditional provisions which confer directly on individuals rights which the national courts must protect.

16 As Article 4(d) is not applicable by itself (see paragraph 11 above), it cannot have direct effect.

17 As regards Article 65, the second subparagraph of its fourth paragraph confers on the Commission sole jurisdiction, subject to review by the Court of First Instance and the Court of Justice, to rule on the compatibility with Article 65 of any agreement prohibited by the first paragraph. Accordingly, as long as such incompatibility has not been established by the Commission itself, individuals may not plead, in proceedings before the national courts, that an agreement is incompatible with Article 65.

18 Likewise, Article 66(7) reserves to the Commission the power to verify whether public or private undertakings which, in law or in fact, hold or acquire in the market for one of the products within its jurisdiction a dominant position shielding them against effective competition in a substantial part of the common market are using that position for purposes contrary to the objectives of the Treaty. The conferral of sole jurisdiction on the Commission precludes individuals from relying directly on that provision in proceedings before the national courts.

19 The answer to Question 3 must therefore be that Articles 4(d), 65 and 66(7) do not confer rights which are directly enforceable by private parties in proceedings before the national courts.

Questions 4 and 5

20 In Questions 4 and 5, the national court asks the Court to rule, first, on whether the national courts have the power and/or the obligation under Community law to award damages in respect of breach by an undertaking of the ECSC Treaty provisions in question, and, second, whether that power or obligation depends on a prior decision by the Commission, the exhaustion of remedies available under the ECSC Treaty and/or the completion of the steps or procedures indicated in the relevant provisions.

21 It follows from the answer to Question 3 that, since the Commission has sole jurisdiction to find that the provisions of Articles 65 and 66(7) have been infringed, the national courts may not entertain an action for damages in the absence of a Commission decision adopted in the exercise of that jurisdiction.

Question 6

22 The essence of this question is whether the national court is bound as regards issues of fact or law by a Commission decision taken as a result of a complaint on the basis of Articles 65 and 66(7) of the ECSC Treaty.

23 As the Commission has sole jurisdiction, subject to review by the Court of First Instance and the Court of Justice, to adopt decisions on the basis of Articles 65 and 66(7) of the Treaty, such decisions, which are binding in their entirety pursuant to Article 14 of the ECSC Treaty, are binding on the national courts. However, the national courts may still ask the Court of Justice to rule on the validity or interpretation of those decisions.

Costs

24 The costs incurred by the United Kingdom and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT,

in answer to the questions referred to it by the High Court of Justice of England and Wales (Queen' s Bench Division), by order of 25 February 1992, hereby rules:

1. The provisions of the ECSC Treaty, in particular Articles 4(d), 65 and 66(7), but not Article 60, constitute the legal framework for the examination of licences to extract unworked coal and of their royalty and payment terms;

2. Articles 4(d), 65 and 66(7) do not confer rights which are directly enforceable by private parties in proceedings before the national courts;

3. Since the Commission has sole jurisdiction to establish that the provisions of Articles 65 and 66(7) have been infringed, the national courts may not entertain an action for damages in the absence of a Commission decision adopted in the exercise of such jurisdiction;

4. As the Commission has sole jurisdiction, subject to review by the Court of First Instance and the Court of Justice, to adopt decisions based on Articles 65 and 66(7) of the Treaty, such decisions, which are binding in their entirety pursuant to Article 14 of the ECSC Treaty, are binding on the national courts. However, the national courts may still ask the Court of Justice to rule on the validity or interpretation of those decisions.