“(1) The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; …. (2) Any agreements or decisions prohibited pursuant to this Article shall be automatically void. (3) The provisions of paragraph 1 may, however, be declared inapplicable in the case of: - any agreement or category of agreements between undertakings; …. which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.”
“(1) Pursuant to Article 85(3) of the Treaty, and subject to Articles 7 to 9 of this Regulation, it is hereby declared that Article 85(1) of the Treaty shall not apply to agreements to which only two undertakings are party and whereby one party, the reseller, agrees with the other, the supplier, in consideration for according special commercial or financial advantages, to purchase only from the supplier, an undertaking connected with the supplier or another undertaking entrusted by the supplier with the distribution of his goods, certain beers, or certain beers and certain other drinks, specified in the agreement for resale in premises used for the sale and consumption of drinks and designated in the agreement. (2) The declaration in paragraph 1 shall also apply where exclusive purchasing obligations of the kind described in paragraph 1 are imposed on the reseller in favour of the supplier by another undertaking which is itself not a supplier.”
“(1) apart from the obligation referred to in Article 6, no restriction on competition shall be imposed on the reseller other than: (a) the obligation not to sell beers and other drinks which are supplied by other undertakings and which are of the same type as the beers or other drinks supplied under the agreement in the premises designated in the agreement. …. (2) Beers or other drinks of the same type are those which are not clearly distinguishable in view of their composition, appearance and taste.”
“On the basis of the information provided on notification of the agreement as well as that contained in documents subsequently received the Commission’s Directorate-General for Competition has now completed the examination of this case. The result of this examination is that for the period from the introduction of the standard leases up to and including28 March 1998 , the agreement appears to contain restrictions of competition falling under the prohibition in Article 81(1) of the EC Treaty, namely the non-compete and exclusive purchase obligations contained in the requirement that all specified beers are bought exclusively from Inntrepreneur or its nominee with the exception of one guest beer from the date of introduction of the notified leases until28 March 1998 . However, the Directorate-General for Competition takes the view that you have provided sufficient justification for finding that the conditions laid down by Article 81(3) are fulfilled. A Notice pursuant to Article 19(3) of Council Regulation No 17 was published in the Official Journal of the European Communities, No. 374 p.11 of10 December 1997 inviting all interested parties to submit their observations. You have agreed that the notification under consideration may be dealt with by means of an administrative letter closing the file. The Directorate-General for Competition, therefore, considers that it is not necessary to conclude the procedure by proposing that the Commission should adopt a decision granting an exemption under Article 81(3), as laid down in Article 6 of Council Regulation No 17. However, the case could be reconsidered if the factual or legal situation changes as regards any essential aspect of the agreement which affects the view which should be taken of it.”
“This is a question which the national court is in a position to decide. It can be added that the national court can take into account some factual and legal elements which the Commission has made public on earlier occasions. With regard to a general market description, reference can be made to the earlier mentioned 19(3) notice and to similar such notices in the Bass and Whitbread cases. As to the legal point of the applicability of Article 85(1), legal guidance can be taken from the Commission’s intention indicated in the earlier mentioned Inntrepreneur 19(3) notice to grant an exemption to the Lease. Furthermore, in the event that the national judge finds that Article 85(1) is applicable, he is in a position to determine the civil law effects following from the prohibition set out in Article 85(2). …. The judge can also award compensation for loss suffered as a result of an infringement of Article 85.”
“30 We are minded to refer to the European Court of Justice the question whether, assuming that a party to a prohibited agreement may be someone who is given rights against the other party by virtue of Article 85 which are protected under Community Law, and assuming that such a party has been damaged by actions taken under the agreement by the other party, the national court is obliged as a matter of Community law to award damages to the injured party.”
“It follows that this court must rule in the abstract on a situation where a breach of article 81 EC has caused loss to one of the parties to the agreement. The question whether this abstract situation corresponds to the facts in the case is a question to be decided later by the referring court and does not concern this court.”
“26 The full effectiveness of article 85 of the Treaty and, in particular, the practical effect of the prohibition laid down in article 85(1) would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition. …. 29 However, in the absence of Community rules governing the matter, it is for the domestic legal system of each member state to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness).”
“32. In that regard, the matters to be taken into account by the competent national court include the economic and legal context in which the parties find themselves and, as the United Kingdom Government rightly points out, the respective bargaining power and conduct of the two parties to the contract. 33. In particular, it is for the national court to ascertain whether the party who claims to have suffered loss through concluding a contract that is liable to restrict or distort competition found himself in a markedly weaker position than the other party, such as seriously to compromise or even eliminate his freedom to negotiate the terms of the contract and his capacity to avoid the loss or reduce its extent, in particular by availing himself in good time of all the legal remedies available to him. 34. Referring to SA Brasserie de Haecht v Wilkin (Case 23/67) [1967] ECR 407 and Delimitis v Henninger Bräu AG (Case C-234/89 )[1991] ECR I-935 , 984-987, paras 14-26, the Commission and the United Kingdom Government also rightly point out that a contract might prove to be contrary to article 85(1) of the Treaty for the sole reason that it is part of a network of similar contracts which have a cumulative effect on competition. In such a case, the party contracting with the person controlling the network cannot bear significant responsibility for the breach of article 85, particularly where in practice the terms of the contract were imposed on him by the party controlling the network.”
“Having regard to all the foregoing considerations, the questions referred are to be answered as follows. A party to a contract liable to restrict or distort competition within the meaning of article 85 of the Treaty can rely on the breach of that article to obtain relief from the other contracting party. Article 85 of the Treaty precludes a rule of national law under which a party to a contract liable to restrict or distort competition within the meaning of that provision is barred from claiming damages for loss caused by performance of that contract on the sole ground that the claimant is a party to that contract. Community law does not preclude a rule of national law barring a party to a contract liable to restrict or distort competition from relying on his own unlawful actions to obtain damages where it is established that that party bears significant responsibility for the distortion of competition.”
“Consequently, in the present case it is necessary to analyse the effects of a beer supply agreement, taken together with other contracts of the same type, on the opportunities of national competitors or those from other Member States, to gain access to the market for beer consumption or to increase their market share and, accordingly, the effects on the range of products offered to consumers.”
“If an examination of all similar contracts entered into on the relevant market and the other factors relevant to the economic and legal context in which the contract must be examined shows that those agreements do not have the cumulative effect of denying access to that market to new national and foreign competitors, the individual agreements comprising the bundle of agreements cannot be held to restrict competition within the meaning of Article 85(1) of the Treaty. They do not, therefore, fall under the prohibition laid down in that provision.”
“It can thus be concluded that an examination of all tying agreements, including but not limited to beer-supply agreements entered into, and the other factors relevant to the economic and legal context of the UK on-trade market shows that the brewers' tying agreements had in 1990 and still have today, on the basis of the most recent available information, the cumulative effect of considerably hindering independent access to that market, for new national and foreign competitors.”
“It is therefore concluded that Whitbread's tied sales, of which the notified agreements are a part, contribute significantly to the foreclosure of the UK on-trade market. The exclusive purchasing obligation and the non-competition obligation in the Leases therefore have a restrictive effect on competition.”
“Member States shall take all appropriate measures, whether general or particular, to ensure fulfilment of the obligations arising out of this Treaty or resulting from action taken by the institutions of the Community. They shall facilitate the achievement of the Community’s tasks. They shall abstain from any measure which could jeopardise the attainment of the objectives of this Treaty.”
“4. The Commission is the administrative authority responsible for the implementation and for the thrust of competition policy in the Community and for this purpose how to act in the public interest. National courts, on the other hand, have the task of safeguarding the subjective rights of private individuals in their relations with one another.”
“Such conflicting decisions would be contrary to the principle of legal certainty and must, therefore, be avoided when national courts give decisions on agreements or practices which may subsequently be the subject of a decision by the Commission.”
“Such statements provide national courts with significant information for reaching a judgment, even if they are not formally bound by them.”
“it cannot be right that the national courts and Community institutions shall both independently weigh the force of particular evidence with the possibility of inconsistent results.”
“The necessity of avoiding conflicting decisions between the Commission and national courts is a theme which runs through a number of European and English domestic cases, as I will set out below. It is an objective which makes obvious sense. The European Union is intended to be a cohesive economic unit. It would interfere with that cohesiveness if a finding by the specialist competition authority of the Community that there had been an abuse of dominant position was undermined by decisions of national courts, some of which came to the same conclusion and others of which came to the opposite conclusion.”
“60 …. As a body which supervises compliance with the Community rules of competition and has specialised departments for that purpose, the Commission has many years of experience with the result that its findings carry a degree of authority, although such authority is not binding. However, it is self-evident that no obstacles may be placed in the path of third parties seeking to challenge before the national court findings which the Commission has arrived at in a decision of that kind. 61 If, on the basis of the parties’ arguments, the national court comes to the conclusion that the issues of fact and/or law decided by the Commission are incorrect or insufficient, or if at any rate it has serious doubts in that regard, then in the light of the Delimitis judgment it must take the following course of action: in the case of findings which carried no weight in the final decision and do not therefore underlie the reasoning of the Commission, the national court is at liberty to adopt a different interpretation: in those circumstances the risk of conflicting decisions and the resultant impairment of the principle of legal certainty is extremely small. On the other hand, in the case of findings which have an influence on the final decision arrived at by the Commission, the national court is well advised, in accordance with the provisions of its national procedural law, to suspend the proceedings in the case and to seek the necessary information from the Commission or make a direct reference to the court for a preliminary ruling concerning the validity of the decision in question or the interpretation of the relevant Community competition rules.”
“A relatively short notice period in certain retail markets, like those for ice cream and beer where there is far greater product differentiation than in the retail petroleum-fuels supply market, could still contribute to a not insignificant degree to an overall tying-in effect flowing from a major supplier’s network of agreements. However, if, at the time a dispute arises, the agreements in question give resellers a virtually unrestricted opportunity, without being subject to penalties on existing loans or any other disguised termination disincentives, to switch suppliers, it is difficult to conceive of any adverse effect on competition on the relevant market flowing from them.”
“A brewery with a relatively small market share which ties its sales outlets for many years may make as significant a contribution to a sealing-off of the market as a brewery in a relatively strong market position which regularly releases sales outlets at shorter intervals.”
“purchase from the Company or its Nominees and from no other person, firm or company all such Specified Beers as he shall require for sale in the premises….” (1st Schedule Clause 2 (1)). The “Company” was Inntrepreneur and “Nominees” were defined as Courage “and/or such person, firm or company as the Company may from time to time specify to the lessee”. “Specified Beers” were defined as: “beers of the types set out in Part A of the Appendix hereto… which are represented by the brands or denominations of beer stated in the Company’s Price List last issued before the date of the agreement…”
“36 It is clear from Article 6 (1) … that the exclusive purchasing obligation on the part of the re-seller relates solely to certain beers or to certain beers and drinks specified in the agreement. The purpose of requiring that they be so specified is to prevent the supplier from unilaterally extending the scope of the exclusive purchasing obligations. A beer supply agreement which refers, as regards the products covered by the exclusive purchasing agreement, to a list of products which may be unilaterally altered by the supplier does not satisfy that requirement and thus does not enjoy the protection of Article 6 (1).”
“58 The principal ground for excluding beer supply agreements containing a specification of the purchasing obligation by type of beer from benefiting from the Block Exemption thus required, in the present case, recourse to that clause. It follows that the Bass standard leases fail to comply with the conditions of [the Block Exemption] solely because of a purely technical matter which does not, however, prevent those agreements from complying with the spirit of that regulation. 59 In those circumstances the Commission was right to refer, in the context of the examination of the possibility of granting an individual exemption, to the framework of analysis provided by the regulation.”
“[A] close analysis of Arts 6, 7 and 8 … shows that it is only the type of beer or other drink which must be specified in the contract, and that these articles do not require the brand or trade mark to be so specified, so that the supplier is at liberty to add or vary the brands or trademarks to which the tie extends by amending his price list from time to time, although he may not extend the scope of the tie by adding further types of drinks. That is the submission which is made to us on behalf of the plaintiff, and I, for my part, find it convincing.”
“I am not yet convinced that a supplier can unilaterally extend a list of commodities as to which the tenant is bound by the tie.”
“There is no express requirement in [the Block Exemption] that the specification required must be by brand or denomination. Article 7 (1) (a) refers to beers supplied under the agreement as of a type; the tenant may be precluded from selling beers of that type supplied by other undertakings. Thus, the comparison between the agreement beers and those which he may not sell is by reference to the type of beer. The same comparison is apparent in Article 7 (1) (b), and there appears to be an assumption that the agreement will identify beers by type. Article 7 (2) defining drinks of the same type by reference to “their composition appearance and taste”, is consistent with the interpretation of Gibbs Mew. Article 8 (2) (b) requires the tenant to have the right to obtain from other undertakings non-beer drinks “of the same type” as those supplied under the agreement but which bear different trademarks. “Type” there cannot mean brand or denomination. The regulation, in short, does not point to the specification having to be by brand or denomination but is consistent with it having to be by type. The present case differs from Delimitis in that in the lease itself are specified the types of beer and other drinks. The landlord cannot unilaterally enlarge the scope of the tie beyond those types. The landlord can change the brands or denominations on the price list, but unless it has freedom to do that, no brand or denomination could be added to or removed from the price list without a variation of the lease itself, requiring the tenants consent. That consideration seems to me to add practical force to the considerations based on the language of [the Block Exemption] which persuaded the majority in the Greenalls case.”
“217 My understanding ofsection 3 of the European Communities Act 1972 (as amended) is that questions as to the meaning of any community instrument (like the Block Exemption) are questions of law and are to determined as such in accordance with the principles laid down by any relevant decision of the ECJ or the CFI. In my view I am obliged by the statute to apply the law as declared by the CFI in the two cases to which I have referred. That obligation overrides my normal duty to regard myself as bound by decisions of the Court of Appeal. Therefore, if Inntrepreneur needed the protection of the Block Exemption, my decision would be that it did not qualify for it because the Inntrepreneur beer ties were ties by type, and the meaning of the Block Exemption (as definitively determined by the Court of First Instance) is that such ties cannot come within the terms of the exemption.”
“221 …. I find it difficult to believe, that, in so far as the reference to special commercial and financial advantages requires a factual examination at all, the examination can be expected to be performed, not merely with hindsight, but also individually on a tenant by tenant basis. Taking the Inntrepreneur case as a whole and looking at it at the time when the leases, including the beer ties were being negotiated and entered into, the theory was that, although the lessees were tied, they would get something in return in the form of lower rents than they would have had to pay if they had not been tied. I am inclined to think that that would be sufficient to refute this particular ground on which Mr. Crehan seeks to argue that Inntrepreneur cannot bring itself within the Block Exemption, even though Mr. Crehan himself was an exception to the norm and did not pay lower rents than would have been charged to an untied tenant.”
“For the purposes of all legal proceedings any question as to the …. meaning or effect of any Community instrument shall be treated as a question of law and, be for determination as such in accordance with the principles laid down by and any relevant decision of the [ECJ] or any court attached thereto.”
“[I]t seems to me that there could, in theory, come a time during the currency of the lease when no special commercial or financial advantage accrues to the tenant by reason of the tie. There could, in theory, be a time when a market rent for a public house without a tie was no different from the market rent of the public house with a tie. That may seem unlikely: but improbable things do happen.”
“225 Counsel for Inntrepreneur argue that Mr. Crehan was a voluntary participant in the transaction. He did not have to enter into the agreements for leases if he did not want to. That is true, but in my judgment it does not approach the sort of situation which the ECJ had in mind …. the beer tie provisions were in the leases of The Cock Inn and The Phoenix because Inntrepreneur put them in its standard form of lease. Inntrepreneur at the time was not willing to take the provisions out of the leases, and it was not willing to consider any variations to them in negotiations with a prospective lessee or his advisers. There was no equality of bargaining power between Mr. Crehan and Inntrepreneur. Indeed the ECJ effectively recognised as much in a passage where it refers with approval to an observation which had been made to it both by the Commission and by the United Kingdom Government ….”
“And it is quite clear that if respondents were injured, it was not ‘by reason of anything forbidden in the antitrust laws’: while respondents’ loss occurred ‘by reason of’ the unlawful acquisitions, it did not occur ‘by reason of’’ that which made the acquisitions unlawful. We therefore hold that [for] the plaintiffs to recover treble damages … they must prove more than injury causally linked to an illegal presence in the market. Plaintiffs must prove antitrust injury, which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.”
“Article 81 is about distortions of competition, but it is not about the particular kind of distortion which Mr. Crehan says affected him personally. Mr. Crehan says that the beer tie distorted competition between himself and other pubs which were free of tie, especially The Angel. It may have done that, but the distortion which Mr. Crehan needs to show as the first stage in his claim for damages under Art. 81 is distortion at a different place in the market altogether. He needs to show that the beer ties, taken together with other networks which also contained tying provisions, distorted competition between, on the one hand, aspiring entrants into the market for distributing beer to on-trade outlets and, on the other hand, incumbents already established in that market.”
“Of course, if he can establish the initial proposition that the beer tie was illegal by reason of Art.81, the case moves to the next stage: did the illegality cause the loss for which Mr. Crehan seeks redress?”
“14.2 For the reasons explained in the Skeleton Opening [Inntrepreneur] submits that the loss claimed by Mr. Crehan is not a loss against which he is entitled to be protected. 14.3 Mr. Crehan did not address the heads of recoverable damages in his opening, and [Inntrepreneur] reserves the right to answer any submissions on this question which he may make in closing.”
“In my opinion this argument by Inntrepreneur cannot stand with the CJEC’s decision in Mr. Crehan’s own case. It would make the whole decision pointless. The CJEC was specifically considering whether a publican lessee (not, for example, a brewer based in another member state) could have a claim for damages on the ground that his lessor’s conduct infringed Art. 81. By giving the answer that he could, the Court must have taken it for granted that this particular defence being put forward by Inntrepreneur could not be maintained. Otherwise the Court would have been wasting its time, and would have known it.”
“I do not agree with this. In my view it would put a gloss on the decision of the CJEC in Mr. Crehan’s own case which would not have been intended by the Court and which would substantially emasculate the decision. The decision of the Court is that a person may have a claim for damages flowing from an agreement if two conditions are satisfied. The first condition is that the agreement is in breach of Art.81. The second condition is that the agreement causes damage to the particular claimant. It is true that the agreement will only be in breach of Art. 81 if it may affect trade between member states, but that is relevant to the first condition. I see no basis in the CJEC’s decision for somehow interpolating the factor of affecting trade between member states into the second condition. That would be to read the Court’s decision as if it said that a person who is harmed by an agreement which infringes Art. 81 has a claim for damages, but only if he himself wishes to engage in trade with other member states and is prevented from doing so by the agreement. That is not what the Court said, and in my opinion it is not what the Court meant either.”
“Is the party claiming relief entitled to recover damages alleged to arise as a result of his adherence to the clause in the [tied house] agreement which is prohibited under Art.81?”
“Article 85 of the Treaty precludes a rule of national law under which a party to a contract liable to restrict or distort competition within the meaning of that provision is barred from claiming damages for loss caused by performance of that contract on the sole ground that the claimant is a party to that contract.”
“[Mr. Crehan] contended that [Courage] sold its beers to independent tenants of pubs at substantially lower prices than those in the price list imposed on [Inntrepreneur] tenants subject to a beer tie. He contended that that price difference reduced the profitability of tied tenants, driving them out of business.”
“Inntrepreneur’s answer, supported by expert evidence from Mr. Haberman, is that he would not. Mr. Crehan, on the other hand, is convinced that he would have survived, and expert evidence to that effect was given on his behalf by the accountancy expert, Mr. Main. My view (very much on the balance of probabilities, and not something on which I am confident that I am right) is that he would have survived – just, and with a struggle.”
“Reviewing all of the foregoing matters I come, on the balance of probabilities, to the conclusion, in agreement with the opinion of Mr. Main, that if Mr. Crehan had been free of tie throughout and had been paying a market rent for free-of-tie pubs, not an inflated rent for free-of-tie pubs, his business would have survived the first three critical years. He and his wife might have had to give up their house in Bedfont, and I think that survival of the business would have been a close-run thing. But I do think that Mr. Crehan would have survived – just – and, if I was in favour of him on the issue considered earlier of whether the beer ties in his leases infringed Art.81, I would conclude that the infringement of the article did cause the failure of the business and thus caused losses to Mr. Crehan.”
“The resolution is in my view to take a capital value for the hypothetical business at the time at which it became clear that it could not proceed, that is, when it was lost. That is the best reflection of what UYB….. [has] been deprived of. That value should be based on the value which the business would have fetched in the open market at that date. That figure will reflect the fact that the new purchaser would be running the business and taking the risks in place of UYB. It would reflect the market view of the value. It will carry appropriate interest commencing at the date of the valuation.”
“that sum of money which will put the party who has been injured, or has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation.”
“I accept that Mr. Main has conscientiously taken account of developments between 1993 and 2003 in so far as he knows of them, and judges that they could have impacted on the businesses of The Cock and Inn and The Phoenix. For example, he has noted that part way through the period a new and large Wetherspoons pub opened quite close to The Cock Inn and The Phoenix (about the same distance away as The Angel), and he has considered what impact that might have had: by itself it might have had a downward effect on trade at The Cock Inn and The Phoenix. To the opposite effect he has observed that in 1997 a new shopping centre was opened near to The Cock Inn and The Phoenix: passing trade from that development could be expected to have a good effect on turnover. However, 10 years of trading is a long time, and there must be a real possibility that if Mr. Crehan had remained in the pubs for that period, something unforeseen could have gone wrong. I realise that a contingency provision is normally made in a forecast for the future, and that I am now looking back over ten years which have already elapsed. I nevertheless believe that it is appropriate to scale down Mr. Main’s figure by 15 per cent for unidentified contingencies.”
“On the basis that a free of tie tenant had achieved the performances set out by Mr. Main, and could demonstrate that he had, it is agreed that the Leases could have been sold for a premium. Mr. Day states 2.5 Years Purchase on maintainable net profit after rent to include the value of the trade inventories. Mr. Butters believes the range could have been 1.5 to 2.5 Years Purchase in 1993. If the two leases had been sold together as a package then there could have been a premium attached to the sale to reflect the additional discounts available.”