Although the effect on trade by a contract as a whole is being examined in view of Article 85 (1)**, it are in principle only those provisions of the agreement which restrict competition that are null and void under Article 85 (2), provided they are severable from the agreement^. As mentioned at 2.2.5.2. above, the effect of the nullity of the infringing provisions on the remainder of the agreement is not governed by Community law but
Peterbroeck, see footnote 42 supra, is an example where Belgian case law allowed for exceptions for new pleas alleging breach of a limited number of principles of domestic law, in particular time-bar of the right to charge tax and the force of res judicata.
The effect on trade may not have been caused by the particular restriction of competition (only). In Windsurfing v Commission, case 193/83 [1986] E.C.R. 611, the Court held that if the agreement as a whole affects trade between Member States, Article 85 may be infringed even if the restrictions of competition do not affect such trade.
See, for example. Société Technique Minière v Machinenbau U l m . case 56/65 [1966] E.C.R. 235, at 250, Société de Vente de Ciments et Bétons v Kerpen & Kerpen. case 319/82, [1983] E.C.R. 4173; Delimitis v Henniger Bràu C234/89, [1991] E.C.R. 935.
by applicable national law*®. The Community Court did not lay down a Community-wide principle of severance and it is thus a matter for the national court, applying domestic doctrines of severance to decide whether enough remains of the contract to be enforceable.
Where the infringing provisions cannot be severed, the entire agreement will be void. This is mostly the case where the parts infringing EC competition law cannot be considered separately from the other parts of the agreement, in other words, if the other parts form a compensation for the prohibited part or if those other parts have no individual possibility of existence. It does not seem possible to sever an agreement in order to bring it within a block exemption*®.
The doctrine of severance pursuant to application of article 85 (2) is something which should be kept in mind when entering into -, or drafting a contract which might be challengeable under EC competition law®°. It may not always be desirable that the remainder of an agreement stands. The bargaining power may have shifted as a result of the nullity of certain clauses. The result of subsequent litigation might be the enforcement of the residue of the agreement which does not include the features for which
*® Société Technique Minière v Machinenbau Ulm G m b H , case 56/65, 30.6.66, [1966] E.C.R. 235, [1966] C.M.L.R. 357, C.M.R. 8047. Here the Community Court held that:
"the automatic nullity provided in art 85 (2) applies to all contractual provisions which are incompatible with art 85 (1). The consequences of that nullity on all other elements in the agreement are not the concern of Community law" .
*® Delimitis has done away with this possibility for the national court when the Community Court ruled that the agreement as a whole will have to come within the four corners of the block exemption. See paragraph 38 and 39 of the judgment, discussed at 5.5.2.2. below.
Some firms provide for detailed clauses in the contract to apply, in so far as the law permits, in the event of severance.
it was originally concluded^. It will depend on the forum's doctrine of severance and the discretion of the judge how far the remainder of an agreement must differ from the original agreement before a national court will decline to enforce it.
The fact that the effect of invalidity is left to national doctrines of severance allows for divergencies throughout the Community and may lead to different levels of protection in different Member States. Whish commented:
"It is undesirable that a procedural issue such as this should be left to national law: it means that the enforceability of a contract may vary from one Member State to another, whereas the impact of Article 85 (2) ought to have uniform effect throughout the EEC"“ .
At 2.2.5.2. above, mention was made of the same nullifying effect in respect of contractual terms infringing Article 86. The impact of this invalidity raises the same question of severability” .
It is submitted that it might not be too complicated, in terms of legality, for the Community Court to issue guidelines in case law, for a harmonised doctrine of severance to apply in
” See also Butterworth's Competition L a w . XI, ed. Smith, para 14 9. In Chemidus Wavin Ltd v Soc. pour la Transformation et l'Exploitation des Résines Industrielles S A . [1977] FSR 181,
[1978] 3 C.M.L.R. 514 at 519, Lord Justice Buckley said:
"It seems to me that in applying Article 85 to an English contract one may well have to consider whether, after the excisions required by the Article of the Treaty have been made from the contract, the contract could be said to fail for lack of consideration or any ground, or whether the contract could be so changed in its character as not to be the sort of contract that the parties intended to enter into at all".
A similar uncertainty in respect of how to deal with a comfort letter and the issue of severance was expressed by Deputy Judge Barnes QC in Inntrepreneur Estates Ltd v Mason (unreported, judgment of 11 March 1993), [1993] 2 C.M.L.R. 293.
” Whish, Competition Law. 1993, 3rd ed, p 323.
” At least the task of a national judge is not complicated here by provisional validity for old agreements or notification of the agreement to the Commission. See 5.2.1. and 5.2. - 5.6 below.
the event of infringements of Article 85 or 86. It seems that Article 3 (g) and Article 5 of the Treaty would provide sufficient justification for such guidelines. So far, the Court has refrained from doing so®V
In practice, many cases involve the performance of contractual obligations and Article 85 is thereby invoked as a defence. If this defence succeeds, the court may decide to simply dismiss the claim and refuse to enforce the contractual obligation in issue. The question of how the nullity of the clause the plaintiff sought to enforce may affect the remainder of the agreement may then not arise.
2.2.5.5. Remedies
Remedies, arising out of infringements of Article 85 (1) or 86, may include injunctions (mandatory or prohibitive)^, declarations that the agreement is not within Article 85 or 86, restitution®® and damages®''. Claims can arise under both private and public law but this is a somewhat artificial distinction made under English law. It does not matter whether the body sued is a public or private undertaking. Both are subject to Articles 85 and 86 although some public bodies may in certain circumstances be able to rely on a defence based on Article 90 (2) of the EC Treaty.
National courts must make use of their own domestic rules to give effect to the rights derived from Community law.
See for its comments on severance in Delimitis 5.5.2.3. below.
® Cutsford V Mansfield Inns. [1986] 1 C.M.L.R. 1, Holleran and Evans v Thwaites pic [1989] 2 C.M.L.R. 917. See also 1.4.2. supra.
®® Restitution of moneys paid under a contract void under Article 85 (1) might be difficult to obtain since it is unlawful to enter into an agreement prohibited by art 85 in the first place, see Goff and Jones: The Law of Restitution. 3rd ed, 1986. ®’ See 2.1. supra. See on remedies generally and in the context of UK law. Green and Robertson, Commercial Agreements and Competition L a w , 2nd ed, 1997, p 386 -392.
Community law only prescribes that remedies must be non- discriminatory, real and no less effective than they would have been in similar circumstances under domestic law^®. This principle was spelled out by the Community Court in Rewe v Hauptzollamt KieV^ and Amminis tr azione delle Finanze dello Stato V San Georgrio“ . See also 1.4.2. supra and paragraphs 10 and 11 of the Commission's Notice on cooperation with national co u r t s ^ .
Again, the available remedies will differ in each forum. Some may allow exemplary damages and restitutionary remedies. Most EC Member States allow remedies based on contract and tort, subject to small divergencies, but in the UK, a breach of Community law is classified as a breach of statutory duty” .
” See for cases decided by the Community Court, for example, San Georaio case 199/82 [1983] E.C.R. 3595, Rewe v Landwirtschaftskammer Saarland case 33/76 [1976] E.C.R. 1989, Comet V Productschap voor Sieraewassen case 45/76 [1976] E.C.R. 2043, Just V Ministry of Fiscal Affairs case 68/79 [1980] E.C.R. 501.
Examples of cases decided by national courts are: Johnson V Chief Constable of the Royal Ulster Constabulary case 222/84,
of 15.5.86, BMW, judgment of 23.10.79 [1980] E.C.C. 213, Union
de Remorquage et de Sauvetage v Schelde Sleepvaartbedrii f [1986]
C.M.L.R. 251, Cadbury Ireland v Kerry Cooperative Creameries