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Block exemptions appear less precisely aimed than individual exemptions because they exempt large groups of agreements "en block" as a matter of general policy to free DG I V s limited resources from having to monitor individually, common kinds of agreement.

It is arguable, therefore, that stricter provisions of domestic competition law may be applied, in individual

IP/90/472 of June 1990.

Compare the draft, point 12, with the Commission's actual Notice, O.J. 1993 C 39/6, [1993] 4 C.M.L.R. 12, point 12. See

circumstances, to agreements benefitting from their protection^:. This has been done in the past. The UK beer supply report^^ is an example illustrating that the UK's Monopolies and Mergers Commission has not hesitated to look into those agreements and treat them more severely. The Commission allowed this to happen and was happy with the result^*.

Another justification for this view is the fact that some of the block exemptions include, or used to include, recitals expressly contemplating the application of stricter national competition laws^“®.

Opponents to the view that a block exemption is merely a concession from the application of Article 85 (1) , have argued that the recitals to each block exemption Regulation elaborate the reasons why particular agreements should be permitted and that this should be seen as a positive act on the part of the Commission from which national courts should not derogate through

An example of a stricter domestic rule is the UK Patents Act 1977, s 44 which forbids tie-ins in patent licenses which, in some circumstances, would be permitted by Regulation 2349/84 and its successor: the Technology Licensing Regulation 240/96. Whish, Competition L a w . 3rd ed 1993, p 40.

Report on the Supply of Beer for Retail Sale in the UK, (1989) Cm. 651. The MMC considered that some parts of Regulation 1984/83 (it did not say which) could not be considered sufficiently strict and could, by virtue of UK domestic law, be restricted further. According to the MMC, it followed from general principles of EC law that stricter domestic law could be used to halt adverse effects in the UK (point 12.118). Orders were made on the basis of the report, SI 2390/1989 and SI 2258/1989, that went further then the Commission could have done. See Korah and Rothnie, Exclusive Distribution and the EEC Competition Rules (2nd ed) 1992, at 8.26. See also Swift and Anderson, Developments in United Kingdom Competition Law and its Relationship with EC Law, [1991] Fordham Corporate Law Institute, at 528. In later reports, the MMC demonstrated a similarly independent attitude in respect of the Commission's policies. See Kon and Bara, A Fragrant Success before the MMC, [1994] 3 E.C.L.R. 165.

Commission Press Release IP/90/472 of 14 June 1990. See recital 19 to Regulation 1984/83 and recital 29 to Regulation 123/85. When the latter Regulation was replaced, upon expiry, by Regulation 1475/95, the recital in question was left o u t .

application of domestic laws.

It is submitted that this argument is even less convincing in respect of block exemption Regulations than in respect of individual exemption decisions (see above under B ) . The policy of the Commission was primarily to reduce its workload by disposing of the masses of notified agreements which, in themselves, would not necessarily have restricted competition in the first place, had the Commission not from the start interpreted the substantive scope Article 85 (1) so widely and had the notification system not been intended to monitor all agreements having some impact on competition or interstate trade.

Whish mentions another argument in support of the view that block exemptions may pre-empt stricter domestic rules.

"The block exemptions all confer power on the Commission to withdraw the benefit of the block exemption in particular circumstances. To allow a national authority to apply its stricter provisions would seem to run counter to t h i s " ^ ® °.

Today, however, the Commission is actively encouraging national courts to apply EC competition law (see section C above) and, although national courts cannot help the Commission in its application of Article 85 (3)“ \ by not pre-empting national courts from applying stricter domestic rules to certain agreements that appear to benefit from a block exemption, the national courts could again support the Commission. The domestic competition laws of more and more Member States become similar to Articles 85 and 86 and a domestic condemnation, in a particular Member State, of an agreement benefitting from a block exemption may involve much the same rationales as would a Commission decision to withdraw the benefit of a block exemption. This, again, may be a partial reason for the u-turn in the Commission's policy (see previous section C above).

Nonetheless, in the recent cases BMW v ALD and Bundeskartellamt v Volkswagen and VAG Leasing before the

Whish, Competition L a w , 3rd Ed. 1993, p 40. See 1.2.2. and 1.2.3. above.

Community Court, Advocate General Tesauro argued, in unequivocal terms, that the application of a block exemption and the existence of an individual exemption foreclosed action by national authorities under domestic competition law^^^.

Unfortunately, the Community Court did not reach the issue. It ruled that the agreements in question fell outside the relevant block exemption and consequently infringed article 85. The opinion of the Advocate General should therefore retain some persuasive authority. He took the view that:

"since the agreements in question are liable to affect trade between Member States and therefore fall in principle within the prohibition set out in Article 85 (1) , the [block] exemption granted to them cannot but prevent the national authorities from ignoring the positive assessment put on them by the Community authorities. Otherwise, not only would a given agreement be treated differently depending on the law of each Member State, thus detracting from the uniform application of Community law, but the full effectiveness of the Community measure - which an exemption under Article 85 (3) undoubtedly is - would also be disregarded.

Neither does it appear to me that a different conclusion may be reached with regard to agreements protected, not under individual exemption but under an exemption regulation. In that connection, it is sufficient to observe that exemption regulations - in the same way as Articles 85 and 86 - produce direct effects in relations between individuals and create rights directly in respect of the individuals concerned which the national courts must safeguard.

A National court is therefore bound not to take decisions which are incompatible with the provisions of an exempting regulation by extending its scope in relation to agreements which are covered by the exemption; if need be, it should first make a reference to the Court of Justice for a preliminary ruling under Article 177 of the Treaty. .

The Advocate General said that even a domestic prohibition based on "particular circumstances" would counter the principle

Opinion in Bayerische Motorenwerke AG v ALD Auto-Leasing D G m b H , case 70/93 [1995] E.C.L.R. I 3459, and Bundeskartellamt V Volkswagen AG and VAG Leasing GmbH, case C 266/93, [1996] 4 C.M.L.R. 505 delivered on 8.6.95, paras 38 - 41 and 51 respectively.

of supremacy of EC law unless they are of such a kind as to not give rise to any conflict between national law and Community law. He also referred to recital 29 in Regulation 123/85 as being contradictory and thought that the best interpretation would be that agreements, which are eligible for exemption under a provision of the Regulation, may be prohibited by national law, but only on the condition that this is expressly provided for by

some other provision of the Regulations^. It should be noted that in Regulation 1475/95, replacing Regulation 123/85, the recital was left out.

Until the Community Court has addressed the issue, the views set out in this opinion may be considered as an authoritative guideline but it should be kept in mind that Advocate Generals Roemer and Reischl have differed on this issue in the past^^. Advocate General Roemer stated in his opinion in Walt Wilhelm:

"If national authorities thwart the Community exemption through the application of a national rule of prohibition, they no more threaten the objectives of the Treaty than do the parties to an agreement when they refrain from applying it, which can occur at any time. This conclusion applies as a general rule because in principle cartels cannot be considered as instruments of the organisation of the Common Market

Should the opinion of Advocate General Tesauro one day be confirmed by the Community Court, which seems probable, the consequences for national courts will be momentous. They will have to enforce agreements benefitting from an individual or block exemption and ignore prohibiting provisions of domestic law. The consequence for business is that such agreements will not be subjected to the multiple control of stricter domestic provisions in the different Member States in which they operate

See points 40 and 41.

Advocate General Roemer in Walt Wilhelm v

Bundeskartellamt. case 14/68, [1969] E.C.R. 1, [1969] C.M.L.R. 100 and Advocate General Reischl in NV L'Oréal (Brussels). L'Oréal SA (Paris) v De Nieuwe A M C K . case 31/80, [1980] E.C.R. 3775, [1981] 2 C.M.L.R. 235.

and that national courts can ignore domestic prohibitions in private litigation.

Finally, it has never been suggested that an individual exemption or a block exemption Regulation precludes domestic actions in the field of lack of capacity, fraud or other provision of national law (commercial, fiscal, criminal etc.) not based on protecting competition which may be relevant^®’.