Opinion of the Advocate-General
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My Lords,
Article 2 of Council Regulation ( EEC ) No 1017/68 ( Official Journal 1968, L*175, p . 1 ) applying rules of competition to transport by rail, road and inland waterway, prohibited as being incompatible with the common market, inter alia, agreements between undertakings liable to affect trade between Member States which have as their object or effect the prevention, restriction or distortion of competition within the commmon market, and in particular those which :
"( a ) directly or indirectly fix transport rates and conditions or any other trading conditions;
( b ) limit or control the supply of transport, markets,
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( d ) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
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There is no obligation to notify such agreements but by Article 5 the prohibition may be declared inapplicable with retroactive effect to such an agreement as contributes e.g . to improving the quality of transport services, or their continuity or stability if otherwise subject to temporal fluctuation, and which at the same time takes fair account of the interest of transport users without imposing unnecessary restrictions or eliminating competition .
By Decision 85/383 of 10 July 1985 ( Official Journal 1985, L*219, p . 35 ) the Commission declared that an agreement made between the Association nationale des travailleurs independants de la batellerie (" Antib ") and the Chambre syndicale nationale des courtiers en frêts fluviaux and dated 13 June 1983 infringed Article 2 of the regulation in so far as it impaired the normal operation of competition; the Commission refused to grant an exemption under Article 5 .
Antib asks the Court to annul that decision .
The background to the dispute is in summary this . Goods are carried on French inland waterways either by owner-boatmen ( usually having one vessel each ) or by operators of a large or small fleet of boats . General cargo is more usually carried under a voyage charter though owner-boatmen can, though do not commonly, carry pursuant to a time charter of their vessels . For larger cargoes tonnage charters are arranged by the fleets or by groups formed by owner-boatmen . Voyage charters ( other than for voyages beginning in France and passing along the Rhine and the Moselle ) are arranged at official government exchanges through the intervention of forwarding agents, where cargoes and vessels available are listed, and where a queue system operates, the first vessel on the list having the first choice of cargo . Vessels not registered in France can join the queue when they complete an outward trip into France but only to carry goods by inland waterways out of France or to the French border .
Prior to the events at issue in this case it seems that inland waterway carriers had been losing business to carriers by road and rail .
Antib is a trade association, set up in 1978 pending the establishment of a national chamber of waterway carriers, whose members pay a subscription and a levy of 0.5% on freight earned .
Non-incorporated firms and individuals having at their disposal one or more vessels registered in France and engaged in inland waterway carriage of goods can become members, as can non-incorporated carriers of non-French nationality if they fulfil the definition laid down, but they do not have the right to vote .
The establishment of this national chamber ( known as the Chambre nationale de la batellerie artisanale (" CNBA ") was provided for in Act 82-1153 of 30 December 1982, although the idea of forming it had been mooted for some years previously . Its method of operation was laid down in Decree 84-365 of 14 May 1984 . It seems that despite the original intention to wind up Antib once the CNBA existed, this has not yet been done .
A government report proposed that in addition a boatmen' s cooperative be set up . This was provided for by Act 83-657 of 20 July 1983 which laid down that cooperatives in inland waterway transport be formed of inland waterway carriers registered with CNBA - a provision which the Commission took to mean that owners of vessels not registered in France could not be members of the cooperative, to be known as the Entreprise artisanale de transport par eau (" EATE "). That limitation to French-registered vessels was expressly enacted in the aforementioned Decree 84-365 of 14 May 1984, which provided in Article 3 that enterprises carrying goods by inland waterway where the vessels were registered in France must be included on the CNBA register, but which made no provision for non-French carriers to be registered .
The agreement of 13 June 1983 between Antib and the forwarding agents' syndicate, which is at issue in these proceedings, provided that a new organization of "transport fluvial artisanal" was to be applied from that date . Separate rates were fixed for transport internally and for export by inland waterway . Those for export included a "cotisation EATE", fixed at 10% on freight resulting from the operation of the queue system . The subscription to EATE was to be taken as a preferred sum from the gross freight . After deduction of statutory and customary dues, a commission on the charter of 7.5%, a del credere commission of 0.5% and a subscription in favour of Antib ( eventually to go to the CNBA ) of 0.5% on such freight, such part of the EATE levy as was not repaid to the members of EATE was to be used for EATE' s administration expenses and for commercial purposes for the benefit of the profession, as decided by a committee composed of representatives of EATE and the forwarding agents' syndicate . 5% out of the forwarding agents' commission also went into the regulation fund . In addition the French Government made a substantial contribution . Since EATE was not yet in existence, the levy was to be dealt with by BASC, the commercial arm of Antib .
Belgian and Netherlands carriers quickly protested about this new scheme which they considered to be unfair and adversely to affect their ability to compete . Following an investigation, the Commission concluded that this agreement between associations was discriminatory, was liable to affect trade between Member States and did distort competition . In the first place the charges were levied only on export cargoes which in respect of trade from France to Belgium and the Netherlands ( called north-south traffic ) was said to be shared almost equally between French carriers and Belgian or Dutch carriers ( paragraph 19 of the decision ) and in respect of all international traffic was said to be accounted for as to "almost half" by foreign carriers ( paragraph 48 ). Only French carriers received the refund so that foreign carriers were at a competitive disadvantage . Moreover, the major new business obtained by EATE with the funds collected was largely for the benefit of French carriers in inland traffic from which non-French carriers were largely excluded . French carriers on purely inland routes, who did not pay the levy, received benefits from new contracts and an improved operating system, whereas foreign carriers who paid it got no comparable benefits on internal routes . Such benefits as they did receive by way of increased trade on external routes did not match or outweigh the disadvantages resulting from the discriminatory manner in which the levy was collected and refunded . Nor was such benefit proportionate to the amount of their contribution . Moreover, the conditions required to be fulfilled to justify an exemption were not satisfied .
The levy was collected for some four months from June to October 1983 and had ceased to be collected before the decision was taken . Antib does not take any point on this . It is right not to do so . In Case 7/82 GVL v Commission (( 1983 )) ECR 483 the Court recognized that the Commission may have a legitimate interest in issuing a decision that conduct which has already been terminated was unlawful . A fine may still be appropriate . Of wider significance, it may be right to issue such a decision so that the legal position can be clarified or to prevent further infringements .
It is also clear that in those four months substantial sums were involved and some FF*5*million French francs were received by way of the levy of which 2.21*million came from non-French carriers .
It seems to me that this levy was beyond doubt discriminatory, in favour of those French carriers who signified their intention to join EATE ( in particular those who operated inland carriage ) and to the detriment of those who did not or could not, in particular those carriers whose vessels were not registered in France and who substantially were limited to export or frontier carriage and who paid the levy but received no refund .
Antib contends that even though the levy was discriminatory it did not have as its object or effect the prevention, restriction or distortion of competition within the common market . In the first place it is said that the real benefit alleged is the increase in, and improved conditions relating to, internal traffic . Here there was no competition since non-French owners were largely excluded . Therefore, there could be no competitive disadvantage for non-French owners . This argument seems to me somewhat unrealistic . It is true that the foreign owners did not compete on the inland market . The Commission' s decision, however, is clearly directed to the external market . The fact is that the non-French owners paid the levy and did not get it back . French owners on that market paid the levy and, subject to deductions, got part of it back . Since for external trade there was no fixed floor rate for freight, even though rates may have been influenced by the internal traffic floor rates, there was a possibility of competition in regard to rates . For one group of traders to get 90% of the freight agreed and for the other to get that amount plus a refund ( which Antib has not suggested is insignificant in amount ) cannot but make the competitive position of the former disadvantageous . Moreover, those French carriers who paid the levy got collateral advantages resulting from their participation in the internal traffic - more cargoes, payment for empty trips and waiting time, an improved commercial position - from which the non-French owners were largely excluded . In both these respects - refunds and collateral advantages - the French owners' competitive position on the external market was or was capable of being strengthened . Not only did they get a refund but the more they received by way of earnings on the internal market the better were they able to offer competitive rates and services on the external market . Accordingly, in these two respects, in my opinion competition on the external market was distorted and additionally, within the meaning of Article 2*(d ) of the regulation, the agreement did "apply dissimilar conditions to equivalent transactions ".
Antib says, however, that this is a misconception . Any benefits enjoyed by French owners were not due to the effect or object of the agreement but to French legislation which made it largely impossible for non-French owners to participate in the internal market . On the basis of the Court' s decision in Joined Cases 40 to 48, 50, 54 to 56, 111, 113 and 114/73 Suiker Unie and Others v Commission (( 1975 )) ECR 1663 there can accordingly be no breach of the competition rules . Therefore, the Commission erred in law .
This argument, in my view, is fallacious . The French legislation relates primarily to internal traffic and, in the absence of appropriate measures from the Council liberalizing the provision of transport services between Member States, it has not been suggested that it is incompatible with Community law . The decision, on the other hand, looks at the competitive position on the external inland waterway market . Nothing in the French legislation required the refund of the levy to be limited to French carriers, nor did it require that a levy on external trade be used predominantly to procure improvements in the commercial position of French owners on the internal market . It did nothing to require that non-French carriers who had paid the levy should receive, relatively, disproportionately small benefits from their contributions . This resulted from the agreement and only from the agreement . The parties were perfectly free, under French law, to devise a scheme which did not produce these distorted effects - and it is not without interest that legislation subsequent to the termination of the levy under the agreement imposed a parafiscal charge on all carriage both internal and international with, it seems, no refund limited to French carriers ( Decree 84-282 of 9 April 1984 and Finance Law of 1985 ).
The applicant' s second argument is that the Commission' s criticism of the way in which the levy was refunded is misguided . While a prerequisite of eligibility for refund of the EATE levy was a demonstration of intent to become a member of EATE, the Commission' s reasoning is based on the assumption that no foreign carriers could join EATE . This, according to the applicant, was not the case during the period in which the levy was charged .
The applicant points out that EATE' s articles of association, which were in existence during the relevant period, laid down no restrictions based on nationality . Rather, they provided ( so far as relevant ) that any "artisan batelier" could become a member pending the creation of the Chambre nationale de la batellerie artisanale ( CNBA ) after which time EATE members must also be members of the CNBA . While it is true that French law restricted membership in the CNBA to French-registered boatmen, the relevant decree was not passed until 14 May 1984 or over seven months after the levy ceased to be charged on 17 October 1983 . The applicant accuses the Commission of attributing an "amazing prescience" to Antib in saying that it was aware of the contents of legislation so long before it became law . Antib therefore maintains that the levy refund scheme was not discriminatory since the only reason for foreign boatmen not to have become eligible for levy refunds during the relevant period was their own failure to indicate an intention to join .
The Commission contends that, on the date it entered into the inter-association agreement, Antib must have been aware that only French-registered boatmen would be eligible for the refunds . The terms of the law restricting EATE membership to CNBA members were known on the date the agreement was signed, even though the actual law was not passed until the following month . Since the CNBA was to be an organization for promoting the interests of French boatmen, Antib must have known or expected that only French-registered carriers would be able to join - an expectation borne out when the relevant decree was passed on 14 May 1984 . Moreover, if there had been a realistic probability that foreign boatmen would be eligible for the levy refunds then Dutch and Belgian carriers would not have complained so strongly . In any event the Commission, as the decision states, would have objected to the inter-association agreement' s effect on competition even if foreign boatmen had been eligible for EATE membership : the benefits they derived bore no reasonable relationship to the contribution they made .
I find Antib' s argument somewhat surprising . Despite its assertions of incredulity, all indications are that Antib must have known that foreign boatmen would be ineligible for the refunds . The inter-association agreement, and indeed Antib itself, were designed to last only until EATE and the CNBA were established . It is difficult to believe that Antib was not informed of the legislative measures being contemplated by the French authorities, particularly as the restructuring of the sector had been under consideration for years .
This view is confirmed circumstantially by the complaints of the Dutch and Belgian boatmen . It is striking that when replying to their complaints set out in a telex of 13 June 1983, Antib in its telex of 14 June 1983 ( i.e . the day after the agreement was signed ) did not for one moment suggest that the Belgian and Dutch carriers could qualify for the refund by indicating their intention to join EATE . Moreover, it seems clear that if foreign boatmen had been eligible for refund of the EATE levy, as Antib claims, the entire regulation fund would have been repaid, leaving little or nothing for use in promoting the interests of Antib' s or EATE' s members . The plain fact is that no refund of any amount was at any time made to any non-French boatman . It seems to me on all the material before the Court that the Commission was fully entitled to conclude that the levy scheme was discriminatory . That would be its effect : that was its effect .
Antib' s next two arguments are intertwined . It is said that the Commission failed to appreciate the benefit to non-French owners from the agreement, alternatively that the reasons given are insufficient to justify the refusal of an exemption under Article 5 of the regulation .
The Commission has not denied that non-French owners got some benefits . Its case is that they were not proportionate to the level of their contributions and in any event that Article 5 is not satisfied when refunds are made only to some carriers, when those who do not receive refunds get no proportionate collateral benefits .
So far as the internal traffic is concerned it seems from figures put in evidence by the applicant and prepared by the Office national de la navigation, a division of the Ministry of Transport, that internal traffic in fact declined from 40*377*842 tonnes in 1982 to 36*535238 tonnes in 1983 and 33*619*153 tonnes in 1984 . These figures do not, however, distinguish between traffic subject to the queue system and other traffic . On any view it seems, as is agreed by the parties, that even if the volume fell in 1983, substantial contracts were obtained as a result of the new organization and that the decline in waterway traffic in relation to road and rail transport was arrested .
As to export traffic by inland waterways, the figures prepared by the ONN show that that the export traffic was ( rounded to the nearest 100*000 tonnes ):
( 1 ) in 1982, 5.6*million tonnes, of which French boatmen carried 45%, all foreign boatmen 55%, the Dutch and Belgians taking 42%;
( 2 ) in 1983, 5.7*million tonnes, of which the French carried 42%, all foreign boatmen 58%, the Dutch and Belgians taking 41%;
( 3 ) in 1984, 5.7*million tonnes, of which the French carried almost 42% and the foreign boatmen just over 58%, the Dutch and Belgians taking 42 %.
The total increase of tonnage for export by inland waterways from 1982 to 1983 was 104*000 tonnes, which is less than 2% of the 1983 total export tonnage . The foreign boatmen' s tonnage increased by 242*228 tonnes, though the combined Belgian and Dutch tonnage fell and was in both years percentage-wise less than the French total . The increase in 1983 was taken substantially by German and Swiss carriers .
It is thus right to say, as the Commission did, that the French carriers and the combined Belgian and Dutch carriers had broadly comparable proportions of the traffic in both 1982 and 1983 ( though the latter had marginally less ) but overall the totality of foreign carriers took more in each year than the French carriers alone .
The scheme operated for such a short period that it is obviously not possible to know precisely what effect the agreement had on these figures . Other factors may have been at play . The figures have thus to be regarded with some caution, not least since it is not known during which part of the year the increase took place .
Even, however, assuming that it was the effect of the agreement in the second half of 1983 which produced this increase, it does not seem to me that the figures support the claim made at the hearing that, as a result of the agreement, the non-French carriers increased their share of the available traffic "considerably", "spectacularly" or so as to give them an "infinitely superior share of the available export market ".
Thus, even accepting, as the Commission does, that the non-French carriers gained some benefit, it seems to me that the Commission was well entitled to accept that the increase was insufficient to offset the 10% levy paid by the non-French carriers and not refunded . This is largely a question of economic appraisal and I do not consider that any error of law, misdirection or unreasonableness has been shown in the Commission' s decision . Moreover, although the arguments in the case have developed certain details behind the Commission' s reasoning in the decision, it seems to me that, particularly in paragraphs 14, 47 to 50 and 56, the basis of the Commission' s approach and its calculation has been sufficiently set out for Antib to know how it approached the question and for the Court to review its legality . It is always possible with hindsight to pick holes in drafting, but, accepting as I do, contrary to the Commission' s contention, that the allegation of lack of adequate reasoning is raised in the application, and not merely in the reply, it seems to me that the allegation has not been made out in this case .
Accordingly, I consider that this application should be dismissed and that the applicant should pay the Commission' s costs .
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