Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. By the present application, the French Republic seeks the annulment under Article 33 of the ECSC Treaty and the first paragraph of Article 173 of the EEC Treaty of the Agreement between the Commission and the Government of the United States regarding the application of their competition laws (hereinafter "the Agreement"), which was signed in Washington on 23 September 1991 and entered into force on the same date.
The French Government' s action, which is also supported by the Netherlands and Spanish Governments, is based essentially on the contention that the Agreement was entered into in breach of the Community rules on the power to conclude agreements, and in particular of Article 228 of the Treaty. In addition, the French Government alleges failure to state reasons and breach of the principle of legal certainty, as well as infringement of Community competition law.
2. It is appropriate to begin by recalling the circumstances of this dispute, and briefly to recapitulate the events which led to the conclusion of the Agreement in question.
Certain Council of the OECD recommendations, (1) concerning the application of procedural machinery for notification and consultation which the Member States have used on several occasions, (2) have a bearing on the issue of the so-called extra-territorial application of the rules of competition and the problems which may arise therefrom as regards the relationship between different kinds of legislation of different origin. In particular, it is necessary to bear in mind the Recommendation of 21 May 1986, which amended and replaced the previous Recommendation of 25 September 1979 concerning cooperation between Member countries on restrictive business practices affecting international trade. (3) Equally significant is the later Recommendation of 23 October 1986 concerning cooperation between member countries "in areas of potential conflict between competition and trade policies".
It is precisely the OECD' s 1979 recommendation, as amended in 1986, which served, according to the Commission itself, as a frame of reference for the definition of some of the issues relating to the extra-territorial application of the rules of competition which frequently arose between the United States and the EEC and were subsequently resolved under the contested Agreement.
3. Noting that the changes which had occurred in the international economy in recent years called for more ambitious objectives, in particular the drawing up of a "legally binding document rather than a non-binding recommendation", with a more incisive and innovatory content, (4) the Commission suggested to the United States authorities, in the course of meetings held at the end of 1990, the possibility of negotiating an agreement formalising relations between them, hitherto founded on a voluntary basis within the context of OECD recommendations, with a view to establishing closer cooperation based on a binding act.
Negotiations proceeded swiftly and a practically definitive text was already available in July 1991. The draft agreement was thus forwarded to the national authorities of the Member States responsible for competition, accompanied by an Explanatory Note stating inter alia that the act in question constituted an "administrative" arrangement.
4. At the meeting on 5 September 1991, organized by the Commission in order to enable the representatives of the Member States to submit their observations, certain States expressed reservations regarding the legal basis of the Agreement and in particular the Commission' s power to conclude it, as well as on the need for a negotiating brief from the Council also concerning the responsibility of the Communities. They also raised questions concerning other aspects of the Agreement, such as the protection of the principle of confidentiality and the consultation procedures, and therefore asked for another meeting to be held so as to enable the working party of national experts to discuss the act in question. However, the Commissioner responsible for competition ruled out that possibility so far as matters of principle were concerned, in particular as to whether it was advisable to conclude a cooperation agreement with the United States in the chosen form; he agreed to a further meeting only on condition that the national experts confined themselves exclusively to the technical aspects. At the meeting on 9 September, the national experts accordingly confined themselves to technical considerations, some of which were subsequently incorporated in the draft agreement.
On the following day, namely 10 September 1991, it is clear from the minutes of the meeting that the Commission approved the draft agreement and authorized its vice-president to draw up the final act and to sign and conclude the Agreement itself on behalf of the institution.
The text of the Agreement, signed in Washington on 23 September by the Attorney-General and the President of the Federal Trade Commission, on behalf of the Government of the United States, and by the Commissioner responsible for competition on behalf of the Commission, was forwarded to the Member States by letter of 7 October 1991 from the Director-General for Competition (DG IV).
5. The stated purpose of the Agreement is to "promote cooperation and coordination and lessen the possibility or impact of differences between the parties in the application of their competition laws" (Article 1(1)). Its aim is therefore to avoid, through prevention, any conflicts arising from the extra-territorial application of the rules of competition.
To that end, activities relating to the supervision and enforcement of the rules of competition (5) must be notified whenever they may affect the interests of the other party (Article 2). Provision is made for the exchange of information between the competent authorities of each party at meetings to be held at least twice each year (Article 3) and for cooperation and coordination (Article 4) which, as is clear from the provision in question and as emphasized by the Commission, may "even involve cases in which one of the parties may take the lead in the enforcement activities, whilst the other party refrains from duplicating those activities or it may involve allocating particular aspects of the enforcement activity between the parties". (6) Thus, whenever interests coincide in cases concerning both the Community market and the United States market, the authorities may divide between them the task of conducting investigations.
Cooperation regarding anti-competitive activities in the territory of one party that adversely affect the interests of the other party also entails ° an innovation in respect of similar agreements ° "positive comity" (Article 5). In particular, the Agreement lays down that each contracting party may request the other to consider its interests and to initiate an investigation in relation to anti-competitive activities which are carried out on the territory where the authority to whom the request is addressed has its seat and which may affect the market protected by the authority making the request.
Alongside that procedure, provision is made for "traditional comity", that is to say the obligation to take due account of the important interests of the other party "in decisions as to whether or not to initiate an investigation or proceeding, the scope of an investigation or proceeding, the nature of the remedies or penalties sought, and in other ways, as appropriate" (Article 6). In applying that provision, the parties are required to comply with certain principles, which are listed in detail. Provision is also made for consultation with regard to any matter related to the Agreement (Article 7) and the form of communications between the competent authorities (Article 10).
Reference should also be made to the provisions on the confidentiality of information, which neither party is required to provide if disclosure is prohibited by the law of the party possessing the information or would be incompatible with important interests of that party (Article 8); and to the provision that the interpretation of the Agreement cannot be inconsistent with the existing laws of the parties, nor can it require any change in such laws (Article 9). Finally, provision is made for the possibility of terminating the Agreement by giving two months' notice (Article 11(2)) and for the obligation of reviewing its operation two years from the date of its entry into force, especially with a view to determining whether the parties' interests could be better served through closer cooperation (Article 11(3)).
6. The Agreement, as outlined above, lays down a number of instrumental and procedural requirements aimed at coordination to prevent the difficulties which arise from the applicability of several rules of competition to the same set of facts.
The French Government' s action, as I said earlier, seeks a declaration that the Agreement is unlawful, essentially on the ground that the Commission lacked the power to conclude it. The breach of the principle of legal certainty complained of and the submission based on breach of Community competition law also amount, as we shall see, to alleging that the Commission lacked power to conclude an agreement of that kind.
Before the substance of the case is considered, some preliminary remarks are called for regarding the admissibility of the application.
Admissibility
7. As we know, under the first paragraph of Article 173, the Court reviews the legality of acts of the institutions "other than recommendations or opinions". According to the relevant case-law, however, for the purposes of judicial review, it is not the form of the act which matters but its effects and its content which must be verified. (7) The Court pointed out in the AETR judgment (8) that an action for annulment must be available against "all measures adopted by the institutions, whatever their nature or form, which are intended to have legal effect".
As regards the question whether an act is capable of having legal effect, it is sufficient to note that the Commission itself, while describing the Agreement as a minor one, does not deny that it imposes obligations on the contracting parties, that is to say it is an act intended to have legal effect, (9) as we shall see in due course (paragraphs 18 to 22 below).
8. Since France has formally challenged the Agreement as such, however, it is essential, so far as concerns the admissibility of the application under consideration, to turn to the question whether an agreement may be regarded as an "act of the institutions" within the meaning of Article 173, and, if not, whether the application may be regarded, as the French Government maintained at the hearing, as aimed by implication against the Community "decision" which authorized the conclusion of the Agreement.
The Commission, for its part, while raising the question whether the French Government should have challenged, not the Agreement as such, but the decision of 10 September 1991 which authorized it to conclude the Agreement with the United States, has not expressly raised any objection of inadmissibility, leaving the matter to the discretion of the Court.
Nevertheless, the Commission has argued that under Article 173 the Court may review only acts of the institutions, which clearly cannot encompass an Agreement which, being an act that has come into being with the participation of a non-member country, is not ° nor can it be considered ° a unilateral act of a Community institution. The case-law in which the Court affirms that it has jurisdiction to interpret agreements as well by way of a preliminary ruling (10) confirms, in the Commission' s view, that only the decision to conclude an agreement and not the agreement itself can be the subject of a review of legality.
9. In that regard, it should be noted first of all that the relevant case-law of the Court does not by any means rule out the possibility of challenging an agreement directly. In fact, quite the opposite is true, as suggested by the weight of evidence.
Let us remember that in justifying its jurisdiction to interpret by way of a preliminary ruling agreements concluded by the Commission with non-member countries, the Court has equated such agreements with acts of the institutions. Thus, in its judgment in Haegeman, (11) the Court expressly stated that an agreement concluded under Article 228 of the Treaty constitutes "so far as concerns the Community, an act of one of the institutions of the Community within the meaning of subparagraph (b) of the first paragraph of Article 177" and that "the provisions of the agreement, from the coming into force thereof, form an integral part of Community law".
Since in the same judgment the Court referred to the Council decision relating to the conclusion of the agreement in question, the aforesaid statement has been interpreted as meaning that the Court' s jurisdiction to interpret provisions of international agreements can be exercised only because of the existence of an executive act. The fact remains, however, that, even in subsequent judgments, the Court reiterated, for purposes of interpretation, that agreements, so far as concerns the Community, are to be treated as acts of the institutions. (12)
10. Still more important for the purposes of this case is the fact that the Court' s jurisdiction to carry out an a posteriori review of legality in relation to international agreements concluded by the Communities has already been affirmed by the Court unequivocally, albeit in an obiter dictum, in Opinion 1/75. (13) In that Opinion, the Court stated that "the question whether the conclusion of a given agreement is within the power of the Community and whether, in a given case, such power has been exercised in conformity with the provisions of the Treaty is, in principle, a question which may be submitted to the Court of Justice, either directly, under Article 169 or Article 173 of the Treaty, or in accordance with the preliminary procedure". (14)
It is clear, therefore, first of all that the possibility of review under Article 173 (as well) arises from the exercise of the Community' s external powers being subject to compliance with the procedural and substantive rules laid down by the Treaty, and secondly that the possibility of direct review of the agreements concluded by the Community is by no means excluded since the Court has expressly stated that it can review, in proceedings under Article 173, whether the power to conclude an agreement has been exercised in accordance with the provisions of the Treaty.
11. Admittedly, the Court has not so far had occasion to exercise that power of a posteriori review in a specific case, although it has already ruled on the legality of a Community act relating to the conclusion of an agreement. (15) The question remains, therefore, for the purposes of this case, whether such review is permissible only indirectly, that is to say where it is carried out as a result of an action challenging the regulation or decision relating to the conclusion of the agreement, or also where the agreement is challenged directly.
It seems to me that the question is merely one of form. In my view, under the Community legal system which makes provision for judicial review, without exception, of all the acts and practices of the institutions, of individuals and of the Member States, which affect the system itself, it is not reasonably possible to exclude review of the legality of the procedure for concluding an agreement with a non-member country. The possibility of doing so on the basis of a complaint expressly directed at the agreement as such, or at the act connected therewith, or else at an implied act, strikes me as a secondary and wholly irrelevant matter.
12. So far as concerns the consequences, with regard to the existence of an agreement, of a finding that the authority of one of the parties lacks jurisdiction, a problem which in academic writings has frequently been viewed in conjunction with that just considered, (16) and wrongly so in my opinion, a few comments will suffice. Let me point out first of all that it constitutes another matter, which is regulated to a sufficient extent by international law and, in particular, by Article 46 of the Vienna Convention of 21 March 1986 on the law of treaties concluded by international organizations; secondly, it is a problem which normally arises ° and this has never been disputed in any way ° in most legal systems in which the management of external relations by the executive does not escape judicial review, at least so far as concerns the legality of the procedures for concluding agreements. (17)
13. Should the Court instead come to a different conclusion, it is necessary to ascertain whether, as the French Government also maintains, the application under consideration may be regarded as being directed against the decision which authorized the conclusion of the Agreement.
From that point of view, I consider it appropriate to summarize the relevant factors in that regard:
° the negotiations between the Commission and the United States were not preceded by any act of the Council, nor by overt contacts with the Member States;
° the draft agreement was forwarded to the Member States, accompanied by an Explanatory Note;
° the draft agreement was subsequently approved (on 10 September 1991) by the Commission which, at the same time, authorized its vice-president to sign it and to conclude it; that decision, however, is recorded only in the minutes of the meeting, which were not communicated to the Member States;
° the Agreement was signed on 23 September 1991;
° the signed Agreement was forwarded to the Member States together with the letter of 7 October 1991 from the Director-General for Competition.
14. The decision to conclude the Agreement was therefore simply recorded in the minutes of the Commission meeting of 10 September 1991 and was not published, notified or brought to the attention of the Member States in any other way. It is far from clear, therefore, how the applicant could have challenged a decision when it was not aware of its existence, and which finally came to light only subsequently when, with a view to completing the inquiry preparatory to these proceedings, the Court asked for it to be produced.
In order to overcome that obstacle, the Commission contends that France could and in any event should have presumed the existence of a decision of the type in question, both because it could not have been unaware of the relevant internal rules of procedure, and because the decision in question was "announced" ° it is unclear in what form ° to the competent authorities of the Member States before its adoption.
I do not believe that argument calls for any specific observation. The internal decision which authorized the Commissioner in question to sign the Agreement on behalf of the Commission was not only taken under a procedure which is in itself by no means customary, (18) but went no further than the minutes of the meeting in question. In my view, therefore, France cannot be reproached for challenging a "decision" which is not embodied in any act, even one that has no form and no name.
15. So far as concerns the Commission' s other argument, that the applicant could also have challenged the letter of 7 October 1991 which was sent together with the Agreement, it is sufficient to note that it is merely a covering letter which, moreover, is not from an institution but only from one of its officials; accordingly, it constitutes a "document" which is not intended to, nor can it, adversely affect the addressee in any way and which, in any event, cannot be regarded as a decision or, in any event, as an act capable of being challenged as such in accordance with the relevant case-law of the Court referred to earlier. (19)
16. That being so, it seems to me that it would, in a case such as this, be excessively formalistic to declare that the application is inadmissible and would amount to stating, paradoxically to say the least, that it is impossible to review the legality of the Agreement itself in the light of the rules on the power to conclude agreements, as laid down in the Treaty, in a situation in which there has been a failure to adopt either a formal act authorizing negotiations or approval or else another "Community" act connected with the Agreement.
In other words, let us be quite clear, such a declaration would be utterly ridiculous. To endorse the argument under consideration would be tantamount to authorizing any procedural device, which would thus be the best way to shield an act from the risk of any challenge to it.
In my view, however, even if we were to start from the premise that an agreement cannot be challenged as such under Article 173, the application in question should nevertheless be held to be admissible. As it is "physically" impossible to challenge the usual Community act "relating to the conclusion of the Agreement", which in this case has not come into being or in any event has not been brought to the attention of the applicant, the only solution would be to treat the application as being directed by implication against the decision, whatever it may be, which enabled the Agreement to be concluded.
Substance
17. The main problem therefore consists in ascertaining whether or not the Commission has power to conclude an agreement of the kind at issue, which the Commission has defined as an "administrative" arrangement. That definition constitutes the fundamental basis on which the Commission has developed its defence, inasmuch as it states, now as before, that it has power to conclude agreements with non-member countries, at least those of an "administrative" nature.
Definition of the Agreement
18. In order to dispel any possible ambiguity, and for the sake of the argument that follows, therefore, I consider it appropriate to begin by defining the Agreement under consideration on the basis of international law.
Formally designated as an "Agreement" and concluded between the Commission and the Government of the United States, under whose legal system it has taken the form of an "executive agreement", (20) the Agreement under consideration does not seem to display any features which differ from those of normal international agreements. In order to establish its nature, however, reference must be made to the identity of its addressees and the will of the contracting parties, its contents and any provision for penalties in the event of non-compliance.
19. Against that background, it should be noted first of all that, although the Commission is expressly referred to as a party, it is clear from certain provisions of the Agreement that it is the Community which has committed itself at international level. In that regard, it is sufficient to consider the provisions of the Agreement which refer to the "party' s territory" (Article 2(2)(b)), to the party' s "States or Member States" (Article 2(2)(c)) and, in particular, to the fact that the Commission is designated as the competition authority for the European Communities (Article 1(2)(b)(i)), and that competition law for the purposes of the Agreement is defined once again in relation to the European Communities (Article 1(2)(a)(i)).
Hence the terms of the Agreement are clear: the Community has bound itself at international level, and the Community must be regarded as the true contracting party. Furthermore, in its observations on the Spanish and Netherlands interventions, the Commission acknowledged that since the United States Government had asked ° by reason of constitutional requirements ° to appear as a party to the Agreement "it was inevitable that the Community should appear as the other contracting party", all the more so as "the Commission has no international legal personality and it was therefore more appropriate legally for the Community to appear as a party to the Agreement". Admittedly, the Commission went on to point out, in reply to a question from the Court, that those statements were valid in general terms but not in relation to the present case, as demonstrated by the fact that the Commission appears in the title of the Agreement alongside the Government of the United States; in my view, however, that is wholly irrelevant.
20. The will of the parties to bind themselves is also quite clear. It is scarcely necessary to recall that the Commission itself expressly stated that the conclusion of such an Agreement was dictated by the intention of going beyond the recommendations of the OECD, not only by envisaging more far-reaching forms of cooperation and coordination but also, and above all, by providing for fixed and obligatory forms of conduct in a legally binding act.
So far as concerns the nature of the obligations set out in the Agreement, it is sufficient to reiterate that they are, as stated earlier, instrumental and procedural obligations, that is to say obligations binding on the parties and therefore on the Community, and which undoubtedly make up an international agreement.
21. Furthermore, the Agreement contains an express provision for its revocation, laying down that a period of two months must elapse between notice and termination of the effects of the Agreement. That is undoubtedly a provision typical of a legal instrument aimed at imposing obligations on the parties.
Finally, so far as concerns the penalty factor, the absence of an express provision in that regard is hardly surprising for the simple reason that an international agreement is subject to the rule pacta sunt servanda and there is clearly no need to recall this every time in an appropriate clause. Nor, in my opinion, can too much importance be attached to the fact that the only permissible reaction in the event of a breach is non-performance: that is a feature of many bilateral agreements and, in particular, of those concluded by international organizations whose "standing" to be subjected to the normal penalties laid down by international law is questionable to say the least. At most, economic reprisals may be contemplated which, as we know, are not generally acknowledged to be penalties in the proper sense.
In conclusion, I do not believe there can be any doubts as to the fact that the Agreement concluded by the Commission is, and is meant to be, an international agreement, which imposes at the very least instrumental and procedural obligations on the Community and is therefore governed by international law.
22. It is scarcely necessary to add that the class of administrative arrangements, viewed as a category distinct from that of international agreements, is as such unknown in international law. Rather, it designates a standard internal procedure, evidently where that type of arrangement assumes a specific connotation. Under international law, there are binding agreements and ° taking the most generous view ° the unusual category of non-binding agreements, (21) which are variously described but which are essentially either "gentlemen' s agreements", which at times have considerable political significance and are in fact endowed with an international control mechanism to ensure compliance therewith, (22) or else "understandings" designed to consolidate trends and courses of action in certain sectors, but which lack the force of law altogether, as is frequently apparent moreover from the express will of the parties. (23) Nor is it superfluous in that regard to emphasize that such agreements are in any event normally concluded by the authorities empowered to do so and not by any other authority or institution.
Finally, there are certain arrangements brought into being by specific administrative entities with a view to establishing forms of cooperation with the authorities of other States having similar powers. That category of "agreements", which are evidently not international agreements, concluded ° admittedly ° also by bodies lacking power to bind the State effectively at international level, is tolerated; they amount to concerted practices between authorities which act in the exercise of their discretion and which are therefore acts that are clearly not governed by international law. (24)
I do not believe, however, in the light of the foregoing considerations, that the Agreement under consideration can be brought within that category, in view of the fact that the Commission itself stated that it was binding and contended, moreover, that it was an agreement within the meaning of Article 228 of the EEC Treaty (see p. 19 of the defence).
In conclusion, it is necessary to determine whether Article 228 allows the Commission to conclude international agreements, whatever their designation.
Interpretation of Article 228 of the EEC Treaty
23. The relevant Treaty provision is therefore Article 228, as it was worded prior to the entry into force of the Treaty of Maastricht, which seems to identify in general terms the Council as the only body with power to conclude international agreements, entrusting the Commission with responsibility for negotiations. More specifically, Article 228(1) provides that external agreements "subject to the powers vested in the Commission in this field ... shall be concluded by the Council, after consulting the European Parliament where required by this Treaty".
Referring to the aforesaid provision, the Commission contends that Article 228 does not provide for the Council to have exclusive power, nor can it be interpreted as being subject only to the powers conferred on the Commission by the Treaty itself, in that the provision refers to the powers "vested" in the Commission and not to those conferred upon it.
The Commission therefore infers from the wording of the limb of sentence in question that Article 228 permits it to be vested, either through the practice of the institutions or the development of a custom (on the basis of an interpretation of Article 228 imposed in practice), with the power to conclude international agreements itself. In its view, that is precisely what happened: as a result of consolidated practice, it was vested with a general power to conclude international agreements, albeit of an "administrative" nature.
24. Article 228 of the Treaty, and in particular the phrase relating to the powers "vested" in the Commission, cannot be read as having the meaning and the effects claimed by the Commission. Rather, it refers to the fact that the Commission has limited power to conclude agreements at Community level in certain expressly specified cases. (25) Here I would refer to Article 7 of the Protocol on the Privileges and Immunities of the European Communities, which empowers the Commission to conclude agreements with non-member countries for laissez-passer for Community nationals issued by the Community to be recognized within the territory of those countries, and to the powers by implication conferred on it by Articles 229 to 231 in order to ensure the maintenance of appropriate relations with other international organizations.
Academic writers have also argued that the meaning of the provision in question is that the Council may delegate to the Commission the power to conclude agreements in certain specified cases, a possibility which the Council, notwithstanding the Commission' s requests, has always rejected. And it is significant that such a possibility has now been formally and expressly recognized in the amendment of Article 228 made by the Treaty of Maastricht, which recently entered into force.
Under Article 228(4) of the EC Treaty, the Commission may now conclude certain agreements in a simplified form. The conditions for the exercise of that power bear witness, however, to the extreme caution of the Member States in acceding to the Commission' s claims in that regard. That possibility is limited to the amendment of pre-existing agreements concluded by the Council in the usual form, and only where the agreement in question provides for the amendments in question to be adopted by a simplified procedure or by a body set up by the agreement. Furthermore, the Council may attach further specific conditions to its authorization.
In that regard, the Commission argued at the hearing that the new wording of Article 228, in so far as it confers on the Commission the power to modify the technical aspects of pre-existing agreements concluded by the Council, does not concern or encroach on the power, already vested in it, to conclude administrative arrangements. Hence the Commission falls back on the leitmotiv of its defence.
25. Perhaps aware that Article 228 cannot be relied upon in any way in support of its argument, the Commission added, however, that the power thus vested in it is based on and restricted by the same conditions as those referred to in the third paragraph of Article 101 of the Euratom Treaty, relating to agreements which do not impose financial burdens on the Community and do not require action by the Council (in other words, mere implementing agreements).
After empowering the Commission to negotiate and conclude, subject to the Council' s approval, agreements or contracts with non-member countries, (26) Article 101 provides in its third paragraph that "agreements or contracts whose implementation does not require action by the Council and can be effected within the limits of the relevant budget shall, however, be negotiated and concluded solely by the Commission; the Commission shall keep the Council informed".
26. I cannot endorse the Commission' s view that the power to conclude international agreements is based on the criteria listed in Article 101 of the Euratom Treaty. It is sufficient to point out in that respect that Article 101 deliberately provides for a procedure which is wholly different from that in Article 228 of the EEC Treaty: that is all the more significant if it is borne in mind that the Treaties were signed on the same date and contain several provisions which are absolutely identical.
The difference in the wording of the two corresponding provisions under consideration is not fortuitous. On the contrary, the difference serves to demonstrate the will of the authors of the Treaty not to vest in the Commission, at Community level, the same powers as those which it has under the Euratom Treaty. In other words, the Commission' s powers, which are expressly laid down in Article 101 of the Euratom Treaty, are lacking in Article 228 of the EEC Treaty: ubi lex tacuit, noluit.
27. In conclusion, it does not seem to me that the actual wording of Article 228 and, in particular, the limb of sentence at issue, can support the Commission' s view that it has been vested with the power to conclude agreements of a certain type, or that reference can be made to Article 101 of the Euratom Treaty so far as concerns the limits of and the conditions for the exercise of that power, in view of the fact that the two provisions in question are quite different so far as concerns the power to conclude agreements.
If Article 228 is interpreted as meaning that the Commission is vested only with the powers expressly or implicitly conferred by the Treaty or delegated by the Council, it follows that France' s application would have to be upheld in view of the Commission' s lack of power to conclude the Agreement in question.
In other words, if Article 228 is viewed as the provision which governs in general terms the conclusion of treaties and is interpreted as not vesting any autonomous powers in the Commission, it is clear that consideration of the matter could end there.
° Practice of the Commission
28. That said, it must be acknowledged that the Commission has brought into being acts in the nature of agreements in other fields as well. (27) Agreements have been concluded on the subject of the privileges and immunities of diplomatic missions, (28) on economic relations with countries belonging to the General Agreement on Tariffs and Trade (29) and on technical matters, (30) in particular in the field of plant health protection and scientific and technological cooperation.
Does this support the inference that, as a result of an interpretation of Article 228 which has gained ground in practice, the Commission has been vested with an autonomous power to conclude international agreements, in that the Council and the Member States have not so far called in question the agreements which it has nevertheless concluded?
29. I do not believe the problem can seriously be approached in those terms, without even raising the question whether and to what extent the Council and the Member States have actually been aware of the existence of a practice of that kind and have therefore consciously tolerated a limited exercise of the Commission' s power in that field.
It is sufficient to recall in that regard, as the French Government has done, the Court' s statement that "a mere practice on the part of the Council cannot derogate from the rules laid down in the Treaty. Such a practice cannot therefore create a precedent binding on Community institutions with regard to the correct legal basis." (31) Unlike the Commission, I consider that the aforesaid passage concerning the choice of the legal basis can indeed be applied to the case under consideration: any other solution would be tantamount to acknowledging that an infringement of the rules of the Treaty acquires legitimacy only because it is repeated!
30. Against that background, it is superfluous in my view to verify whether the contested Agreement can be equated, in terms of content or type, with those hitherto concluded by the Commission. Furthermore, indirect confirmation, if it were still needed, of the fact that it is not possible to interpret Article 228 as empowering the Commission, albeit within limits, to conclude international agreements independently is provided in fact by examination of the conditions which, according to the Commission itself, govern the exercise of the power in question.
The "administrative" agreements hitherto concluded are distinguished, according to the Commission, by the following characteristics: (a) the obligations of public international law to which they give rise are limited and can be discharged in full by the Commission alone (such obligations may in fact be wholly absent); (b) the agreements are implemented within the limits set by the budget, that is without imposing further financial obligations; (c) owing to the actual nature of the obligations in question it will be difficult to make the Community liable under international law for non-performance, in that any failure to discharge those obligations will almost certainly lead (exclusively) to the termination of the agreement.
31. In view of the considerations set out in paragraphs 18 to 22, it is sufficient to point out, once again, that the Agreement under consideration imposes a set of instrumental and procedural obligations on the Community: even if those obligations were described as "limited", the terms of the problem would nevertheless remain unchanged, in that the Agreement still constitutes an international agreement. Nor is it of any significance, from that angle, whether or not the Agreement is implemented within the limits set by the budget.
So far as liability is concerned, let me point out first of all that it is not ruled out by the actual wording of the Agreement and that no such outcome has been agreed between the parties. Nor, it seems to me, can any importance be attached to the fact that, in view of the type of (reciprocal) obligations provided for by the Agreement, the consequences emphasized by the Commission can actually arise and exclude liability on the part of the Community. In that regard, I would merely point out that I fail to see how the Commission' s power to conclude international agreements can reasonably be deduced from the fact that a breach of the terms of the Agreement would not allow the other party to react "incisively" at international level: it would be unusual, to say the least, if the power to conclude an agreement, in the case of a body otherwise lacking such power, were made to depend on a factor of that kind.
32. The possibility cannot be excluded, having regard to the conditions set out above, that by the term "administrative" arrangement, the Commission is in fact referring to the agreements in a simplified form, which, on the basis of the internal law of most States, are concluded by the executive, without parliamentary action, and normally concern ° if we exclude secret arrangements ° technical and administrative matters, whose implementation does not entail legislative amendments or which supplement or define pre-existing agreements concluded in accordance with the usual procedures, when they accordingly form part of the legislative framework established by other agreements. During the proceedings, the Commission frequently referred to the practice applied by the Member States, and in particular to agreements concluded by Governments without reference to the procedures laid down by the Constitution with regard to ratification, which are in fact described in some legal systems as administrative arrangements. (32) The practice in question is based on the view that the power to conclude a specific type of agreement is inherent in the function of the executive. (33)
33. If the problem were expressed in those terms, it would be necessary to determine whether the power of the Commission to conclude an agreement can be made to depend on the designation of such an institution as the Community executive.
Even if were generally acknowledged that the executive function comprises the conclusion of treaties, the theory in question cannot in my view be applied mutatis mutandis to the Community legal system, in view of the impossibility of identifying in that system an independent and general executive function carried out by the Commission. As we know, it is the Council which, in addition to legislative functions, also carries out general functions of an executive nature, while the Commission' s functions are expressly conferred on it by the Treaty or delegated to it by the Council, and therefore to the extent specified in the conferring act.
34. It is scarcely necessary to add, in that regard, that "each institution shall act within the limits of the powers conferred on it by this Treaty" (Article 4(1)) and that Article 228 confers on the Council in general terms the power to conclude international agreements after consultation ° where required ° of the European Parliament, which, it is worth emphasizing, would have been necessary had the Agreement been concluded by the Council. Instead the Commission is merely accorded responsibility for negotiations and a limited power to conclude agreements in certain situations specified, as we have seen, by the Treaty itself.
It follows, in my view, that the practice cannot in any way amend the institutional structures and balances, as laid down by the Treaty, which undoubtedly have in Article 228 one of their fundamental and ° let us be quite clear about this ° constitutional underpinnings. I am constantly aware that the Community is governed by the rule of law, based on the principle of legality and conferred powers.
° Parallel internal and external powers
35. The AETR judgment, (34) as we know, is the frame of reference for identifying the external powers of the Community, the Court having stated that the possibility of concluding international agreements exists not only in the situations exhaustively listed in the Treaty but also whenever the Community has internal powers. (35)
In the same judgment, the Court stated that "with regard to the implementation of the provisions of the Treaty the system of internal Community measures may not ... be separated from that of external relations". (36) Clearly, if no account were taken of the fact that the point at issue in that case was the division of powers between the Community and the Member States, such a statement could be used for recognizing, on the assumption that the conditions are fulfilled, the Commission' s limited power to conclude international agreements, which would thus constitute a corollary, as it were, of its specific internal powers in a given area.
36. The Commission itself has acknowledged, however, that the aforesaid judgment is not relevant to this case, in so far as it concerns the division of powers between the Community and the Member States and not, as is the case here, between the various institutions.
That said, however, it should be noted that the Commission maintained during the proceedings that its power to conclude agreements is even more clear-cut in the field of competition, in that it is for the Commission alone to ensure the application of the principles laid down in Articles 85 and 86 and the application of Council Regulation (EEC) No 4064/89. (37) In other words, the Commission' s alleged power to conclude agreements is all the greater, in its view, when it is exercised in areas, such as competition, in which its own internal powers are directly conferred on it by the Treaty, which means ultimately that its power to conclude agreements in the field of competition constitutes a ramification of the internal legislative powers conferred on it by the Treaty.
37. The power to assume obligations at international level is thus vested in the same bodies as are empowered to exercise (Community) legislative powers internally, with the result that the Commission could be seen as having autonomous powers in areas in which it has its own legislative powers. (38)
Clearly, it follows from that construction that Article 228(1) cannot be treated as an autonomous general provision governing the conclusion of treaties, a possibility which I would rule out on the basis of my previous observations concerning the interpretation of that provision and, in particular, its "constitutional" significance within the overall scheme of the Treaty.
38. That said, and in the event of the Court endorsing that construction, I consider it appropriate to make certain observations which concern the powers of the Commission in the field of competition and which invariably coincide with the complaints of the French Government and the interveners concerning the alleged breach of the rules of competition.
To begin with, independent decision-making powers in the field of competition are conferred on the Commission exclusively by Article 89 of the Treaty, which authorizes it to establish any breaches of Articles 85 and 86 and of Article 90(3), while only the Council has a general legislative power based on Article 87 of the Treaty. In addition, strictly speaking Article 89 does not confer an exclusive power on the Commission, in that it requires the cooperation of the Member States and of the national courts.
39. It is already apparent from those observations that the Commission does not have exclusive powers in the field in question and, in particular, that legislative powers remain firmly vested in the Council. The latter is called upon inter alia to adopt "any appropriate regulations or directives to give effect to the principles set out in Articles 85 and 86" (Article 87(1)), and to "define the ... functions of the Commission ... in applying the provisions laid down in this paragraph" (Article 87(2)(d)), as it has done through the adoption, in particular, of Regulation No 17. (39)
It is by no means fortuitous that Regulation No 17 governs, for instance, relations and cooperation between the Commission and the Member States (Article 10), a fact which by itself is sufficient to show how the subject-matter of the Agreement is regulated internally by a legislative act of the Council. Even more significant in that regard is the fact that the procedure under Article 24(3) of Council Regulation No 4064/89, where it refers to negotiations with non-member countries, clearly refers to the procedure under Article 228 of the Treaty; once again, that is, in a Council regulation based on Article 87. The same considerations also apply to Article 9 of Regulation No 4056/86, (40) which in fact provides that where its application is liable to enter into conflict with the laws of non-member countries, the Commission is to make recommendations to the Council, which is to authorize the Commission to open negotiations with the State in question on the basis of such directives as the Council may issue.
40. It is clear from the foregoing that the power to conclude the Agreement in question cannot in any circumstances be treated, given the rationale behind the AETR judgment, as flowing from the Commission' s internal powers in the field of competition. Nor could it reasonably be argued, on the ground that the Commission is obliged to carry out the Agreement in its capacity as the body responsible for supervising and implementing the rules of competition, that the cooperation established with the United States authorities is merely a function of its internal supervisory power.
In any event, certain provisions of the Agreement conflict with the Council' s legislative powers in this area, in that they go beyond the (implementing) powers conferred on the Commission on the basis of Regulation No 17.
41. In particular, the French Government has alleged that the provisions of the Agreement are in breach of Article 3(2) of Regulation No 17, which restricts the power to apply to the Commission to Member States and natural or legal persons who claim a legitimate interest, in that Article 5 of the contested Agreement confers such a power on the United States authorities as well.
In that regard, I do not consider the Commission' s argument, to the effect that the provision in question does not prevent it from receiving information from sources other than those provided for therein, to be wholly relevant. While it is true that the information provided by the United States authorities could be regarded as having been supplied "voluntarily", I do not believe it is possible quite as easily to disregard the fact that those authorities have the power to request, in the same way as the Member States and the undertakings concerned, the initiation of an enquiry into certain kinds of conduct, in particular where such a request is accompanied by a set of guarantees incorporated in a legally binding act.
42. The French and Spanish Governments have also alleged the infringement of Article 20 of Regulation No 17, which enshrines the principle of secrecy for the protection of the interests of individuals with regard to information acquired by the Commission in connection with its proceedings. The obligation to provide information, imposed by the Agreement, would in fact, according to those Governments, adversely affect undertakings under investigation by the Commission on the basis of Community competition law.
In view of the paramount importance and delicate nature of the principle that information is confidential, (41) especially in the area under consideration, there cannot be any doubts, it seems to me, that the obligations relating to notification, provision of information and coordination, as laid down in Articles 2, 3 and 5 of the Agreement, are such as to conflict with Article 20 of Regulation No 17, according to which information acquired by the Commission may be used only for the purpose for which it has been requested (paragraph (1)), and is deemed, in view of its nature, to be covered by the obligation of professional secrecy with the result that it may not be disclosed, either by the Commission or the competent national authorities (paragraph (2)). In that regard, it is scarcely necessary to add that Article 8 of the Agreement, which in fact concerns the confidentiality of information, does not resolve the problem in question.
Nor do I consider that Article 9 of the Agreement, according to which the Agreement may not be interpreted in a manner inconsistent with the existing laws of the parties, is capable of constituting a satisfactory solution to the problems considered. That provision is, above all, a formal clause which, if in fact complied with, would lead to the non-application of the Agreement so far as the major provisions are concerned, ultimately emptying it of the whole of its substance.
43. In the light of the foregoing, I consider it superfluous to examine the other submissions relied upon by France in support of its application which, let us remember, is also based on Article 33 of the ECSC Treaty, even though the parties themselves have referred, in the course of the proceedings, solely to the relevant provisions of the EEC Treaty. It is scarcely necessary to point out in that regard that even if the view is taken that the Commission could have concluded such an Agreement only so far as the ECSC Treaty rules are concerned, it should have done so on the basis of Article 95 of the ECSC Treaty and therefore "with the unanimous assent of the Council and after the consultative committee has been consulted". If it failed to comply with those conditions, however, it would be in breach of essential procedural requirements, the consequences of which would be no different from those of a finding that the Commission has no power under the relevant provisions of the EEC Treaty.
44. In the light of the foregoing considerations, therefore, I suggest that the Court uphold the application and order the Commission to pay the costs, excluding those of the interveners.
(*) Original language: Italian.
(1) - On this matter, and for an analysis of the relevant recommendations issued, see the OECD publication Mise en oeuvre du droit de la concurrence. Coopération internationale pour la collecte de renseignements, Paris, 1984.
(2) - For an analysis of those problems, see Picone: L' applicazione extraterritoriale delle regole sulla concorrenza e il diritto internazionale in Il fenomeno delle concentrazioni di imprese nel diritto interno e internazionale, Padova, 1989, p. 80 et seq.
(3) - The Recommendation of 25 September 1979 had in turn amended and replaced the Recommendations of 5 October 1967 and 3 July 1973.
(4) - As stated by the Commission in its Explanatory note on the draft agreement between the Government of the United States and the Commission of the European Communities regarding the application of their competition laws , forwarded to the Member States together with the draft agreement. Emphasis added.
(5) - So far as concerns the Community, those rules include Articles 85, 86, 89 and 90 of the EEC Treaty, Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings, Articles 65 and 66 of the ECSC Treaty and their implementing regulations, including High Authority Decision No 24/54, as well as such other laws or regulations jointly agreed in writing by the parties to be competition law for the purposes of the Agreement (Article 1(2)(a)(ii)).
(6) - Explanatory note to the Member States, annexed to the draft agreement.
(7) - See, most recently, the judgment in Case C-325/91 France v Commission [1993] ECR I-0000, at paragraph 9.
(8) - Judgment in Case 22/70 Commission v Council [1971] ECR 263, at paragraph 42.
(9) - See pp. 5 and 6 of the defence.
(10) - See, in particular, the judgment in Case 181/73 Haegeman [11974] ECR 449.
(11) - Cited above, at paragraphs 3 to 5.
(12) - This solution has also been adopted in relation to mixed agreements; see, for instance, the judgment in Case 12/86 Demirel [1987] ECR 3719, at paragraph 7.
(13) - Opinion 1/75 [1975] ECR 1355.
(14) - Opinion 1/75, cited above, at p. 1361.
(15) - Judgment in Case 165/87 Commission v Council [1988] ECR 5545.
(16) - See, for both, J. Rideau: Les accords internationaux dans la jurisprudence de la Cour de justice des Communautés européennes: réflexions sur les relations entre les ordres juridiques international, communautaire et nationaux in Revue Générale de Droit International Public, 1990, p. 289 et seq., in particular p. 380 et seq.
(17) - It is scarcely necessary to add that the issue concerning the effects of annulment arises in the same terms, so far as concerns compliance with the obligations assumed at international level, whether there has been a declaration of nullity of the agreement, so far as concerns the Community of course, or of the act which enabled the agreement to be concluded and which therefore constitutes its legal basis.
(18) - I am referring to the fact that normally decisions relating to the signature of agreements are indeed recorded in the minutes, but are followed by a decision approving the agreement (the act concluding it) which is published: that, however, evidently applies to agreements concluded by the Council.
(19) - See paragraph 7. See, in addition, the judgment in Case C-198/91 Cook [1993] ECR I-2487, in which the Court held that a mere letter sent for information does not constitute a decision that may be challenged in proceedings for an annulment (paragraph 14).
(20) - In that regard, it is sufficient to point out that this designation distinguishes agreements concluded by the President without the Senate' s approval. That procedure is widely used in the United States and is based on a practice endorsed by the Supreme Court. It is scarcely necessary to add that executive agreements do not differ in any way, so far as concerns their effects and their status in the international order, from international agreements concluded on the basis of the procedure involving congressional approval under the Federal Constitution.
(21) - See, on that point, Schachter: The twilight existence of non-binding international agreements in American Journal of International Law, 1977, p. 296 et seq.
(22) - It is sufficient to recall the agreements on security and cooperation in Europe, set out in the Final Act of the 1975 Helsinki inter-governmental conference.
(23) - In that regard, reference should be made to the Memorandum of Understanding between the United States and Canada of 9 March 1984 (see American Journal of International Law, 1984, p. 659 et seq.), which expressly provides in Article 12 that it does not constitute an international agreement .
(24) - See, in that regard, the provisional report of the Institut de Droit International, Virally: La distinction entre textes internationaux de portée juridique et textes internationaux dépourvus de portée juridique , in Annuaire de l' IDI, Cambridge Session, Vol. 60-I, 1983, p. 166 et seq. at p. 212 et seq.
(25) - It has also been argued that the sentence in question could also help to define the scope of the terms negotiation and conclusion in relation to one another in view of the difficulty of establishing where to draw the line between the two. See, for that view, Louis and Bruckner: Relations extérieures in Megret, Le droit de la Communauté économique européenne, Vol. XII, 1980, p. 20 et seq.
(26) - In other words, this procedure is completely different from that laid down in Article 228 of the EEC Treaty. In that regard, see Raux: La procédure de conclusion des accords externes de la Communauté européenne de l' énergie atomique in Revue générale de droit international public, 1965, p. 1019 et seq.
(27) - In its pleadings, the Commission had referred in particular to 25 instances of bilateral cooperation with non-member countries, all of which were subsequent to 1974. However, only the contested Agreement was formally designated as an agreement. On other occasions, the designation has varied: exchange of letters (18), memorandum of understanding (two), administrative understanding (three), agreed minute (one). No fewer than eight of those agreements were concluded with the United States, some directly with the Government, others with specific departments.
(28) - In that regard, it should be noted that, on the one hand, the establishment of delegations in non-member countries may be deemed to fall within the Commission' s power to organize its own departments and, on the other, there is in any event tacit approval by the budgetary authorities (Council and Parliament) which can be inferred from the adoption of the appropriations necessary for them to function.
(29) - The agreements concluded by the Commission in that sector, in the form of an exchange of letters and relating to the closure of the Panel, are in any event the subject of preliminary discussions within the Council' s 113 Committee.
(30) - In this case, the agreements form part of legislation already in force, in that they supplement or define other agreements or acts of secondary legislation adopted by the competent authorities of the Community.
(31) - Judgement in Case 68/86 United Kingdom v Council [1988] ECR 855, at paragraph 24.
(32) - In that regard, it is scarcely necessary to add that under national law agreements of that type are provided for expressly (see, for instance, Article 59(2) of the German Constitution) or at least by implication, in that provision is made for cases in which the prior assent of Parliament is called for (see, for instance, Article 87 of the Italian Constitution), with the result that the agreement is deemed to have been validly concluded by the executive in all other cases. On the other hand, neither Article 228 nor other Treaty provisions contemplate such a possibility even indirectly.
(33) - This doctrine is linked to the fact that traditionally the power to conclude international treaties was a sovereign prerogative, accordingly vested in the executive, and was taken away or in any event severely restricted by the intervention, in the procedure for concluding agreements, of the representative bodies.
(34) - Judgement cited above, paragraphs 12 to 15 and 20 to 22.
(35) - For the same view see, most recently, Opinion 1/92 of 10 April 1992 on the draft agreement between the Community and the EFTA countries concerning the creation of a European Economic Area [1992] ECR I-2821, paragraph 39.
(36) - Judgment cited above, at paragraphs 16 to 19.
(37) - Council Regulation (EEC) of 21 December 1989 on the control of concentrations between undertakings (OJ 1990 L 257, p. 14).
(38) - For that view, see Cannizzaro: Sulla competenza della Commissione CEE a concludere accordi internazionali in Rivista di diritto internazionale, 1993, p. 657 et. seq..
(39) - Regulation No 17 of the Council, First regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959-62, p. 87).
(40) - Council Regulation (EEC) of 22 December 19886 laying down detailed rules for the application of Articles 85 and 86 of the Treaty to maritime transport (OJ 1986 L 378, p. 4).
(41) - See, in that regard, the judgment in Case C-67/91 Asociación Española de Banca Privada [1992] ECR I-4785, in particular at paragraphs 37 and 38, in which the Court refers to the importance of that principle and its effect on relations between the Commission and the Member States.
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