JUDGMENT OF THE COURTOF 13 NOVEMBER 1975 1

General Motors Continental NV

v Commission of the European Communities

Case 26/75

Summary

Competition — Dominant position — Concept — Exploitation — Abuse(EEC Treaty, Article 86)

When combined with the freedom of the

manufacturer or its authorized agentappointed by the public authority to fixthe price for its service, the delegation bya Member State to such person in theform of a legal monopoly of the dutygoverned by public law which consists incarrying out the technical inspection ofvehicles before they are used on thepublic highway, leads to the creation of adominant position.

The abuse of such a position may be,inter alia, in the imposition of a pricewhich is excessive in relation to the

economic value of the service provided,and which has the effect of curbingparallel imports by neutralizing thepossibly more favourable price levelsapplying in other sales areas in theCommunity or by leading to unfairtrading in the sense of Article 86 (2)(a).

In Case 26/75

GENERAL MOTORS CONTINENTAL NV, a limited company incorporated underBelgian law whose registered office is at Antwerp, represented by MichelWaelbroeck, Advocate at the Court, d'Appel, Brussels, with an address forservice in Luxembourg at the Chamber of Andre Elvinger, 80 Grand-rue,

applicant,

v

Commission of the European Communities, represented by its Legal Adviser,Michel van Ackere, acting as Agent, with an address for service inLuxembourg at the offices of its Legal Adviser, Pierre Lamoureux, 4 boulevardRoyal,

defendant,

1 — Language of the Case: French.

1367

JUDGMENT OF 13. 11. 1975 — CASE 26/75

Application for the annulment of the decision of the Commission of 19December 1974, relating to a proceeding under Article 86 of the EEC Treaty(IV/28.851-General Motors Continental);

THE COURT

composed of: R. Lecourt, President, A. M. Donner, J. Mertens de Wilmars,P. Pescatore, M. Sørensen, Lord Mackenzie Stuart and A. O'Keeffe, Judges,

Advocate-General: H. MayrasRegistrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The facts, the procedure and theconclusions, submissions and argumentsof the parties may be summarized asfollows:

I — Facts

In order to be used on the publichighway in Belgium vehicles registeredin that country must satisfy therequirements of the Royal Decree of 15March 1968 which embodies a generalregulation concerning the technicalstandards to be met by motor vehiclesand their trailers (Moniteur beige of 28March 1968, p. 3266, as subsequentlyamended on several occasions).

Each type of chassis or unit-constructionvehicle manufactured or assembled in

Belgium or imported for use in thatcountry must be approved by theMinister for Transport or his rep­resentative and be the subject of an

approval (procès-verbal d'agréation)(Article 3 (1) and Article 10 (1) of theRoyal Decree of 15 March 1968).

Where a type of vehicle has thusobtained an approval the manufactureror, where he is established abroad, hissole authorized agent in Belgium shallissue, in respect of each new vehicle ofthe same type which is in use on theroad, a certificate 'of conformity' whichattests that the vehicle entirely satisfiesthe requirements contained in thecertificate of approval (Article 10 (4) ofthe Decree).

The manufacturer or his sole authorized

agent subsequently affix to each vehiclethe compulsory type-shield (Article 16 (2)of the Decree).

Following instructions from the BelgianMinister for Transport, since 15 March1973 the State testing-stations, whichuntil that date carried out the inspections

1368

GENERAL MOTORS v COMMISSION

of used vehicles, have no longer issuedcertificates of conformity and type-shields for vehicles which have been

registered abroad for less than sixmonths; since this date, therefore, theconformity inspections of such vehicleshas been carried out by themanufacturer's authorized agent inBelgium.

For the purposes of the Royal Decree of15 March 1968, a limited companyincorporated under Belgian law havingits registered office at Antwerp, is thesole authorized agent of Adam Opel AG,Rüsselsheim/Main, a manufacturer ofprivate motor cars, and of othermanufacturers belonging to the GeneralMotors group.

GMC is responsible for obtaining acertificate of approval for all types ofGeneral Motors vehicles included in its

Belgian sales programme. It applies for'general' approvals for Opel and Vauxhallmodels; for the American modelsproduced by General Motors, it appliesfor 'low-volume' type approvals, valid forup to 10 units per year. GMCsubsequently issues the certificates ofconformity and the type-shields for eachvehicle sold through its approved dealers.

Private customers and dealers importingvehicles manufactured within the

General Motors group into Belgiumotherwise than through GMC's standarddistribution system — parallel imports— are also obliged to resort to GMC, inits capacity as sole authorized agent forthe approval procedures for both newvehicles and, since 15 March 1973, forvehicles registered abroad for less thansix months.

Between 15 March and 31 July 1973,GMC charged the same rates for theissue of certificates of conformity andtype-shields in five cases of parallelimports as it has charged previously forinspecting certain American models BF5 000 plus BF 900 VAT).

With effect from 1 August 1973 itimplemented its new scale of charges,

which distinguishes between GMCvehicles of American manufacture and

those of European manufacture: the costscharged for a private motor carmanufactured in Europe by anundertaking within the General Motorsgroup and already type-approved inBelgium were BF 1 250 whereas, asregards private motor cars manufacturedin the USA by General Motors the costswere BF 5 300, 7 000, or 30 000, as thecase might be.

On 3 August 1973, GMC took action toreimburse part of the amounts charged inthe five cases mentioned above. In twocases BF 4 900 and in three cases BF4 425 were returned.

The Commission of the EuropeanCommunities considered that byrequiring parallel importers of Opelvehicles to pay an excessive price for thetechnical inspections and administrativecosts involved in the issue of certificates

of conformity and type-shields GMC hadabused a dominant position within asubstantial part of the common marketwithin the meaning of Article 86 of theEEC Treaty. On 26 July 1974, therefore,acting on its own initiative, it set inmotion against GMC the procedureprovided for by Regulation No 17/62 ofthe Council of 6 February 1962, the firstregulation implementing Article 85 and86 of the Treaty (OS p. 204).

In pursuance of Article 19 (1) ofRegulation No 17/62 and of Article 2 (1)of Regulation No 99/63 of theCommission of 25 July 1963 on thehearings provided for in Article 19 (1)and (2) of Council Regulation No 17 (OJp. 2268), the Commission informedGMC by letter on 31 July 1974 of thestatement of objections which it intendedto raise against it.

On 6 September 1974 GMC informedthe Commission in writing of its viewson these objections.

On 19 December 1974, the Commissionadopted Decision No IV/28·851-General

1369

JUDGMENT OF 13. 11. 1975 — CASE 26/75

Motors Continental, relating to aproceeding under Article 86 of the EECTreaty.

In Article 1 of this decision theCommission find that:

'between 15 March and 31 July 1973,General Motors Continental NV

intentionally infringed Article 86 bycharging a price that was abusive for theissue of certificates and shields which it

was required to issue under Belgian lawafter inspecting Opel vehicles to checktheir conformity with the generallyapproved type and after determiningidentification of the vehicles.'

By reason of this infringement Article 2of the decision imposes on GMC a fineof 100 000 units of account, that is, BF5 000 000, the decision being enforceableagainst General Motors NV inaccordance with the provisions of Article192 of the EEC Treaty.

The Commission's decision was notified

to GMC by letter dated 24 December1974, received on 6 January 1975, andpublished in the Official Journal of theCommunities on 3 February 1975 (OJ1975, L 29, p. 14).

II — Written procedure

On 7 March 1975 General Motors

Continental NV brought proceedingsagainst the decision of the Commissionunder Article 172 and 173 of the EEC

Treaty.

The written procedure followed thenormal course.

Upon hearing the report of theJudge-Rapporteur and the opinion of theAdvocate-General the Court decided to

open the oral procedure without holdingany preparatory inquiry.

However, the Commission replied inwriting to a question put to it by theCourt.

III — Conclusions of the parties

The applicant claims that the Courtshould:

— annul the decision of the

Commission of the EuropeanCommunities of 19 December 1974;

— alternatively, annul the decision in sofar as it imposes on General MotorsContinental a fine of 100 000 units of

account;

— in any case, order the Commission topay the costs.

The Commission contends that the Courtshould:

— dismiss the application as unfounded;— order the applicant to pay the costs.

IV — Submissions and argumentsof the parties

First submission: infringement of Article86 of the EEC Treaty

The applicant maintains that thecontested decision infringes Article 86 ofthe EEC Treaty in that it is wrong infinding that GMC holds a dominantposition in a substantial part of thecommon market, that it abused thisdominant position and that this abusewas likely to affect trade betweenMember States.

A — The dominant position

The applicant maintains that accordingto the contested decision it had 'a

dominant position with regard toapplications for general type approvaland the issue of certificates of conformityand typeshields in Belgium, both for newOpel vehicles and those registered abroadfor no longer than six months in asubstantial part of the common market'.However, the market in question cannotbe defined in such narrow terms.

(a) The activity in question, whichconsists in obtaining type approval for agiven model and issuing certificates ofconformity and type-shields is merely

1370

GENERAL MOTORS v COMMISSION

one of the activities incidental to the sale

of motor vehicles, like the guarantee orafter-sales service. It is completelyartificial to regard each of these activitiesas a separate market. As regards privatemotor cars this concept involves, inBelgium, the recognition of at least 60separate markets for the activities whichit covers, and 60 dominant positionswithin these markets.

(b) The artificial nature of the marketreferred to by the Commission is alsoshown clearly by the fact that during theyear following 31 July 1973, the date onwhich the Commission accepts that thealleged infringement came to an end,GMC received only 42 applications forcertificates of conformity for Opel cars,although the number of new vehiclesregistered in Belgium during the sameperiod amounted to 368 932.

(c) The market which the Commissionshould have taken into consideration isthe whole of the market of or the sale in

Belgium of new motor vehicles. TheCommission has not even attempted toestablish whether GMC holds a

dominant position within this market.

(d) It is true that GMC is aloneempowered to make applications for typeapproval and to issue certificates ofconformity and type-shields for newOpel vehicles and for those which havebeen registered abroad for less than sixmonths. This does not, however, signifythat GMC is shielded from competition.Because of the intensive competitionexisting between manufacturers it couldnot allow itself to alienate the owners ofGeneral Motor cars. This is demonstrated

by the speed with which GMC reducedits inspection costs at the end of May1973 after its attention had been drawn

to complaints from private importers ofEuropean-manufactured vehicles. GMCwas not in a position to take actionwithout taking particular account ofcompetitors, buyers or suppliers. It isimpossible to isolate the market inapproval formalities from the generalsales market in new motor vehicles.

(e) In order to be covered by Article 86the dominant position must extend to 'asubstantial part of… the commonmarket'. The action for which GMC is

criticized can certainly not be regarded ashaving a substantial anti-competitiveeffect.

(f) GMC is alone entitled to apply fortype approval and to issue certificates ofconformity and type-shields for allGeneral Motors vehicles and not merelyfor parallel imports. For the purposes ofdefining the market to be taken intoconsideration, there is no differencebetween the formalities affecting eithertype of vehicle.

(g) The activity in question cannot beregarded as a separate market on thebasis of its rather exceptional nature.

(h) The case-law of the Court of Justiceshows that the existence of an exclusive

right granted by national legislation isnot in itself sufficient to confer on the

holder of that right a dominant positionwithin the meaning of Article 86, andthe mere power to prevent parallelimports of a given product cannot giverise to a dominant position in asubstantial part of the common market ifthis product is in competition with otherproducts.

The Commission does not accept thisreasoning.

(a) The price charged for inspectingimported vehicles for conformity withthe national safety standards is not one ofthe parameters of competition on themarket in which the various makes of

motor vehicle compete ('inter-brand'competition). It only influences'intra-brand' competition and makes itpossible to favour GMC and its officialdistribution network therein. Amanufacturer or dealer who intends to

meet a reduction in the selling price of acompeting model of another make byreducing the price of the approvalprocedure merely strengthens the

1371

JUDGMENT OF 13. 11. 1975 — CASE 26/75

position of the parallel imports of hismake of vehicle in relation to his own

vehicles, and not the position of his ownvehicles in relation to those of the other

make. This also applies to the conversesituation.

The price of the approval and testingformalities for General Motors vehicles

other than parallel imports is negligibleand is not charged separately. It plays nopart in the 'inter-brand' competition onthe Belgian market in motor vehicles.

(b) The specific nature of the activity inquestion prevents its being considered asan integral part of the whole of themarket for sales of new vehicles in

Belgium. It results from a legalobligation which is imposed in thegeneral interest. It does not give rise toan argument based on sales oradvertising. It is thus clearly distinctfrom the sale of motor vehicles and its

ancillary activities such as the guaranteeand after-sales service. The latter form

part of the very nature of the activity ofthe seller of motor vehicles and are

parameters of competition for the marketbetween the various makes of suchvehicles.

The inspection procedures arenonetheless carried out on the basis of

commercial criteria and in this way aresubject to the rules on competitioncontained in the Treaty.

(c) The applicant is therefore wrong tomaintain that the market to beconsidered is the whole of the market for

sales of new vehicles in Belgium, inwhich it clearly does not hold adominant position. On the other hand,under Belgian legislation it alone isempowered to carry out the inspectionformalities for vehicles in the General

Motors group which are imported new orregistered abroad for less than sixmonths. Any person acquiring such avehicle is totally dependent upon thiscompany to obtain the necessarycertificate of conformity, for which no

substitute is available. As a result of this

monopoly the applicant is in a positionto control parallel imports of GeneralMotors cars, as it holds the key to themarket in General Motors vehicles in

Belgium.

The fact that in Belgium a large numberof manufacturers or authorized agentshold such a monopoly certainlyconstitutes a special situation whencompared to that normally encounteredin the application of Article 86 of theEEC Treaty. It is merely the consequenceof the Belgian legislation existing in thisfield and in no way prevents the situationbeing considered from the point of viewof Article 86.

(d) Of course, a possibility of 'intra-brand' competition exists in actual orpotential parallel imports. However, byfixing very high prices for the inspectionformalities GMC is precisely in aposition to restrict competition, or evento eliminate it by imposing a prohibitiveprice. GMC holds a dominant positionnot only as a result of its exclusive rightto carry out the inspection formalities byfixing the price for such formalities as itpleases, but can also abuse this positionto the extent to which it can impedeparallel imports.

(e) The argument based by theapplicant on the relatively small numberof applications which it received forcertificates of conformity for Opel cars inrelation to the number of new vehicles

registered in Belgium cannot beaccepted. GMC's dominant position ex­tends to the issue of certificates of

conformity for all vehicles which itmanufactures or for which it is the

authorized agent in Belgium and,therefore, not only for cars of the Opelmake. Moreover, according to thecase-law of the Court of Justice theconcept of a 'dominant position withinthe common market or in a substantial

part of it' cannot be defined on the basisof abstract quantitative criteria. Theeffects of the dominant position on the

1372

GENERAL MOTORS v COMMISSION

working of competition across thefrontiers between the Member States andon free access to the markets must be

taken into particular account. GMC'sdominant position affects the freedom tomake parallel imports and the case withwhich this can be done. The total

dependence on GMC of every parallelimporter into Belgium of a GeneralMotors vehicle for the issue of the

certificate of conformity demonstratesthe existence of a dominant positioncapable of falling within the ambit ofArticle 86, even though the number ofparallel imports from other MemberStates has fallen. The relatively low figurefor the parallel imports is irrelevant: thevery high cost of the inspectionformalities during the period consideredby the contested decision was likely toaffect trade between Member States.

(f) The fact that after applying it forseveral months, GMC reduced its scale ofinspection charges from BF 5 900 to BF1 000 in no way shows that this companydid not hold a dominant position.During this period GMC was able torequire systematically, and in five casesactually to charge, the excessive price ofBF 5 900 for the certificate of

conformity. This finding is sufficientevidence that it was in a position to actwithout taking particular account of thebuyers.

B — The abuse

The applicant maintains that there canbe no question in this instance of anabuse of a dominant position. Neitherthe object nor the effect of the conductfor which it is criticized was to affect

competition adversely.

(a) Contrary to the argument putforward by the Commission, the case-lawof the Court of Justice shows inparticular that the purposes of Article 85and 86 are the same, that is, to maintaineffective competition in the commonmarket. A specific activity which has noadverse effect on competition does notconstitute an abuse within the meaning

of Article 86 of the EEC Treaty. Wheresuch conduct corresponds to one of theexamples given in the second paragraphof this provision it only gives rise at themost to a rebuttable presumption of anabuse. Any automatic application ofArticle 86 to specific activities on theground of their legal nature is notpermissible.

(b) GMC 's purpose was in no way todiscourage parallel imports of Opelvehicles by imposing an excessive ratefor the inspection formalities for suchvehicles. On the contrary, GMC simplymaintained in force after 15 March 1973

a rate which had been established solelyin relation to American vehicles and

applied it for a very short period andin a very small number of cases toEuropean-manufactured vehicles. Afterbeing informed of a complaint GMCimmediately reduced this rate to afraction of its original amount andrefunded the excess.

(c) The conduct for which GMC iscriticized did not adversely affectcompetition within the common market.

In each of the five cases in which the

highest rate was imposed the excess waspromptly refunded by GMC.

(d) Moreover, the contested decision iswrong in finding that the requirement ofan excessive price for the approvalprocedures 'acts to the detriment of, andunfairly discriminates against, thosedealers who import, or are in a positionto import, new Opel vehicles intoBelgium as parallel imports and who areable to compete for custom in Belgiumwith Opel dealers appointed by GMC'.The General Motors sales agreementprevents the import into Belgium of newOpel vehicles by dealers who are notauthorized by GMC. The latter aretherefore not in a position to competewith Opel dealers who are approved bythis company. It was also impossible forthe unapproved dealers to import, for thepurposes of resale, new Opel vehicles

1373

JUDGMENT OF 13. 11. 1975 — CASE 26/75

purchased from approved General Motorsdealers. The normal result of the low

level of prices in Belgium was to renderunattractive the import of new cars bynatural or legal persons for their own use.As regards those persons in Germanywho benefited from a special discount,the imposition of a sum of BF 5 000 didnot unduly impede intra-Communitytrade but merely reduced to a certainextent the advantage deriving from thespecial discount. As regards the naturalor legal persons who import used cars fortheir own use or for the purposes ofresale, they are not in competition withGMC or its approved dealers. In thesecircumstances, even if the refund madewas not taken into account, the allegedabuse could not have impeded tradewithin the Community, nor haveprotected GMC and its approved dealersagainst competition from third parties.

For its part, the Commission considersthat the applicant has clearly abused adominant position.

(a) The applicant's interpretation ofArticle 86 is mistaken.

Unlike Article 85, Article 86 does notprovide that the behaviour of anundertaking holding a dominant positionmust have as its object or effect' to affectadversely competition within thecommon market. The adverse effect on

competition lies in the very fact ofabusing a dominant position. It does notconstitute an additional independentcriterion for the application of Article 86.This conclusion results both from the

wording of Article 86 and from ananalysis of its structure and function.

In this instance it is sufficient to find

that the imposition, for the issue ofcertificates of conformity and type-shields for parallel imports of Opelvehicles, of a price which isunquestionably excessive and, therefore,'unfair', constitutes an abuse within themeaning of subparagraph (a) of thesecond paragraph of Article 86.

(b) Secondly, it must be borne in mindthat parallel imports of new or used Opelcars could and did take place: as long asit has not been exempted under Article85 (3) of the Treaty, the selective clausein the General Motors sales agreementhad not been imposed on any dealer inGeneral Motors vehicles. Prices are

subject to fluctuations. The benefit of thediscounts usually granted to certaincategories of private individuals on thepurchase of a vehicle could haveencouraged them to make parallelimports. Competition in fact existsbetween secondhand car-dealers and the

dealers approved by GMC to the extentto which the latter also sell used cars, andindeed new cars in so far as thesecondhand and new car markets are not

completely impervious to one another.

(c) During the period preceding therefund and in the five cases in questionthe excessive price imposed by GMC infact imposed on the parallel imports an'unfair' charge and therefore affectedtrade between the Member States. The

subsequent refund cannot remove theinfringement retroactively but can merelyinfluence an assessment of its gravity.

(d) No time-limit was attached to theapplication of the excessive rate toparallel imports of vehicles from otherMember States. At the time in question itwas unqualified and general in natureand therefore likely to affect tradebetween Member States.

C — The fact of affecting trade betweenMember States

The applicant maintains that the findingin the contested decision that 'the abuse

constituted by GMC's inspection chargeshas in fact affected trade between

Member States' loses sight of the fact thatin each of the five cases referred to the

applicants were refunded after a veryshort time, with the result that in the endthe trade between Member States was notaffected.

The statement that 'The abuse contained

in the imposition of excessive charges …

1374

GENERAL MOTORS v COMMISSION

likely to deter customers and in­dependent dealers in other countries ofthe common market from purchasingOpel vehicles, or noticeably to impedesuch sales' in fact ignores the absence ofany adverse effect on competition.

The Commission considers that the

subsequent refund of the differencebetween the excessive charge and thenormal charge for certificates ofconformity in no way alters the fact thatthe infringement in fact took place; itonly influences the degree of gravity ofthe infringement and, therefore, theamount of the fine.

Second submission: Infringement of anessential procedural requirement

The applicant considers that the reasonsgiven for the contested decision arecontradictory and insufficient.

(a) Article 1 of the operative part of thedecision finds that GMC intentionallyinfringed Article 86 'by charging a pricethat was abusive' for the inspectionformalities. The Commission refuses to

take account of the fact that, before itfirst intervened, GMC decided to refundthe excess in the five cases in question.The Commission considers that the

factors constituting an infringement hadexisted from the moment the abusive

price was fixed and charged and thesubsequent partial refund cannot affectthis. However, in the same decision theCommission expressly declares that therewould have been no infringement ifGMC had reserved the possibility of asubsequent adjustment when it requestedpayment for the inspection carried outin the five cases in question. It iscontradictory to state at the same time,on the one hand, that to fix and chargean excessive amount itself constitutes an

infringement of Article 86, even if theexcess is subsequently refunded and, onthe other hand, that if the charge is onlymade 'subject to a partial refund' or'subject to internal cost review' it is notabusive to fix and charge an excessive

amount. The decision by which theCommission attempts to justify itsdifferent treatment of these twosituations is not valid; its reasoning iscontradictory.

(b) A contradiction which affects anessential part of the statement of thereasons for a decision means that the

statement of reason is inadequate.

The Commission considers that the

applicant's attempt to find a contra­diction in the contested decision is quiteartificial.

(a) It is not contradictory to find, on theone hand, that until the refund was madeor GMC decided to carry out an internalcost review payment of the excess wasfinal and was regarded as such both bythe parallel importers and GMC and thatthe subsequent refund cannot alterretroactively the fact that the elementsconstituting the infringement had existedand, on the other hand, that a calculationand charge made subject to an expressreservation would not necessarily haveled to the same finding. The differentconclusions made on these two cases is

in no way based upon subjectiveconsiderations.

(b) Moreover, the applicant's argumentsdo not show in what way the reasons forthe contested decision are insufficient.

Third submission: Infringement ofArticle 15 (2) and (5) of RegulationNo 17

The applicant considers that no fineshould have been imposed as it put anend voluntarily to the infringement andtook steps to refund all the applicantswho had been overcharged. GMC has notinfringed Article 86 either intentionallyor negligently. Moreover, the impositionof a fine is not justified either by thegravity of the alleged infringement or byits duration.

(a) The rates in question were notestablished in order to be applied to

1375

JUDGMENT OF 13. 11. 1975 — CASE 26/75

European vehicles. When its attentionwas drawn to the fact that it was wronglyapplying a rate laid down in respect toAmerican vehicles, GMC immediatelyceased to apply it and adopted a ratewhich the Commission itself regarded asappropriate. This action on the part ofGMC clearly shows that it had nointention of abusing its position. The factthat the alleged infringement was notintentional is also shown by the findingthat the sum requested was at firstreduced to an amount lower than that

which later appeared justified.

(b) The contested decision is solelybased on the view that GMC acted

intentionally. It cannot subsequently bejustified on other grounds. However, forthe sake of completeness it should bepointed out that the very short periodwhich elapsed between GMC's reactionto the complaints made and its decision,taken before the Commission intervened,to reimburse all the buyers involved,whether they complained or not, showsthat its action can also not be regarded asnegligent.

(c) Under Article 15 (2) of RegulationNo 17, in fixing the amount of thefine the Commission must take into

consideration the gravity and theduration of the infringement. Even if itwere accepted that, technically, theapplicant infringed Article 86 thedecision must still be annulled in so far

as it imposes a fine on the applicant.

Any damage suffered was entirely madegood and neither the object nor theeffect of the price charged was todiscourage other persons or undertakingsfrom importing Opel vehicles intoBelgium. The alleged infringement onlylasted for two and a half months and was

brought to an end before intervention onthe part of the Commission.

(d) In accordance with Article 15 (5) ofRegulation No 17 fines may not beimposed in respect of acts taking placeafter notification to the Commission and

before its decision in application ofArticle 85 (3) of the Treaty, provided theyfall within the limits of the activitydescribed in the notification. The

contested decision is essentially based onthe ground that the purpose or, at least,the effect of the alleged infringement wasto prevent unappointed dealers frommaking parallel imports. However, theseimports were rendered impossible by theGeneral Motors sales agreement, whichwas notified to the Commission.

The Commission contests the applicant'sarguments.

(a) The statement that GMC hadapplied to European cars the muchhigher rate laid down for the inspectionof American cars as the result of an

unnoticed error cannot be accepted.GMC applied this rate with fullknowledge of the fact that it wasexcessive and knowingly exploited itsdominant position by imposing unfairand discriminatory prices. Nor is itestablished that GMC did in fact put anend to the infringement voluntarily onceit learned of the existence of complaints.

(b) At all events, the imposition ofexcessive rates represents, at the least,negligence on the part of GMC andArticle 15 (2) of Regulation No 17 doesnot distinguish between intentionalconduct and negligence when dealingwith the grounds on which a fine may beimposed. The existence of negligence isitself sufficient to justify the impositionof the penalty; at most it may result in adifferent assessment being made of thegravity of the wrongful act and, therefore,of the extent of the penalty to beimposed.

(c) The contested decision expresslytook into account in favour of the

applicant the fact that it put an end tothe infringement after a short time andrefunded the excess to the five buyers inquestion. However, it was also necessaryto take account of the need to protect thefreedom and ease of parallel importswithin the common market.

1376

GENERAL MOTORS v COMMISSION

(d) The fine was imposed as the resultof an abuse of a dominant positionthrough the imposition of unfair prices.This fact was of course not shown in the

agreements notified to the Commissionand it is in any case absurd to maintainthat an abuse of a dominant positionmay form the subject of a notificationand thus benefit from the terms of

Article 15 (5) of Regulation No 17.

V — Oral procedure

At the hearing on 7 October 1975, theparties presented oral argument andanswered questions put by the Court.

The Advocate-General delivered his

opinion at the hearing on 19 February1975.

Law

1 By an application received at the Court Registry on 7 March 1975 GeneralMotors Continental NV requested the annulment of the decision of 19December 1974 (OJ 1975, L 29, p. 14), by which the Commission imposedon GMC a fine of 100 000 u.a., that is BF 5 000 000 on the ground that,between 15 March and 31 July 1973, the applicant had infringed Article 86 ofthe EEC Treaty by charging an excessive amount on the import of five motorvehicles manufactured in another Member State for the inspection forconformity with the specifications contained in the approval certificateprescribed by the Belgian authorities (hereinafter referred to as the 'approvalprocedure') which it must carry out as the sole authorized agent of themanufacturer in Belgium.

2 The applicant put forward certain submissions against this decision whichconcern the infringement of the rules contained in Article 86 of an essentialprocedural requirement and of Article 15 (2) and (5) of Regulation No 17 ofthe Council of 6 February 1962 (OJ 1962, p. 204).

3 It is first necessary to consider the submissions based on Article 86, whichraise the question whether, through the approval procedures, the applicantholds a dominant position within the meaning of Article 86 and, if so,whether its behaviour constituted an abuse of this position.

The dominant position

4 The applicant maintains, first, that contrary to the statement made in thedecision in question, the activity involved in applications for vehicle approvaland the issue of certificates of conformity could not constitute a dominantposition within the meaning of Article 86.

1377

JUDGMENT OF 13. 11. 1975 — CASE 26/75

5 Far from constituting a market in itself, this activity is merely ancillary to themarket in motor cars, the open and highly competitive nature of which isundesirable.

6 Therefore, the provisions of Article 86 could not be applied to charges theimposition of which was penalized by the decision of the Commission, as theincidence of such charges can only be assessed in relation to the market inmotor cars as a whole, in which the applicant does not hold a dominantposition.

7 The approval procedure in the context of which the impositions in questionwere made is, by nature, a duty governed by public law which is so delegatedby the Belgian State that, for each make of motor car the performance of thisduty is reserved exclusively to the manufacturer or its sole authorized agent,appointed by the public authority.

8 However, although it entrusted this task of inspection to private undertakingsthe State took no measures to fix or limit the charge imposed for the servicerendered.

9 This legal monopoly, combined with the freedom of the manufacturer or soleauthorized agent to fix the price for its service, leads to the creation of adominant position within the meaning of Article 86 as, for any given make,the approval procedure can only be carried out in Belgium by themanufacturer or officially appointed authorized agent under conditions fixedunilaterally by that party.

10 It thus emerges, that the submission which the applicant bases on the factthat it held no dominant position must be rejected.

The abuse

11 It is possible that the holder of the exclusive position referred to above mayabuse the market by fixing a price — for a service which it is alone in aposition to provide — which is to the detriment of any person acquiring amotor vehicle imported from another Member State and subject to theapproval procedure.

1378

GENERAL MOTORS v COMMISSION

12 Such an abuse might lie, inter alia, in the imposition of a price which isexcessive in relation to the economic value of the service provided, and whichhas the effect of curbing parallel imports by neutralizing the possibly morefavourable level of prices applying in other sales areas in the Community, orby leading to unfair trade in the sense of Article 86 (2) (a).

13 However, the applicant maintains on this point that conduct complained ofdid not constitute an 'abuse' within the meaning of Article 86.

14 In order to demonstrate this point the applicant puts forward a number ofarguments based on the actual circumstances in which the charge in questionwas imposed and, subsequently, largely refunded in the five cases referred toby the Commission.

15 The question whether the applicant abused its dominant position must beconsidered in the light of all the factors which gave rise to the decision of theCommission.

16 It is not disputed that in the five cases to which the Commission refers, andwhich arose between 15 March and 31 July 1973, the applicant imposed acharge which was excessive in relation to the economic value of the serviceprovided by way of the approval procedure.

17 However, the applicant maintains on this point that the inspections which itcarried out during this period represented an unusual activity on its part, inthat it had only been made to assume responsibility for them as from 15March 1973 when the State testing-stations were discharged from undertakingthese same inspections.

18 As these inspections only constituted an occasional activity on the part of theapplicant and one of minute inportance in relation to the inspections whichit normally carries out on the vehicles which it puts directly on the marketand which are, therefore, manufactured in accordance with the standardsimposed by Belgian legislation, the departments responsible applied thecharge which was until then normal for the inspection of the vehicles whichit imported.

1379

JUDGMENT OF 13. 11. 1975 — CASE 26/75

19 The applicant again draws attention to the fact that following the complaintsmade by the parties concerned it very quickly reduced the charge for theinspection of imported vehicles of European manufacture to a level whichwas more in line with the real cost of the operation and refunded the excessto the parties concerned, and that this took place before the Commissionbegan its investigations.

20 This conduct on the part of the applicant, the truth of which is not contestedby the Commission, cannot be regarded as an 'abuse' within the meaning ofArticle 86.

21 The applicant has given an adequate explanation of the circumstances inwhich, in order to meet a new responsibility transferred from the Statetesting-stations to the manufacturers or authorized agents of the differentmakes of motor car in Belgium, it applied, for an initial period, to Europeancars a rate which was normally applied to vehicles imported from America.

22 The absence of any abuse is also shown by the fact that very soon afterwardsthe applicant brought its rates into line with the real economic cost of theoperation, that it bore the consequences of doing so by reimbursing thosepersons who had made compaints to it and that it did so before anyintervention on the part of the Commission.

23 Although the decision in question may be explained by the Commission'swish to react energetically against any tendency to abuse what is clearly adominant position, its intervention was unjustified in the actual temporal andfactual circumstances in which it took place.

24 In these circumstances the contested decision must be annulled but the

parties must bear their own costs.

Costs

25 Under Article 69 (3) of the Rules of Procedure, where the circumstances areexceptional, the Court may order the parties to bear their own costs in wholeor in part.

1380

GENERAL MOTORS v COMMISSION

On those grounds,

THE COURT

hereby:

1. Annuls the decision of the Commission of 19 December 1974

relating to a proceeding under Article 86 of the EEC Treaty(IV/28.851 -General Motors Continental);

2. Orders each party to bear its own costs.

Lecourt Donner Mertens de Wilmars

Pescatore Sørensen Mackenzie Stuart O'Keeffe

Delivered in open court in Luxembourg on 13 November 1975.

A. Van Houtte

Registrar

R. Lecourt

President

OPINION OF MR ADVOCATE-GENERAL MAYRASDELIVERED ON 29 OCTOBER 1975 1

Mr President,Members of the Court,

I — Facts

Under the Royal Decree of 15 March1968, all motor vehicles — whetherproduced or assembled in Belgium orimported into that country — mustsatisfy certain technical requirementsfixed by this regulation in order to beused on the public highway.

It is for the Minister for Transport or his•representative to issue an approval foreach type of vehicle.

It is for the manufacturer or, where he isestablished abroad, for his sole authorizedagent in Belgium, to check that everynew vehicle of an approved typeconforms to the specifications requiredfor such approval.

This technical inspection is auth­enticated by issuing a certificate of

1 — Translated from the French.

1381