1.

These proceedings concern the appeal by Viho Europe BV (hereinafter ‘the appellant’) against the judgment of the Court of First Instance of 12 January 1995 in Case T-102/92. ( 1 ) This case will give the Court of Justice an opportunity to expand upon its case-law concerning the applicability of the competition rules — in particular Article 85(1) of the EC Treaty — to agreements or concerted practices by undertakings within a group of companies.

2.

The facts of the case arc as follows.

3.

The appellant is a company incorporated under Netherlands law. It acts as a wholesaler, importer and exporter of office equipment.

4.

Parker Pen Limited (hereinafter ‘Parker’) is a company incorporated under English law. It manufactures writing utensils which it sells throughout Europe through its wholly-owned subsidiary companies or through independent distributors.

5.

The sale and marketing of its products by its subsidiaries and the staff policy of those subsidiaries is controlled by Parker by means of an area team consisting of three directors, of whom one is also a member of the board of the parent company. According to the findings of the Court of First Instance, the area team controls, in particular, sales targets, gross margins and sales costs, lays down the range of products to be sold, and issues directives concerning prices and discounts.

6.

Within the Parker group, customers' requests for supplies are referred to the subsidiary which has its place of business in the State in which the customer is established.

7.

After the appellant had unsuccessfully attempted to enter into business relations with Parker and to obtain Parker products upon the same terms as Parker's subsidiary companies and independent distributors, it lodged a complaint with the Commission on 19 May 1988 under Article 3 of Council Regulation (EEC) No 17 of 6 February 1962 ( 2 ) in which it alleged that Parker was prohibiting the export of its products by its distributors, dividing the common market along national borders and maintaining artificially high prices for Parker products on those national markets.

8.

The administrative procedure initiated by the Commission following that complaint was restricted to an examination of the agreements between Parker and its independent distributors. That procedure terminated with a Commission decision of 15 July 1992. ( 3 ) In that decision the Commission found that Parker and an independent wholesaler established in Germany — Herlitz AG — had infringed Article 85(1) of the Treaty by including an export ban in an agreement concluded between them and imposed fines on both of them. The actions brought by Parker and Herlitz to contest that decision were dismissed in substance by the Court of First Instance by two — now final — judgments of 14 July 1994. ( 4 )

9.

The appellant had already lodged a further complaint with the Commission on 22 May 1991. In it the appellant claimed that Parker's distribution policy, which required its subsidiaries to restrict the distribution of Parker products to their allocated territories, infringed Article 85(1) of the Treaty. In the course of the procedure which followed, the appellant claimed that Parker was acting abusively by compelling potential customers to obtain their requirements exclusively from a specific subsidiary company.

10.

On 30 September 1992 the Commission rejected that complaint. It stated that Parker had set up an integrated distribution system in Germany, France, Belgium, Spain and the Netherlands through its subsidiary companies established in those countries. According to the case-law of the Court of Justice, Article 85(1) of the Treaty was not applicable to that system, because the subsidiary companies formed a single economic unit with the parent company, within which the subsidiaries did not enjoy real autonomy in determining their course of action in the market, and because the assignment of a specific distribution area to each of the subsidiaries was within the bounds of what could normally be regarded as necessary for the purpose of the proper allocation of tasks within a group. Nor did a refusal by Parker to grant to the appellant similar prices and terms to those granted to Parker's independent distributors infringe Article 85(1) of the Treaty.

11.

The appellant then brought an action before the Court of First Instance under Article 173 of the Treaty, inwhich it claimed that that court should:

12.

The action was based on three pleas in law: first, infringement of Article 85(1), second, infringement of Article 86 and, third, infringement of Article 190 of the Treaty. The first plea was in two parts. The appellant claimed that the distribution system pursued by Parker and its subsidiary companies had the same objective as the express export bans imposed on the independent distributors, namely the partitioning of national markets from each other. Moreover, it argued that that system constituted collective discrimination under Article 85(1 )(d) because dissimilar conditions were applied to equivalent transactions.

13.

In its judgment of 12 January 1995 the Court of First Instance dismissed the application in its entirety and ordered the appellant to pay the costs of the proceedings. ( 5 )

14.

As to the first plea, the Court of First Instance referred to the statements of the Court of Justice in ICI v Commission ( 6 ) and in Ahmed Saeed Flugreisen, ( 7 ) according to which Article 85 does not apply where the concerted practice in question is between undertakings which belong to a single group as parent company and subsidiary, if those undertakings form an economic unit within which the subsidiary has no real freedom to determine its course of action on the market. Moreover, the Court of First Instance referred to its judgment in SIV and Others v Commission ( 8 ) in which it held that Article 85 referred only to relations between economic entities which were capable of competing with one another and did not cover agreements or concerted practices between undertakings belonging to the same group, if the undertakings formed an economic unit (paragraph 47 of the contested judgment).

15.

The Court of First Instance then found that Parker owned 100% of the capital of its subsidiaries and that their sales and marketing activities were directed by the relevant area team. It concluded from this that the Commission had correctly classified the Parker group as one economic unit within which the subsidiaries did not enjoy real autonomy in determining their course of action in the market (paragraphs 48 and 49 of the judgment).

16.

It then referred to the judgment of the Court of Justice in Hydrotherm v Compact ( 9 ) and to its own judgment in Shell v Commission, ( 10 ) where it had been held that in Community competition law the term ‘undertaking’ was to be understood as an economic unit. It concluded from this that, for the purposes of the application of the competition rules, unified conduct of the parent company and its subsidiaries took precedence over the formal separation between those companies as a result of their separate legal personalities (paragraph 50 of the judgment).

17.

The Court of First Instance concluded as follows in paragraph 51 of its judgment:

‘It follows that, where there is no agreement between economically independent entities, relations within an economic unit cannot amount to an agreement or concerted practice between undertakings which restricts competition within the meaning of Article 85(1) of the Treaty. Where, as in this case, the subsidiary, although having a separate legal personality, does not freely determine its conduct on the market but carries out the instructions given to it directly or indirectly by the parent company by which it is wholly controlled, Article 85(1) does not apply to the relationship between the subsidiary and the parent company with which it forms an economic unit’.

18.

The Court of First Instance recognized that the distribution policy applied by Parker might lead to the partitioning of the various national markets and so thwart one of the fundamental objectives of the common market. Nevertheless, it took the view that it followed ‘from the abovementioned case-law’that this could not alter the fact that such a policy followed by an economic unit did not fall within the scope of Article 85 (paragraph 52 of the judgment).

19.

It did not therefore avail the appellant to argue that the agreements at issue between Parker and its subsidiaries infringed Article 85 on the ground that they exceeded an internal allocation of tasks within the group. The reasons given by the Court of First Instance were as follows:

‘It is apparent from its very terms that Article 85(1) does not apply to conduct which is in reality performed by an economic unit. It is not for the Court, on the pretext that certain conduct, such as that to which the applicant objects, may fall outside the competition rules, to apply Article 85 to circumstances for which it is not intended in order to fill a gap which may exist in the system of regulation laid down by the Treaty’ (paragraph 54 of the judgment).

20.

As to the appellant's complaint of discrimination, the Court of First Instance took the view that Parker's relations with its independent distributors were irrelevant to the outcome of the case. Furthermore, the appellant had not indicated which agreement or concerted practice between Parker and its independent distributors was said to have discriminated against it (paragraph 62 of the judgment). As to the relationship between Parker and its subsidiaries, the Court of First Instance referred to its previous finding that they formed a single economic unit whose unilateral conduct did not fall under Article 85 (paragraph 63 of the judgment).

21.

The Court of First Instance also rejected the plea alleging infringement of Article 86 of the Treaty, because the action did not satisfy the Rules of Procedure in that regard, which require the application to contain a summary of the pleas in law on which it is based. It staled that the appellant's submissions regarding the position of Parker and the other major suppliers of office equipment on the market, their uniform conduct or their economic links were insufficient. Moreover, the Commission had not been obliged to carry out an investigation in that regard since the appellant's complaint of 22 May 1991 had not contained any indication to that effect (paragraphs 68 to 72 of the judgment).

22.

Finally, the Court of First Instance also rejected the plea of infringement of Article 190 of the Treaty. It stated that the statement of reasons on which a decision on a complaint is based must enable the addressee to recognize the reasons for the measure adopted, so that it might enforce its rights, and must enable the Community judicature to exercise its power of review. That was the case here, because the decision at issue set out the essential matters of fact and of law on which the Commission's rejection of the applicant's complaint was based.

23.

The appellant lodged an appeal against that judgment, maintaining the same pleas in law as it submitted to the Court of First Instance. It claims that the Court of Justice should set aside the judgment of the Court of First Instance of 12 January 1995, annul the Commission decision of 30 September 1992 and order the Commission to pay all the costs.

24.

Its criticisms are centred on the view adopted by the Court of First Instance that Article 85 is not applicable to the relationship between Parker and its subsidiaries. The appellant claims that Parker's distribution policy brings about a partitioning of national markets, which causes economic disadvantages for the appellant. That distribution policy not only restricts competition concerning the sale of Parker products (intra-brand competition), but also has a detrimental effect on competition between Parker products and the products of other manufacturers (interbrand competition). The appellant also claims that the Court of First Instance failed to interpret the prohibition in Article 85(1) of the Treaty in the light of Article 3(c) and (g) and of Article 2 of the Treaty. The latter article provides for the creation of a single internal market, to which the competition rules should also contribute.

The fact that the measures concerned were adopted within a single economic unit does not preclude the application of Article 85 of the Treaty in the present case. The Court of First Instance wrongly based itself solely on the existence of an economic unit. However, if the application of Article 85 is to be excluded, it is still necessary that the measures in question should concern rules that serve to allocate tasks within the group. There can be no question of that being the case here. Article 85 becomes applicable if and as soon as the measures adopted within a group produce effects on third parties on the market, and that is the case here.

25.

As to that central question, the Commission considers that the Court reached a correct decision. The concept of an ‘undertaking’, which underlies the competition rules of the Treaty, is an economic and not a legal concept. Since Parker and its subsidiaries form an economic unit, Article 85 cannot be applied to the relationship between them. The criterion of the internal allocation of tasks is irrelevant in that context.

In the alternative, the Commission contends that in this case the condition in question is satisfied anyway. The subsidiaries are wholly controlled by Parker. They therefore cannot but pursue a policy determined by Parker. Consequently, all agreements within the group are basically intended to serve the internal allocation of tasks.

26.

The Commission contends that the Court should dismiss the appeal, dismiss the action as unfounded and order the appellant to pay the costs.

27.

The appellant has, inter alia, claimed that this Court should set aside the judgment of the Court of First Instance of 12 January 1995. As I have already mentioned, in the proceedings at first instance the appellant claimed that, as well as annulling the Commission decision at issue, the Court of First Instance should issue two orders to the Commission, but those claims were dismissed by that Court. However, it is clear from the appeal that the appellant is not pursuing those claims. The appellant expressly states that in regard to the substantive issue before the Court of First Instance it claims only that this Court should declare void the Commission's decision of 30 September 1992. It must be concluded from this that the appeal is contesting the judgment of the Court of First Instance only in so far as that judgment dismissed the appellant's application for annulment of the decision.

28.

In that context it should be noted that the form of order sought by the Commission also contains a slight inexactitude. If, in accordance with the form of order sought by the Commission, the Court of Justice were to dismiss the appeal, the judgment of the Court of First Instance dismissing the application would become final. The Commission's additional request that the Court dismiss the action as unfounded would consequently be devoid of purpose. That request would be meaningful only if the Court of Justice were to consider it necessary to set aside the contested judgment and decide the matter itself. However, the Commission docs not refer to such a possibility in its response. That request is therefore probably the result of an oversight, which docs not need to be dealt with in any more detail because it is irrelevant to the decision in the present case.

29.

Both the Court of First Instance and the parties agree that a precondition for the nonapplication of Article 85(1) of the Treaty to a group is that the parent company and subsidiary must form a single economic unit, within which the subsidiary is unable to determine its course of action in the market with any real autonomy. That view accords with the view taken by the Court of Justice in the case-law which I will consider immediately below.

30.

On the other hand, there is a dispute as to whether the non-application of Article 85(1) of the Treaty depends upon the existence of any further preconditions.

31.

In order to answer that question, it is necessary first of all to examine the case-law of the Court of Justice and of the Court of First Instance in that area.

32.

The judgment given in 1971 in the Béguelin case ( 11 ) concerned the question whether Article 85(1) of the Treaty is applicable if a parent company, established in a Member State, with an exclusive right to distribute certain goods in respect of two Member States, grants to its subsidiary the exclusive right to distribute the goods in one of those Member States or allows the subsidiary to acquire the exclusive distribution right (from the manufacturer of the goods concerned). The Court of Justice stated that Article 85(1) prohibited agreements which had as their object or effect an impediment to competition. However, that was not the position when an exclusive sales concession was ‘in fact ... in part transferred from the parent company to a subsidiary which, although having separate legal personality, enjoys no economic independence’. It concluded from this that such a legal relationship could not be taken into account in determining the validity of an exclusive dealing agreement entered into between the subsidiary and a third party. ( 12 )

33.

That judgment could be understood as meaning that the Court of Justice takes the view that agreements between undertakings that belong to one and the same group do not fall within the scope of Article 85(1). However, because that case concerned primarily the relation between two connected undertakings, on the one hand, and a manufacturer (that was independent of those undertakings), on the other hand, such an interpretation does not necessarily follow. In any event, it is interesting to note that in his Opinion Advocate General Dutheillet de Lamothe expressed the view that, as regards the two group companies, there was no agreement within the meaning of Article 85(1). Instead, what was in point was an ‘internal reorganization of the parent undertaking’. Article 85(1) was applicable only when an agreement between undertakings might affect competition. However, that was not the case there:

‘Clearly, as between a parent company and a wholly controlled subsidiary, there could be no competition which could be affected by an agreement between these two entities which, while legally distinct, form one and the same economic unit.’ ( 13 )

34.

The judgment given in 1972 in the ICI case ( 14 ) concerned a Commission decision in which the Commission alleged that the British company ICI had taken part in concerted practices which infringed Article 85(1). According to the facts found by the Commission and by the Court of Justice, ICI had decided to increase prices to customers in the Community and had enforced that decision by using its power to control its subsidiaries established in the Community. For that reason the Commission imposed a fine on ICI. That company brought an action before the Court of Justice to contest that decision and claimed inter alia that the conduct in question was to be imputed to its subsidiaries and not to itself. Consequently, the Commission had no power to impose a fine on ICI. The significance of that defence becomes clear, if it is borne in mind that ICI was established in a State — the United Kingdom — which at the material time had not yet acceded to the Community. In its decision the Commission had argued that it was sufficient that the acts in question had produced their effects in the Community.

35.

The Court of Justice rejected ICI's defence on the following grounds:

‘The fact that a subsidiary has separate legal personality is not sufficient to exclude the possibility of imputing its conduct to the parent company. Such may be the case in particular where the subsidiary, although having separate legal personality, does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company. Where a subsidiary docs not enjoy real autonomy in determining its course of action in the market, the prohibitions set out in Article 85(1) may be considered inapplicable in the relationship between it and the parent company with which it forms one economic unit. In view of the unity of the group thus formed, the actions of the subsidiaries may in certain circumstances be attributed to the parent company’. ( 15 )

36.

In that decision the Court of Justice for the first time expressly took the view that in certain circumstances Article 85 was not applicable to the relationship between undertakings belonging to the same group. However, it is clear from the context that the Court was concerned primarily to find a connecting factor within the Community which would make it possible to penalize concerted practices by undertakings established in non-member countries. The view expressed by the Court enabled it to affirm the Community's competence in respect of such matters, without having to base itself on the principle of effects, which is a controversial area in public international law.

37.

The 1974 judgment in Commerdal Solvents v Commission ( 16 ) concerned the interpretation of Article 86 of the Treaty. After consulting its American parent company, which held 51% of its shares, an Italian undertaking discontinued deliveries to a customer in order to eliminate it as a competitor. The Commission took the view that the two undertakings were to be treated as an economic unit as regards their relationship to the customer and were therefore jointly responsible for the abuse of their dominant position on the market. The Court of Justice confirmed that view. ( 17 )

38.

The judgment given in 1974 in Centrafarm v Sterling Drug ( 18 ) concerned the distribution of a medicinal product which was manufactured on the basis of a process protected in the Member States by several parallel patents. The owner of those patents — the American company Sterling Drug Inc. — exploited them by granting licences to subsidiary companies in the individual Member States. Those subsidiaries had the exclusive right to distribute the goods concerned in their own Member State. Centrafarm, a Netherlands undertaking not belonging to the group, acquired the products in question in the United Kingdom, where they had been lawfully marketed, with a view to distributing them in the Netherlands. Relying on its patent, Sterling Drug applied to the Netherlands courts for an injunction prohibiting Centrafarm from distributing the products in the Netherlands. The Netherlands Raad van State then referred several questions to the Court of Justice for a preliminary ruling. It asked, inter alia, whether, if the purpose of the agreements between the patent owner and the connected undertakings to which it had granted licences was to regulate the terms of distribution for the product in question in a different manner from State to State, that constituted an infringement of Article 85(1) of the Treaty. Furthermore, it asked in general terms whether Article 85 was also applicable if the only undertakings participating in the agreements or concerted practices were undertakings belonging to the same group of companies.

39.

The Court stated, first of all, that the exercise of intellectual property rights fell under the prohibition in Article 85(1) if it was the object, the means or the consequence of an agreement. ( 19 ) It then dealt with the question of the applicability of Article 85 to agreements within a group of companies:

‘Article 85, however, is not concerned with agreements or concerted practices between undertakings belonging to the same concern and having the status of parent company and subsidiary, if the undertakings form an economic unit within which the subsidiary has no real freedom to determine its course of action on the market, and if the agreements or practices are concerned merely with the internal allocation of tasks as between the undertakings.’ ( 20 )

40.

In that judgment the Court did not explain in more detail what was to be understood by an ‘internal allocation of tasks’. However, the Court seems to have been influenced in that regard by the arguments of the Commission and the Opinion of the Advocate General.

The Commission had submitted that Article 85 was not applicable to agreements between undertakings within a group ‘the sole object of which is the allocation of tasks within one and the same economic unit. However, if agreements concluded within a concern are of wider scope — if for example they restrict possibilities open to undertakings outside that concern of penetrating a given market — such agreements must be held to be covered by the provisions of Article 85(1).’ It stated that the question whether Article 85(1) was applicable depended upon the specific case in question. ( 21 )

Advocate General Trabucchi adopted that view. He pointed out that the Commission's approach was based on the view that agreements concerning the allocation of tasks within a group did not fall under Article 85, because in the absence of competition within the group they could not have as their purpose or effect the restriction of competition. On the other hand, Article 85 was applicable if such agreements resulted in a restriction on the competitive freedom of third parties. The Advocate General took the view that the judgments in Béguelin and ICI did not preclude such an approach, because those decisions were tailored to the requirements of the particular case. ( 22 )

41.

In the judgment given on the same day in Case 16/74 Centrafarm v Winthrop, ( 23 ) a case closely connected with Centrafarm v Sterling Drug, ( 24 ) the Court reached the same decision as in the latter case.

42.

The judgment in Hydrotherm v Compact ( 25 ) in 1984 concerned the interpretation of Commission Regulation No 67/67/EEC on the application of Article 85(3) of the Treaty to certain categories of exclusive dealing agreements. ( 26 ) Under that regulation the block exemption which it granted benefited certain agreements to which ‘only two undertakings’ were parties. The agreement with which the Hydrotherm case was concerned had, however, been concluded between Hydrotherm and three different persons. Those three persons were a natural person, Mr Andreoli, who had developed the goods to be distributed, and two legal persons, Compact and Officine Sant'Andrea. Both of those firms were wholly controlled by Mr Andreoli.

43.

The Court held that ‘in competition law’ the term ‘undertaking’ was to be understood as designating an economic unit, even if in law it consisted of several (natural or legal) persons. That economic unit was therefore to be understood as one undertaking for the purposes of Regulation No 67/67: ‘For in those circumstances competition between the persons participating together, as a single party, in the agreement in question is impossible’. ( 27 )

44.

The judgment given in 1988 in Bodson v Pompes Funèbres ( 28 ) concerned certain funeral services which, under French law, were the responsibility of the municipalities. Approximately 5000 of those municipalities had assigned to private undertakings the relevant tasks and the exclusive right to perform them. In 2800 of them that concession had been granted to a particular undertaking or to its subsidiaries. In proceedings before the national courts the question was raised, inter alia, as to whether Article 85 could be applicable to the relations between those undertakings, which were part of the same group of companies.

45.

The Court of Justice, referring to its decision in Centrafarm v Sterling Drug, repeated its view that Article 85 was not applicable to agreements and concerted practices between companies in the same group ‘if the undertakings form an economic unit within which the subsidiary has no real freedom to determine its course of action on the market, and if the agreements or practices are concerned merely with the internal allocation of tasks as between the undertakings’. ( 29 ) It was for the national courts to decide whether such a situation existed. When so doing they had to take into account in particular whether the undertakings pursued the same market strategy, which was determined by the parent company. ( 30 ) The Court added: ‘Any anti-competitive behaviour on the part of a group of undertakings holding concessions which constitute an economic unit as defined in the case-law of the Court must be considered in the light of Article 86 of the Treaty’. ( 31 )

46.

The judgment in 1989 in Ahmed Saeed Flugreisen ( 32 ) concerned the appraisal, under Community competition law, of certain practices fixing airline tariffs. It concerned, inter alia, the question whether the application of an airline tariff by an undertaking with a dominant position on the market could represent an abuse of that position if it was the result of an agreement between two undertakings which might, as such, fall under the prohibition in Article 85(1). It therefore had to be decided whether Articles 85 and 86 could be applied simultaneously to the same situation.

The Court answered that question in the affirmative. In that context it stated, inter alia, as follows:

‘according to the case-law of the Court Article 85 does not apply where the concerted practice in question is between undertakings belonging to a single group as parent company and subsidiary if those undertakings form an economic unit within which the subsidiary has no real freedom to determine its course of action on the market (see, most recently, the judgment of 4 May 1988 in Case 30/87 Corinne Bodson [1988] ECR 2479). However, the conduct of such a unit on the market is liable to come within the ambit of Article 86’. ( 33 )

47.

Finally, I must deal briefly with the case-law of the Court of First Instance, in so far as it is of significance in this context. The judgment in Shell v Commission ( 34 ) concerned the question whether the conduct of a subsidiary can be attributed to its parent company. The Court of First Instance held that it could. It based its view on the consideration that Article 85(1) of the Treaty was ‘aimed at economic units which consist of a unitary organization of personal, tangible and intangible elements which pursues a specific economic aim on a long-term basis and can contribute to the commission of an infringement of the kind referred to in that provision’. ( 35 )

The judgment in SIV, ( 36 ) delivered on the same day as the judgment in Shell, concerned the relationships between three — independent — manufacturers of flat glass in Italy. The contested Commission decision had accused the undertakings concerned both of infringements of Article 85 and of abuse of a collective dominant position as contemplated in Article 86 of the Treaty. In that context the Court of First Instance stated as follows:

‘It has consistently been held, as indeed all the parties acknowledge, that the concept of agreement or concerted practice between undertakings docs not cover agreements or concerted practices among undertakings belonging to the same group if the undertakings form an economic unit (see, for example, the judgment in Case 15/74 Centrafarm, cited above, paragraph 41). It follows that when Article 85 refers to agreements or concerted practices between “undertakings”, it is referring to relations between two or more economic entities which are capable of competing with one another.’ ( 37 )

48.

Considered as a whole, the decisions which have just been discussed present an inconsistent picture. Both the Court of Justice and the Court of First Instance proceed on the basis that the concept of ‘undertakings’ in Article 85 is to be understood as relating to economic units. Flowever, it is an entirely open question whether this means that Article 85 is wholly inapplicable to agreements or concerted practices of group undertakings forming such an economic unit.

49.

So far, the Court of Justice has expressly adopted a position on the application of Article 85 to groups of companies only in four cases — namely in ICI, Centrafarm, Bodson and Ahmed Saeed Flugreisen. ( 38 ) If one considers those judgments, it can be seen that in two cases — in Centrafarm and in Bodson — the Court makes the non-applicability of Article 85 dependent on the further condition that the agreement or concerted practice in question must govern the internal allocation of tasks as between the undertakings in the group, while in ICI and Ahmed Saeed that condition is not mentioned. ( 39 ) It must therefore be asked whether, and if so, how those decisions can be reconciled.

50.

It might first be asked whether the condition in question is actually an independent, additional condition which must be fulfilled if the relevant agreement or concerted practice of the group undertakings is to fall outside the scope of Article 85. In terms of pure theory, it could be considered that the condition merely clarifies the previous condition laid down (under which the undertakings concerned must form an economic unit) and does not have its own, different subject-matter. ( 40 ) However, in my opinion, that possibility should be ruled out. The wording of the relevant passage in the Centrafarm judgments (‘und ferner’ ( 41 )) clearly shows that the condition in question is an additional one which, in the Court's view, must be fulfilled in order to exclude the application of Article 85. If that condition is considered against the background of the views expressed in those proceedings by the Commission and the Advocate General, the only possible conclusion is that the Court of Justice wished to restrict the special treatment of groups. Consequently, there is much in favour of the view that the Court wished to keep open the possibility of applying Article 85, subject to certain conditions, also to agreements between group undertakings forming a single economic unit.

51.

That becomes even clearer if it is borne in mind that this additional condition is found precisely in the two judgments in which the Court had to deal directly with the question whether an agreement or concerted practice of group undertakings forming an economic unit may infringe Article 85. Centrafarm concerned agreements between group undertakings on distribution and industrial property rights which could have led to the partitioning of national markets. In that context it is noteworthy that in its observations in that case the Commission expressed the view that, given the specific circumstances of that case, ‘it would appear that [the question of the applicability of Article 85] should be answered in the affirmative’. ( 42 ) In Bodson the Court also dealt specifically with the question whether the relations between licensed undertakings belonging to one and the same group were to be measured against Article 85. However, the Court's statements in that regard should be read in the context of its comments on Article 86, because the judgment does not contain any more precise indications of the specific nature and form of the relations between the group undertakings concerned. ( 43 )

52.

The judgments in ICI and Ahmed Saeed, on which the Court of First Instance bases its argument, do not alter that assessment in any way. ICI concerned the question whether the conduct of a subsidiary may be attributed to a parent company established in a non-member country. As Advocate General Trabucchi stated in his Opinion in Centrafarm, the concept of an ‘economic unit’, at the centre of the Court's judgment in ICI, had a ‘peculiar significance’. ( 44 ) I have already set out the background to that decision. ( 45 ) It cannot therefore be deduced from the judgment in ICI that Article 85 can never be applied to relations between group undertakings forming a single economic unit. The position is the same in regard to the judgment in Ahmed Saeed. As I have already mentioned, that case concerned, inter alia, the question whether Articles 85 and 86 could be applied simultaneously. Since that case concerned pricing agreements between independent airlines, the question of the applicability of Article 85 within a group was not, as such, in issue at all. ( 46 ) In the passage in question the Court merely seems to have wished to recapitulate its entire case-law on the relationship between Articles 85 and 86, before deciding the question to be examined, even though it was of no significance to the specific case before it.

53.

Nor, for a similar reason, does the judgment in Hydrotherm seem to me to have any great conclusive force for the purpose of this case. That judgment concerned the interpretation of a block exemption regulation. As already mentioned, it concerned specifically the question whether that regulation could be applied to agreements to which one or other participating party consisted of several undertakings forming a single economic unit. On the other hand, the judgment does not concern the question whether agreements or concerted practices between those undertakings may infringe Article 85. ( 47 )

54.

It should, however, also be examined whether the Court of Justice has in the meantime not ceased to apply the additional condition that intra-group agreements must be for the purpose of allocating tasks within the group. As has already been seen, no such condition is stated in the judgment in Ahmed Saeed — the latest judgment in which the Court has so far expressed a view on that question. However, it already follows implicitly from the above that such an interpretation cannot be correct. In its judgment in Ahmed Saeed the Court did not expressly distance itself from its earlier case-law. Since the treatment of intra-group agreements for the purposes of competition law was not directly at issue before the Court, it seems unlikely that it wished to change its case-law in that area. Above all, however, it should be noted that, although in Ahmed Saeed the Court did not expressly refer to the condition in question, it did expressly refer to its judgment in Bodson, which does contain it.

55.

Nor does the case-law of the Court of First Instance prior to the delivery of the contested judgment provide any additional indications. Although the judgment in SIV does not refer to the additional condition, it does expressly refer to the passage in the judgment in Centrafarm v Sterling Drug in which that additional requirement is formulated.

56.

In the result, it is possible to maintain the view that in Centrafarm the Court of Justice decided that the non-applicability of Article 85 within a group depended not only on the undertakings concerned forming a single economic unit, but also on the agreement or concerted practice in question being for the purposes of an internal allocation of tasks within the group. That additional criterion is also to be found in the judgment in Bodson, but not in other decisions. However, there is much to suggest that the Court of Justice has not yet ceased to apply that additional criterion.

57.

As regards the question whether Article 85 applies within a group of companies, the Court of First Instance applies, in the contested judgment, only the test of a single economic unit. When viewed against the background of the case-law set out above, that can be understood only as meaning that the Court of First Instance wished to discard the additional condition that the agreement or concerted practice in question must be concerned with the internal allocation of tasks within the group. Some commentators have also understood the judgment to that effect. ( 48 ) The view taken by the Court of First Instance can be valid only if the non-applicability of Article 85 within a group does not in fact depend upon the additional condition formulated by the Court of Justice. It is that question which must now be considered.

58.

The Court of First Instance bases its view on three considerations: the case-law, the wording of Article 85, and the restricted scope of Article 85. ( 49 )

59.

As I believe I have already shown, its references to the case-law — which in any event it took into consideration only selectively — miss the point. Nor can reference to the wording of Article 85 supply a convincing argument. Article 85(1) refers to agreements between ‘undertakings’. However, a parent company and its subsidiaries undoubtedly constitute undertakings. The non-applicability of Article 85 can therefore only be the result of the fact that ‘undertaking’ is understood in the sense of an ‘economic unit’. Moreover, the view taken by the Court of First Instance presupposes that agreements within a single economic unit can never fall under Article 85. That certainly cannot be deduced from the wording of Article 85 alone.

60.

The decisive question is therefore whether having regard to its object and purpose, Article 85 may be applied at all to agreements and concerted practices of group companies that form a single economic unit.

61.

Before I deal with that question, it is appropriate to point out that the present case concerns relations between a company and its wholly controlled subsidiaries. In my opinion, the present case therefore concerns only the question whether Article 85 may be applied within such a group. Accordingly my deliberation will be based exclusively on those factual circumstances.

62.

One argument in favour of applying Article 85, subject to certain conditions, also to agreements and concerted practices of group companies forming a single economic unit is that this may serve to protect competition. As the appellant has correctly stated, agreements between such group undertakings may have the same effects as agreements between independent undertakings. It might be concluded from this that Article 85 would also be applicable to such agreements and concerted practices, since — as the appellant correctly states — Article 3(g) of the Treaty calls for a system ensuring that competition in the internal market is not distorted. That view of the matter would mean that a purposive interpretation, directed to the effectiveness of the competition rules, would also have to consider intra-group agreements in the light of Article 85 in so far as they produce such harmful effects.

Moreover, in so far as the conduct of such a group of companies leads to the partitioning of the common market along national borders, there would also be an effect on the single internal market, whose establishment is provided for in Article 2 and 3(c) of the Treaty. If Article 85 were not applied to intra-group conduct, effects might arise which would be contrary to the objectives of that internal market.

63.

Furthermore, the failure to apply Article 85 to intra-group agreements and concerted practices might prompt the undertakings to service individual national markets instead of developing sales plans for the entire common market. There might also be a danger that competition law would impose stricter requirements for the conduct of small and medium-sized undertakings than for that of large groups of companies. The former undertakings are often unable to afford to set up their own distribution companies in all Member States and would therefore be dependent upon agreements with independent distributors. Those agreements are, however, subject in full to the requirements of Article 85.

64.

For all those reasons, it is entirely understandable that the appellant's view is also shared by influential legal writers. ( 50 ) Similar considerations probably also prompted the Court of Justice in the Centrafarm case to make the non-applicability of Article 85 dependent upon that additional requirement.

65.

Nevertheless, there are weighty grounds militating against such a view, which have led me to conclude that preference should be given to the view taken by the Court of First Instance.

66.

First of all, Article 85 does not make the protection of competition an absolute requirement. Article 85(1) of the Treaty is applicable only if ‘agreements between undertakings, decisions by associations of undertakings and concerted practices’ exist which have as their object or effect a restriction of competition. If the function of Article 85 had been to protect competition generally, it would not have been necessary for its wording to include those factual preconditions. The scope of Article 85 is therefore limited in that regard. Even a purposive interpretation of Article 85 in the light of Articles 2 and 3 of the Treaty must respect that limitation. That requirement can be inferred, for example, from the case-law of the Court of Justice on the question of which obligations arise for Member States as a result of Article 85 in conjunction with Article 5 of the Treaty. ( 51 ) It is settled case-law of the Court of Justice that a Member State infringes those obligations only if it requires or favours the adoption of agreements, decisions or concerted practices contrary to Article 85 or reinforces their effects, or where it deprives its own rules of the character of legislation by delegating to private economic operators responsibility for taking decisions affecting the economic sphere. ( 52 ) However, there is no infringement of those obligations ‘in the absence of any link with conduct on the part of undertakings of the kind referred to in Article 85(1) of the Treaty’. ( 53 ) Accordingly, even according to that case-law, which is after all intended to secure the effectiveness of Article 85, the need for there to be an agreement or concerted practice between undertakings cannot be disregarded.

However, an agreement or a concerted practice within the meaning of Article 85 presupposes a meeting of minds between two or more undertakings. Unilateral measures, in contrast, are not covered by Article 85. Since, according to settled case-law, Article 85 is based on a conception of undertakings as economic units, this suggests that in a case such as the present there is not even an agreement or concerted practice. ( 54 ) That is because this case basically docs not concern an agreement between two or more participants. Instead, one undertaking — the parent company — determines the distribution policy to be followed by the group. The Commission also expressed that view in its response.

67.

As I have already mentioned, however, that consideration alone is not a sufficient basis for the view held by the Court of First Instance, because it docs not explain why the Treaty bases itself, in Article 85, on a conception of undertakings as economic units. In my opinion the principal reason for this is the fact that, in a case such as the present, there can be no competition between the parent company and its subsidiaries. Independent, economic competitive measures by the subsidiaries arc inconceivable where the parent company determines and controls their conduct completely, as it docs here. Consequently, Article 85 is not applicable because there is no competition between the group companies which needs to be protected. ( 55 ) In that context it should be noted above all that in such a case the parent company could achieve the same result by issuing instructions or by the exercise of other means of control.

68.

It is true that relations between undertakings in the group may have effects on the position of third parties competing on the relevant market. However, if the undertakings in the group are to be regarded as one unit, their acts constitute unilateral conduct, to which Article 85 does not apply.

69.

That approach also produces reasonable and appropriate results. That follows quite simply from the fact that the special treatment of groups of undertakings is of only limited scope. First, it is applicable only if, and in so far as, it concerns relations between undertakings in a group which in fact form an economic unit, within which the subsidiaries cannot determine their conduct with genuine autonomy. A strict test must be applied in that regard. If the economic unit is broken up (for example by the sale of a subsidiary to a third party), Article 85 will become applicable to what was previously an internal agreement. ( 56 ) Secondly, Article 85 is applicable where third-party undertakings participate in an agreement or concerted practice as well as the group undertakings. Finally, if, for example, a parent company instructs its subsidiary to include certain clauses in agreements with independent distributors, Article 85 would be applicable to those contracts. ( 57 )

The fear expressed by the appellant that this approach could lead to undertakings' seeking to avoid the application of Article 85 by entrusting distribution to subsidiaries controlled by them seems to me to be unfounded. Moreover, it should be noted that undertakings could probably achieve this by other means — open to all undertakings — namely by carrying out distribution themselves through dependent branches without separate legal personality.

70.

Above all, however, it should be noted that the approach adopted by the Court of First Instance in no way results in the relations between group undertakings being wholly removed from the Community competition rules. It is not disputed that Article 86 may be applied in such cases. Consequently, where the group undertakings have a dominant position on the market and abuse it, Article 86 can be used against them. The view expressed here does not therefore lead to a gap in the applicability of the Treaty's competition provisions which is incompatible with the scheme of those provisions.

71.

Finally, it should be borne in mind that — as the Commission has rightly emphasized — the contrary view would lead to almost insuperable difficulties of differentiation. It would then be necessary to determine when an agreement or concerted practice was for the purposes of the internal allocation of tasks within a group and when it was not. The Court of Justice did not explain that concept in more detail in the two judgments in which it used it. If — as the proponents of the possibility of applying Article 85 advocate — ( 58 ) the decisive differentiating criterion in that regard is whether the conduct in question has effects on the competitive position of third parties, that view raises more questions than it answers. For if it is accepted that there is no competition between undertakings that form a single economic unit, an agreement between such undertakings would in any event have to restrict competition by third parties if it is to fall under Article 85 at all.

72.

The view of the Court of First Instance, according to which the only relevant factor is whether there is a single economic unit within which the subsidiaries have no real freedom to determine their course of action in the market, therefore has the additional advantage of case of application. For that reason I also share the opinion that the case-law in this area has thereby been given some degree of coherence. ( 59 )

73.

Moreover, it is worth mentioning that the view adopted by the Court of First Instance is in harmony with the prevailing view in American cartel law. In its judgment in 1984 in Copperweld Corporation and Others v Independence Tube Corporation the Supreme Court held that agreements or concerted practices between a company and its wholly-owned subsidiaries did not infringe Section 1 of the Sherman Act. ( 60 ) It based its view in particular on the fact that parent and subsidiary companies had completely identical interests and should be regarded as one undertaking for the purposes of the competition rules. ( 61 )

74.

Since I therefore take the view that, when deciding whether Article 85 was inapplicable, the Court of First Instance was right to base itself solely on the existence of a single economic unit within which the subsidiaries had no real freedom to determine their course of action in the market, I can now be brief, because, as the Commission has stated, the appellant no longer contests the fact that there is such a single economic unit in the present case.

75.

As regards the question of possible discrimination, I share the view of the Court of First Instance and of the Commission that the appellant cannot rely on the contractual relations between Parker and its independent distributors in order to argue that Article 85 applies in the present case. Admittedly, the special treatment of groups does not extend to those agreements. However, those agreements were not the subject-matter of the procedure before the Commission with which this case is concerned. Moreover, the Court of First Instance held in its judgment that the appellant had not indicated which agreements or concerted practices discriminated against it in that regard. I agree with the Commission that this is a finding of fact which may not be challenged in an appeal. Furthermore, the appellant has not given anymore specific indications in the proceedings before this Court.

76.

Since the Court of First Instance therefore rightly held that Article 85 was not applicable to the relations between Parker and its subsidiaries, the first ground of appeal must be rejected.

77.

On the other hand, if the Court of Justice were to adopt the view that, for Article 85 to be inapplicable, the agreement in question must also be for the purposes of the internal allocation of tasks within the group, the judgment of the Court of First Instance would of course contain a legal error. Merely as a precaution, I would add that in that case the Commission's alternative argument, that agreements between a company and its wholly-owned subsidiaries ‘generally’ serve the internal allocation of tasks, is not convincing. It would, rather, be necessary to consider exactly what effects the intra-group agreements had on third parties.

78.

As regards the question of the correct interpretation of Article 86, the appellant's appeal merely refers to the application at first instance. However, under Article 112(1)(c) of the Rules of Procedure of the Court of Justice an appeal must contain the pleas in law and legal arguments relied on. Consequently, the legal arguments supporting the application in question must be specifically set out. It is not sufficient simply to repeat the pleas in law and arguments submitted to the Court of First Instance or even to repeat them word for word. ( 62 ) It is therefore just as inadmissible for the appeal merely to refer to the application.

79.

Consequently, this ground of appeal should be rejected as inadmissible.

80.

The appellant claims that the Commission's decision infringed Article 190 and, contrary to the view of the Court of First Instance, failed to deal with the essential matters raised by the appellant. It refers in that context to ‘Annex K 5 and K 6 to the application’.

81.

In my opinion this ground of appeal should be considered to be inadmissible in that respect also, because, contrary to Article 112(1)(c) of the Rules of Procedure, it docs not indicate in what respect the Court of First Instance misinterpreted Article 190. If the complaint is that in its decision the Commission failed to deal with the essential arguments and that the Court of First Instance failed to find any fault in that regard, those arguments should at least have been indicated in the appeal. Reliance on an annex to the appeal is of course insufficient in that respect. ( 63 )

82.

Since none of the grounds of appeal arc valid, the appeal should be dismissed. The decision as to costs follows from Articles 122, 118 and 69 of the Rules of Procedure of the Court of Justice.

83.

I therefore propose that the appeal should be dismissed and the appellant should be ordered to pay the costs of the proceedings.