Crehan v Inntrepreneur Pub Co (CPC) and others

EC Treaty — Competition — Beer tie — Whether tie infringing Article 81(1) of EC Treaty — Whether national court obliged to follow approach of European Commission — Appeal allowed The respondent took leases of two public houses from the appellant on the latter’s standard terms, which included a beer tie that required the respondent to purchase his beer from a named brewer at its list prices. Both pubs made a loss, and the respondent ultimately surrendered the leases. The appellant sued the respondent to recover sums owed for beer purchases. The respondent counterclaimed for damages, arguing that the tie agreement had been unlawful under the competition provisions of Article 81 (then Article 85) of the EC Treaty. The appellant had previously referred the agreement to the European Commission for “negative clearance” under Article 2, seeking a decision either that the agreement did not infringe Article 81, or that it should be granted an individual exemption disapplying Article 81(1), pursuant to Article 81(3). The respondent’s claim was stayed pending a decision on that matter. He and other tenants opposed the grant of an exemption, and applied, under Article 3, for a decision that Article 81(1) was infringed. The appellant subsequently withdrew its notification, and, in the light of that, the Commission declined to give a formal decision on the Article 3 applications, suggesting that the matters there raised could be decided by the national courts. By that time, the Commission had given formal decisions on notifications made by various other companies in relation to beer ties. In Whitbread [1999] OJ L88/26, it had granted the exemptions sought but expressed the view that the agreements fulfilled the first of the two tests of infringement of Article 81(1) as set out in Delimitis v Henninger Bräu AG C-234/89 [1991] ECR I-935. A subsequent European Court ruling established that a breach of Article 81 could give rise to a cause of action for damages. The national court then had to decide whether Article 81 had been breached in the instant case. The judge heard detailed evidence as to the state of the UK on-trade market during the relevant period, and held that the beer tie agreement did not infringe Article 81. The Court of Appeal reversed that decision, holding that the judge’s decision offended against the principle of legal certainty within the European Community and failed to comply with the duty of sincere co-operation: see [2004] EWCA Civ 637; [2004] 3 EGLR 128. The Court of Appeal held that although the Commission’s view was not formally binding, the judge should have shown it much greater deference. The appellant appealed. Held: The appeal was allowed. Although national courts had a duty to avoid decisions that conflicted with those given or envisaged by the Commission in the implementation of Article 81, that duty was confined to the grounds and operative part of the Commission’s decision, and there could be no risk of conflict where the legal and factual context of the case examined by the Commission was not completely identical to that before the national courts: Delimitis, HJ Banks & Co Ltd v British Coal Corporation C-128/92 [1994] ECR I-1209 and Masterfoods Ltd (t/a Mars Ireland) v HB Ice Cream Ltd C-344/98 [2000] ECR I-11369 applied. The duty did not apply in the instant case, since a decision of the Commission that the Whitbread agreements infringed Article 81 could not conflict with a decision of the national court that the Inntrepreneur agreements did not. A relevant conflict arose only where the agreements, decisions and practices ruled upon by the national court had been, or were about to be, the subject of a Commission decision; no conflict arose in relation to other agreements, decisions or practices in the same market: see Council Regulation 1/2003. The judge’s decision did not create an irreconcilable inconsistency in the application of the Community competition policy to the relevant market. Had the Commission desired uniformity on the matter, it could have given a decision on the Article 3 applications, which would have bound the appellant. Instead, it had chosen to leave the decision to the national court. The judge had therefore been entitled to make his own decision, and had been under no obligation to show “deference” to the Commission’s view on Article 81(1). Where the decision-making power on a particular question lay with the national court, exercising concurrent jurisdiction, and there was no question of a conflict of decisions, the decision of the Commission was, as a matter of law, merely part of the evidence properly admissible before the national court, although it might, in the light of the Commission’s expertise, be regarded as highly persuasive. If, upon an assessment of all the evidence, the judge concluded that the Commission’s view was wrong, he could not, consistently with his judicial oath, say that he proposed to follow it as a matter of deference. Iain Milligan QC, Nicholas Green QC, James Flynn QC, Martin Rodger and Dinah Rose (instructed by Sprecher Grier Halberstam) appeared for the appellant; David Vaughan QC, Mark Brealey QC, Marie-Eleni Demetriou and Michael Bools (instructed by Maitland Walker, of Cheltenham) appeared for the respondent. Sally Dobson, barrister