1. CASE SUMMARY
A. Summary of facts
Ford AG employed a selective distribution system based on a main dealer agreement binding it to its German distributors. This agreement was notified to the Commission by Ford AG with the intention of obtaining an exemption under Article 101(3) TFEU.
Following an increase in demand by British customers for right-hand drive cars in the German market, Ford AG issued a circular to its German dealers stating that it would no longer accept their orders for those cars and that, as of that date, all such cars would have to be purchased either from a Ford dealer established in the United Kingdom (‘UK’) or from a subsidiary of Ford Britain.
The Commission adopted a definitive decision, which stated that Ford’s main dealer agreement restricted competition and affected trade between Member States in the sense of Article 101(1) TFEU. The Commission refused to grant an exemption under Article 101(3) TFEU for that agreement as applied by Ford AG since 1 May 1982 (the date on which Ford AG’s circular of 27 April 1982 came into force). Finally, the Commission ordered Ford AG to bring the infringement to an end. The action for annulment concerns this “contested decision” (dated 16 November 1983).
The key question in the proceedings leading up to the final Commission decision was whether the Commission was able to rely upon the circular containing the refusal to supply right hand drive vehicles in support of its decision to deny the exemption based upon Article 101(3) TFEU. Ford argued that the Commission could not do so in view of the fact that its refusal was a unilateral act falling outside the scope of Article 101 TFEU. The Commission argued that it was obliged to take such refusal into account because Ford’s conduct is an integral part of the context in which the agreement applies..
B. Legal analysis
B.1 - Article 101(1) TFEU
The ECJ first ruled that Ford AG’s circular did not constitute a unilateral act, but instead formed part of the contractual relations between Ford and its dealers. The notified selective distribution agreement contained provisions that granted Ford the right to change the range of vehicles that could be distributed. The presence of such clauses in the notified agreement entails that Ford’s decision forms part of the contractual relationship. (§20-22).
B.2 - Article 101(3) TFEU
The ECJ confirmed that the Commission was entitled to take into account Ford’s refusal to supply right-hand-drive vehicles in the context of its examination of the exemption under Article 101(3) TFEU. The ECJ noted that Ford’s decision to discontinue supplies of right-hand-drive cars was not made in any contractual context other than that of Ford AG’s main dealer agreement. (§25-26)
The ECJ also accepted the Commission’s argument that it was obliged to take account of all the circumstances surrounding the application of Ford AG’s agreement and that it was thus entitled to decide that the mere refusal to supply German dealers with right-hand-drive cars suitable for export was a key element in artificially partitioning the common market. (§33)
The ECJ furthermore agreed with the Commission that the latter was not obliged to carry out a detailed examination of all the advantages and disadvantages likely to flow from Ford AG’s selective distribution system as it had good reason to believe that Ford used such a system to prevent parallel imports and thus to artificially partition the common market. (§46)
Ford’s application was therefore dismissed in its entirety by the ECJ.