Prevalence of Community-law norms
RULING Nº 471/97
2 of July of 1997
With regard to restrictive competitive practices, the economic situation of a particular company or given economic sector is not necessarily assessed in the same way under national competition law as under Community competition law, especially if consideration is given to the fact that Portugal’s economic position and trade organisation immediately prior to its accession to the Common Market were radically different from the situation of trading in most other EEC member States. It is not possible to rule out that the outcome of a specific economic assessment concerning Portugal's domestic market might be different from the outcome of an economic assessment on transnational economic relations which could rely on the existence of a category-based rule on exemption under Community law.
From a legal standpoint, the establishment of a standard system prohibiting concerted agreements and competition-restricting practices, and sanctioning any such agreements as void, and the admissibility of exceptions to the rule of prohibition on the grounds that certain practices are justified where there is a favourable economic assessment under either national or Community law, may lead to different evaluations of the economic effect of certain restrictive practices, owing to the diversity of economic circumstances covered by these assessments (in the former case, a national economy in which a given sector of production was shared between two dominant public companies; in the latter case, the economy of the same sector of production in all Community countries, in terms of their transnational relations). This diversity as such constitutes an obstacle to the formulation of a judgement as to whether or not there was a violation of the principle of equality as claimed by the Portuguese state company whose exclusive distribution contracts were considered contrary to the principles of competition, given that it is not possible to compare different markets within different legal systems and that it is not possible to identify any discrimination on the basis of nationality.
The question of constitutionality was raised by a Portuguese state company in an appeal to set aside a decision of the Portuguese Council on Competition, which had required amendments to the standard distribution contract for beers and refrigerated products produced by this company. The ruling sought to cancel the exclusivity clauses in distribution agreements concluded by the producer and its distributors.
The state company concerned relied upon Community competition law to argue that the application of Portuguese legislation entailed a violation of the principle of equality, in so far as a Community regulation exempted distribution agreements at Community level. Therefore, whereas the Portuguese company in question was unable to conclude exclusive distribution agreements in the domestic market, foreign companies were able to establish valid exclusive distribution agreements with Portuguese companies in the same economic sector. It argued that the prohibition on using this same commercial practice amounted to unjustified discrimination on the basis of nationality, entailing the violation of the constitutional principle of equality (Article 13 of the Constitution).
The Constitutional Court, hearing the case as part of a specific review of constitutionality, considered first that the question should be examined and resolved in the light of Portuguese competition law. The subject of the review of constitutionality was the whole body of legislative rules on the basis of which the Council on Competition had deemed a restrictive practice, carried out by a national company in the domestic market, to be unjustified although identical practices were exempt under Community regulations.
Having considered the way in which Portuguese competition law and in particular the national legislation passed during Portugal’s negotiations with the Common Market had developed, the judgement examined the facts underlying the appeal and emphasised that the decision by the Council on Competition had been adopted before Portugal's accession to the EEC, although the company had been notified of its ruling at a time when Article 85 of the Treaty of Rome and Regulation no. 1983/83 Commission (EEC) of 22 June 1983 were already in force in Portugal.
The Constitutional Court found that there had been no violation of the principle of equality. The Council on Competition had assessed the specific impact of the company in the domestic market and its economic situation had been judged to be unfavourable which had ruled out the possibility of an individual exemption. This assessment did not necessarily have to coincide with the European Commission’s economic assessment of transnational relations in the sector, which had led to the publication of the category-based exemption regulation on exclusive distribution agreements. The co- existence of the two legal orders and the diversity of economic factors made a meaningful comparison between the different situations impossible and did not permit the conclusion that there had been a violation of the principle of equality.