Select Committee on Trade and Industry Second Report


25. Competition within the European Single Market is regulated mainly under Article 81 and 82 of the EC Treaty. There have been several instances where the European Commission and the European Courts have considered the arrangements for the supply of beer between national brewers and pubcos, on the one hand, and their respective tied tenants, on the other, under Article 81 (formerly Article 85) of the EC Treaty.[24] The judgment of the European Court of Justice in Stergios Dilimitis v Henninger Bräu[25] provided a benchmark two-fold test for the courts with regard to the application of Article 81 to the beer tie. Only if both conditions are fulfilled cumulatively does such an agreement fall foul of Article 81. If not, EU competition law is considered irrelevant to the agreement in question.

26. The first condition is that of 'national market foreclosure', which is measured by the Courts against a series of indicators relating to the economic and legal context in which the agreement must be assessed. These indicators are:

—  the existence of a bundle of similar tying agreements of at least several national brewers (more specifically the number of outlets thus tied to national brewers in relation to the number of public houses not so tied, the duration of the commitments entered into, the quantities of beer to which those commitments relate, and the proportion between those quantities and the quantities sold by free distributors);

—  factors relating to opportunities for access (the possibility to acquire an existing brewery together with its network of retail outlets, the possibility to open new public houses, the minimum number of houses required to have a viable economic operation, and the presence of independent wholesalers); and

—   the conditions under which competitive forces operate on the market (the degree of saturation of the market, customer fidelity to existing brands, and the trends in beer sales in the off­trade).

27. The second condition is that the agreement in question must make a 'significant contribution' to the sealing-off effect brought about by the totality of those agreements in their economic and legal context. The Court gave the following criteria: the market position of the brewery in question (market share of the brewing group, number of outlets tied to it in relation to the total number of premises), and the duration of the agreement.

28. Although some old lease agreements have been found by the European Commission and Courts to breach Article 81,[26] there have been no instances where the current arrangements underwriting pubcos' agreements have been found to be anti­competitive.[27] Indeed, many multiple public house owners applied for exemption for their agreements. These so called 'block exemptions' were granted in all cases.[28]

24   For example see European Court of First Instance, Case T-25/99 Roberts v Commission, 5 July 2001 (OJ (C) 2001 317/24) and European Court of First Instance, Case T-231/99 Joynson v Commission, 21 March 2002 (European Court Reports, 2002, II-2085) Back

25   European Court of Justice, Case C-234/89, Delimitis v Henninger Bräu AG, 28 February 1991 (European Court Reports 1991 I-0935) Back

26   For example see European Commission Decision 99/230/EC, Case IV/35.079/F3, Whitbread (OJEC (L) 1999 88/26) Back

27   For example see European Court of First Instance, Case T-231/99 Joynson v Commission, 21 March 2002 (European Court Reports, 2002, II-2085) Back

28   For example see European Commission Decision 1999/474/EC, Case IV/35.992/F3, Scottish & Newcastle, 16 June 1999 (OJEC (L) 1999 186/28) Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2004
Prepared 21 December 2004