Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Wathelet
• ECLI: ECLI:EU:C:2001:181
• Docket Number: C-453/99
• Date: 22 March 2001
• Procedure Type: Reference for a preliminary ruling

Important legal notice

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61999C0453

Opinion of Mr Advocate General Mischo delivered on 22 March 2001. - Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd and Others. - Reference for a preliminary ruling: Court of Appeal (England and Wales) (Civil Division) - United Kingdom. - Article 85 of the EC Treaty (now Article 81 EC) - Beer tie - Leasing of public houses - Restrictive agreement - Right to damages of a party to the contract. - Case C-453/99.

European Court reports 2001 Page I-06297

Opinion of the Advocate-General

I - Facts and procedure

1. This matter has been referred to the Court of Justice by the Court of Appeal of England and Wales (Civil Division) in proceedings between Courage Ltd (hereinafter Courage), the plaintiff in the main proceedings, and Mr Bernard Crehan, the defendant in the main proceedings. The Court of Appeal has referred four questions asking about the possibility for a party to an agreement prohibited under Article 81 EC to claim damages from his co-contractor.

2. In 1990, Courage, a brewery with a 19% share of the market in sales of beer, and Grand Metropolitan plc (hereinafter Grand Met), a company with various catering and hotel interests, agreed to merge their estates of public houses. To this end, their respective estates were transferred to Inntrepreneur Estates Ltd (hereinafter IEL), a company owned in equal shares by Courage and Grand Met.

3. An agreement concluded between IEL and Courage provided that all IEL tenants had to buy their beer exclusively from Courage. Courage was to supply the quantities of beer ordered at the prices specified in the price lists applicable in the establishments leased to IEL.

4. IEL provided a standard form of lease for its tenants. While the level of rent could be a point of negotiation between a prospective tenant and IEL, the exclusive purchase obligation and the other clauses of the contract were not negotiable.

5. In 1991, Mr Crehan concluded two 20-year leases with IEL imposing an obligation to purchase from Courage. The rent was subject to a five-year upward only rent review to the higher of the rent for the immediately preceding period or the best open market rent obtainable for the residue of the term on the other terms of the lease. The tenant had to purchase a fixed minimum quantity of specified beers and IEL agreed to procure the supply of specified beer to the tenant by Courage at the prices shown in the latter's price list.

6. In 1993, Courage brought an action for the recovery from Mr Crehan of the sum of more than GBP 15 000 for unpaid deliveries of beer.

7. Mr Crehan's defence was that the exclusive purchase obligation for certain specified types of beer (the beer tie) in the lease was contrary to Article 81 EC and he counter-claimed for damages. The basis for Mr Crehan's claim was the fact that Courage sold its beers to clients who were not bound by the beer tie at substantially lower prices than those given in the price list imposed on its tied tenants. He contends that this price difference resulted in a reduction in the profitability of tied tenants, driving them out of business.

8. The considerations which led the Court of Appeal to refer questions to the Court of Justice for a preliminary ruling were as follows.

9. First, in an earlier judgment the Court of Appeal had held that Article 81(1) EC was designed to protect third-party competitors and not parties to the prohibited agreement. It was held that they are the cause, not the victims, of the restriction of competition.

10. Second, English law did not allow a party to an illegal agreement to claim damages from the other party. Even if Mr Crehan's claim that his lease infringed Article 81 EC were upheld, English law would bar his claim for damages. In contrast, it was clear from the judgment of the Supreme Court of the United States of America in Perma Life Mufflers Inc. v International Parts Corp. 392 U.S. 134 (1968) that where a party to an anti-competitive agreement is at an economic disadvantage, it may bring an action for damages.

11. It is against that background that the Court of Appeal referred the following questions to the Court of Justice.

II - The questions referred for a preliminary ruling

1. Is Article 81 EC to be interpreted as meaning that a party to a prohibited tied house agreement may rely upon that article to seek relief from the courts from the other contracting party?

2. If the answer to Question 1 is yes, is the party claiming relief entitled to recover damages alleged to arise as a result of his adherence to the clause in the agreement which is prohibited under Article 81?

3. Should a rule of national law which provides that courts should not allow a person to plead and/or rely on his own illegal actions as a necessary step to recovery of damages be allowed as consistent with Community law?

4. If the answer to Question 3 is that in some circumstances such a rule may be inconsistent with Community law, what circumstances should the national court take into consideration?

III - Appraisal

Preliminary observation

12. It is clear from the order for reference that, for the purposes of the main proceedings and in an endeavour to settle first of all the issues of law, the Court of Appeal makes two assumptions. First, it assumes that the exclusive purchase obligation for certain types of beer laid down in the lease for a public house concluded by Mr Crehan is contrary to Article 81 EC. Second, it assumes that Mr Crehan was damaged by actions taken under the agreement by the other party.

13. It follows that this Court must rule in the abstract on a situation where a breach of Article 81 EC has caused loss to one of the parties to the agreement. The question whether this abstract situation corresponds to the facts in this case is a question to be decided later by the referring court and does not concern this Court.

14. However, I do not consider that the Court must refuse...