Crehan v Inntrepreneur Pub Company (CPC) & Anor

For a beer tie to infringe Article 81, both Delimitis conditions must be satisfied. It must be difficult for actual or potential competitors to enter, or expand within, the relevant national market, and the particular network of agreements must make a significant contribution to that foreclosure.

The relevant market is the supply and distribution of beer to on-licensed premises, not competition between individual pubs. The court must assess the economic and legal context, including the practical availability of untied outlets, the duration and terms of other supply agreements, and opportunities for entry through licensing. A market need not be completely closed for the first condition to fail.

The claimant operated two public houses under agreements for lease with the defendants. The agreements imposed beer ties requiring most beer to be purchased from the defendants’ nominated supplier at listed prices. The businesses failed after substantially lower turnover than projected, and the claimant claimed damages under Article 81 of the EC Treaty.

The claim had previously been dismissed by Carnwath J in [1999] EuLR 409. The Court of Appeal referred questions on the availability of damages to the CJEC, which held that a party to an infringing agreement could in principle recover loss caused by it. The case returned for determination of whether the ties infringed Article 81 and, if so, whether they caused the losses claimed.

1. Article 81 and Delimitis. The two conditions identified in [1991] ECR I-935 were cumulative. The first concerned access to the United Kingdom market for supplying beer to on-licensed premises. The relevant question was whether entry or expansion was difficult because of tying agreements or comparable arrangements.
2. The court was not bound to adopt the Commission’s conclusion in the Whitbread decision. Having considered the evidence, it found that the market in July 1991 and subsequently was not foreclosed to the extent required by the first condition. The Beer Orders had progressively increased the availability of outlets. There were substantial untied outlets, opportunities to acquire breweries and pubs, successful foreign entrants, and access through licensing arrangements. The existence of tied estates did not make the market sufficiently difficult to enter.
3. The first condition therefore failed and the damages claim failed. The court expressed no concluded view on the second condition. It observed that the effect of a network had to be assessed in the context of the total market, and that the Inntrepreneur network’s contribution might not have been significant.
4. The Commission Regulation (EEC) No 1984/83 Block Exemption would not in any event have applied. Following Shaw and Falla v Commission and Joynson v Commission, the exemption covered ties by brand, not the ties by type used here. The tripartite structure involving Inntrepreneur, the tenant and the nominated brewer also narrowly fell outside Article 6(2).
5. The court rejected the abuse of process argument. Inntrepreneur had not obtained a definitive decision from the Commission, had reserved its position, and was entitled to argue the issues before the national court.
6. On the alternative causation issue, the court found that the claimant’s failure was caused by highly damaging price competition and concluded that, if he had been free of tie and paid appropriate free-house rents, he would probably have survived, though only narrowly. Those findings were unnecessary to the result.

The claim was dismissed because the beer ties did not infringe Article 81.

1. CJEC: On a reference from the Court of Appeal, held that a party to an agreement infringing Article 81 could in principle claim damages: [2002] QB 507.
2. Court of Appeal: Referred questions concerning damages and the effect of the claimant’s participation in the agreement.
3. High Court (Chancery Division): The claim was dismissed because the first Delimitis condition was not satisfied.