Article 85
(1). Such a geographical division of markets, even as between a third country (the United States) and the Community, is capable of affecting trade between Member States if products are thereby prevented from entering the common market which would otherwise have been distributed in more than one Member State (Case 51/76, EMI Records v. CBS (6)). This distortion of competition represents a serious infringement of Article 85 because, on a specific market, it contributes to the technological and commercial isolation of the common market from a third country, by preventing QLI/C from manufacturing and marketing those products. (42) Article V of the protocol provides for a sharing of markets between the parties which is contrary to the very wording of Article 85 (1) (c). Even supposing that some degree of territorial protection may have been justified for a limited period after the sale of QLI to Laser Advances, i. e. a period which must be evaluated in the light of the circumstances of each individual case and may be from two to five years, in the present case such a restriction cannot, owing to its excessive duration, be considered necessary to ensure the transfer of the undertaking sold (Case 42/84, Remia). Moreover, in considering some protection to be sometimes justified in the context of the transfer of undertakings, the aim of the Commission and the Court has been to prevent the vendor, 'with his particularly detailed knowledge of the transferred undertaking', from being 'in a position to win back his former customers immediately after the transfer and thereby drive the undertaking out of business' (Remia, paragraph 19). These considerations do not apply in the present case as the agreement in question is designed to protect the vendor from the purchaser. Appreciable effect on competition (43) The agreement and the protocol are not covered by the Commission's Notice of 3 September 1986 on agreements of minor importance which do not fall under Article 85 (1). That Notice states that an agreement is deemed not to fall under the prohibition of Article 85 (1) if the participating undertakings have a combined market share of not more than 5 % and an aggregate turnover of not more than ECU 200 million. The turnover in question includes that of all undertakings which have a controlling interest in a party to the agreement, or in an undertaking controlling a party. (44) As seen above, the market share ceiling is exceeded here, QSA alone having a market share of around 16 %. Furthermore, the aggregate turnover in this case far exceeds ECU 200 million, if the turnover of the controlling parent Sfena and its controlling parent Aerospatiale is taken into account, the latter alone having an annual turnover in the region of ECU 5 billion. Accordingly, and contrary to QSA's submissions in its notification and in its reply to the statement of objections, the agreement's effect on competition is appreciable. Regulation (EEC) No 418/85 (45) QSA has claimed to the Commission - in its replay to the transmission of the complaint lodged by QLI/C, in its notification and in its reply to the statement of objections - that the agreement and protocol of 17 and 26 July 1985 must be considered a research and development agreement, capable of benefiting from the block exemption provided in respect of such agreements by Regulation (EEC) No 418/85. This claim is not acceptable for several reasons. (46) Regulation (EEC) No 418/85 applies to agreements entered into between undertakings for the purpose of 'joint research and development of products or processes and joint exploitation of the results of that research and development' (Article 1). The specific purpose of the agreement and the protocol is not the implementation of an R& D programme by the two undertakings. It is clear from a reading of the share transfer agreement and accompanying protocol of 17 and 26 July 1985 (see recitals 30 and 31) that the purpose of the agreements was the transfer of a business and that the joint development provisions were purely ancillary to that sale. The products covered by the joint development provisions (Datachrom dye lasers, long-pulse solid-state lasers, Picochrom dye lasers) were all in varying stages of development by one or other of the parties at the time of the sale. It was normal to provide that the development of these products should be finished in the ways provided for under the parties' pre-existing relationship before the sale. (47) With regard to other products (see recital 32), Article IV of the protocol states that 'they may become the object of common development. In such a case a specific agreement will be signed between QLI and QSA'. No such agreement has been notified to the Commission. The protocol cannot therefore be equated with a joint research and development agreement. (48) Article 2 (a) of Regulation (EEC) No 418/85 also lays down as a condition for exemption that 'the joint research and development work is carried out within the framework of a programme defining the objectives of the work and the field in which it is to be carried out.' The purpose of the Regulation, which is to encourage such activities by allowing - under certain conditions - costs and benefits to be shared, is not achieved in this case. Indeed, instead of increasing the research and development effort by combining the resources of the two parties to a common end, the agreement confines itself to determining the sharing of the benefits from work which thenceforth would be carried out independently by each party, according to the terms of the agreement itself. Thus, the intention is not a joint development, but merely to determine the conditions of separation of the two now-distinct undertakings and a sharing of the benefits from the work. (49) Moreover, an agreement cannot be exempted if it contains clauses prohibited by the Regulation (Article 6). Two clauses in the agreements of 17 and 26 July 1985 fall into this category. In the first place, Regulation (EEC) No 418/85 permits only territorial restriction clauses which are limited to five years, whereas in this case the territorial division clause, as initially interpreted by QSA, was of unlimited duration, even if following the letter of 2 August 1989 it was unilaterally modified to limit its duration. In the second place, the agreement contained a field of use restriction between competitors (see recital 31) and a ban on even passive competition on the part of QLI/C; these, contrary to QSA's submission in reply to the statement of objections, are prohibited under Article 4 (1) (e) and (f) of the Regulation. B. Article 85 (3) The notification made by QSA (50) The agreement was not notified to the Commission until 17 October 1989, more than four years after they came into force and after the Commission had informed QSA of the unfavourable light in which it viewed them. That notification, although belated, confers immunity from fines in respect of the period subsequent to notification (Article 15 (5) of Regulation No 17). It must therefore be considered, first, whether fines should be imposed in respect of the period prior to notification and, secondly, whether the notification by QSA of the 1985 agreement is capable of changing the Commission's legal assessment thereof.