## Facts

- A Belgian seed breeder/rights-holder (or its agent), SPRL Louis Erauw-Jacquery, licensed Belgian growers, including La Hesbignonne SC, to propagate protected “basic seed” into first- and second-generation seed for sale and export.
- The licensing agreements prohibited the grower from selling or exporting the basic seed itself.
- The agreements also required the grower to comply with minimum prices set by Erauw-Jacquery for sales or exports of the propagated seed.
- Erauw-Jacquery alleged La Hesbignonne sold propagated seed below the minimum prices, causing other licensees to lower prices and allegedly generating losses.
- Erauw-Jacquery sued in a Belgian commercial court for compensation; that court referred questions to the Court of Justice for interpretation of Article 85(1) EEC (now Article 101(1) TFEU).

## Issues

1. Whether a licensing clause prohibiting a grower from selling and exporting basic seed is compatible with Article 85(1) EEC in an agreement for propagation and sale of protected seed.
2. Whether a clause imposing minimum resale prices for first- or second-generation seed falls within Article 85(1) EEC, particularly where the agreement may affect trade between Member States.
3. What standard governs whether an agreement is capable of affecting trade between Member States for purposes of Article 85(1) EEC.

## Decision

- The Court held that a clause prohibiting the grower from selling and exporting basic seed is compatible with Article 85(1) EEC insofar as it is necessary to allow the breeder to select licensee-growers.
- The Court reiterated that Article 85(1) applies where, based on objective legal and factual factors, it is sufficiently probable the agreement may influence trade between Member States (directly or indirectly, actually or potentially) and has the object or effect of restricting or distorting competition.
- The Court held that a minimum-price clause falls within Article 85(1) only if, in its economic and legal context, the agreement is capable of affecting trade between Member States and restricting or distorting competition.
- The Court left application of these standards to the referring national court.

## Legal Principles

- Restrictions linked to exploitation of an intellectual property right may be compatible with Article 85(1) when they are necessary and do not exceed what is required for legitimate exercise of the right.
- An agreement falls within Article 85(1) where objective factors show, with sufficient probability, a direct or indirect, actual or potential influence on trade between Member States, combined with a restriction or distortion of competition in the common market.
- A prohibition on licensee sale/export of basic seed may be lawful as an ancillary restraint necessary for the breeder’s control over selection of authorized growers.
- Minimum resale price obligations are not exempt merely because they appear in an IP licensing setting; they are caught by Article 85(1) when the agreement, assessed in context, is capable of affecting inter-State trade and competition.

## Conclusion

The Court distinguished between a basic-seed sale/export ban that can be justified as necessary to manage licensed propagation under plant breeders’ rights and a minimum-price clause that is subject to Article 85(1) only when, in context, it is capable of affecting trade between Member States and restricting competition, leaving the factual assessment to the national court.


SPRL Louis Erauw-Jacquery v. La Hesbignonne SC, Case 27/87, 1988 E.C.R. 1919 (C.J.E.C. 1988)