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July 25, 2014

National Competition Authorities in Europe Are Not Bound by the European Commission de Minimis Notice

On 13 December 2012, the Court of Justice of the European Union (CJEU) held that national competition authorities (NCAs) can apply European competition rules, and fine companies for an infringement of EU rules, even in cases where the European Commission considers that Article 101(1) Treaty on the functioning of the European Union (TFEU) is not applicable. 

Article 101(1) TFEU prohibits anti-competitive agreements that have an appreciable effect on competition and trade in the European Union.  In 2001, the Commission published a de minimis notice (the notice), setting out guidance on the concept of appreciable effect.  According to the notice, the Commission holds the view that agreements between competitors that affect trade between Member States do not fall within the scope of Article 101(1) TFEU if the aggregate market share held by the parties to the agreement is less than 10 per cent of any of the markets affected by the agreement.  The threshold increases to 15 per cent where the parties are not actual or potential competitors.  These are considered generally to be safe-harbour thresholds for the application of Article 101(1) TFEU. 

EU competition rules are not only, however, applied by to the Commission; NCAs and courts of the Member States can also apply Article 101(1) TFEU.  The French Supreme Court referred a question under the preliminary ruling procedure to the CJEU, asking whether, when applying Article 101(1), the French Autorité de la Concurrence is bound by the thresholds of the notice (Expedia Inc v Autorité de la concurrence and Others C-226/11). 

The case involved an appeal against the €5m fine imposed by the French regulator.  The French regulator held that an agreement between SNCF and Expedia that created Agence VSC as an online travel agency for the sale of train tickets had as its object and effect the restriction of competition to the detriment of competitors in the market for leisure travel.  Expedia argued that the market shares of the parties to the agreement fell within the thresholds of the safe harbours set by the notice, making the agreement outside the scope of Article 101(1) TFEU.

In its judgment, the CJEU reiterated that the notice is binding only for the Commission.  In this regard, the Court noted that the Commission imposes a limit on the exercise of its own discretion through the guidance it publishes.  In order to adhere to the general principles of law—namely the principle of equal treatment and the protection of legitimate expectations—it must not depart from its own guidance.  With respect to national courts and NCAs, however, the notice is only intended to provide non-binding guidance for the application of EU competition rules.  The de minimis thresholds may be taken into account by the NCAs to determine whether the infringement has an appreciable effect on competition but, owing to its non-binding nature, it is only one of the factors that may be considered

The judgment creates a degree of uncertainty in that, in applying the exact same EU provisions, the European Commission is bound by its own de minimis notice, whereas NCAs are not.  This means that agreements between parties with low market shares can be found in breach of the EU competition rules by the NCAs even if the Commission finds no such breach.  In a national context, companies cannot simply rely on the thresholds of the notice to exclude the application of EU competition rules to the agreements they enter into.  

This judgement suggests that the same reasoning would apply to other Commission guidance, which sits oddly with the harmonised approach to the application of EU competition law.     

Aiste Slezeviciute, a trainee solicitor in the Brussels office, also contributed to this article.

© 2014 McDermott Will & Emery

About the Author

Partner

Wilko van Weert is a partner in the international law firm of McDermott Will & Emery, based in its Brussels office.  His practice focuses on EU competition, EU regulatory and EU trade law, with a particular emphasis on the interface between competition and intellectual property law.  This is reflected in his significant representation of clients in the media and broadcasting sector, as well as those in industries such as high-tech electronics, automotive, aviation, biotechnology, oil and paper.

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About the Author

Partner

Philipp Werner is a partner in the international law firm of McDermott Will & Emery, based in its Brussels office.   His practice focuses on European and German competition law including State aid, merger control, cartels and abuse of dominance, and his clients include companies in the automotive, infrastructure, transport and health care sectors.

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