EU Competition Law Compliance: An Altered Legal Landscape
EU competition law prohibits the restriction of competition by agreements between competitors that may affect trade between Member States and have as their object or effect the restriction of competition (Article 101 TFEU). An agreement will fall outside this prohibition if it is not capable of appreciably restricting competition or trade between Member States. This de minimis principle was established by the European Court of Justice (ECJ) in 1969, in Völk v Vervaecke, where the ECJ held that “…an agreement shall fall outside the prohibition when it has only an insignificant effect on the market, taking into account the weak position which the persons concerned have on the market of the product in question.”1 In order to offer guidance on how to interpret the de minimis principle as established by the ECJ, the European Commission (the Commission) periodically has issued a Notice, outlining that the Commission will not start proceedings in cases which fall below the thresholds set out in the De Minimis Notice.
The most recent de minimis Notice, issued in 2001 was, due to developments in ECJ case law, revised again this summer. The Commission clearly stated in the notice that, even if the market share thresholds are not reached, a restriction “by object” is nevertheless assumed to appreciably restrict competition and therefore does not fall within the De Minimis Notice safety zone. This appears to follow the 2012 ECJ Expedia ruling, in which the ECJ emphasized that “an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition.”2 The revised De Minimis Notice supported this view.3
On Sept. 11, 2014, however, the ECJ drastically altered the legal landscape with its judgment in Groupement des Cartes Bancaires,4 which clarified the application of “by object” restrictions, focusing on its 2013 Allianz Hungária5 ruling rather than, as the Commission had done, on the earlier ECJ Expedia ruling. The facts of the ECJ’s Groupement des Cartes Bancaires decision merit discussion.
The Groupement des Cartes Bancaires (CB) – an economic interest grouping – was created in 1984 in France so that holders of a CB-card issued by a member of CB could make payments to affiliated traders, and/or make withdrawals from automatic teller machines operated by members. In 2002, CB adopted three pricing measures: (i) a fee payable by a CB member whose CB-card issuing activity exceeded its activity in affiliating new traders to the system; (ii) a reform of the membership fee for new members, which consisted in a fixed sum and a supplementary membership fee for members whose number of CB-cards in stock exceeded a certain threshold at a given moment; and (iii) a fee per CB-card issued, payable by “dormant” members (those who were inactive or not very active before the date of entry into force of the new pricing measures). As required, CB notified the Commission of these new measures.
After two statements of objections from the Commission, CB submitted offers of commitments which the Commission found to be out of time and inadequate. Subsequently, the Commission declared that the association shut out new entrants from the market for issuance of payment cards in France. According to the Commission, the measures were applied in such a way as to hinder the issuing of cards by smaller banks prepared to offer cards at lower prices. The Commission concluded that the measures were anti-competitive both by object and by effect, and therefore breached article 101 of the Treaty on the Functioning of the European Union (TFEU).
CB appealed the decision, but the General Court (GC) dismissed the appeal holding that the CB pricing measures constituted a “by object” restriction of competition, and therefore that the effects of the measures did not have to be considered. CB appealed to the ECJ, arguing that the GC should not have considered the measures to be a restriction of competition by object.
The ECJ Ruling
The ECJ emphasized that “by object” restrictions comprise certain types of coordination between competitors that reveal such a significant degree of harm to competition that there is no need to examine their effects — similar to the U.S. rule of per se illegality. The ECJ stressed, however, that under settled case-law, in order to determine whether an agreement between competitors, or a decision by an association of competitors, reveals a sufficient degree of harm to competition to constitute a restriction of competition ‘by object’ within the meaning of Article 101 TFEU, regard must be had to: (i) the content of the agreement’s provisions, (ii) its objectives, and (iii) the economic and legal context of which it forms a part. When In making this determination, it is also necessary to consider the nature of the goods or services affected, and the real conditions of the functioning and structure of the market or markets in question. All of this sounds very much like a rule of reason evaluation.
The ECJ determined that the GC should have applied this standard when it examined whether the CB’s activities caused a sufficient degree of harm to competition to constitute a “by object” restriction. The ECJ added that even though the parties’ intentions are not a necessary factor in determining whether an agreement is restrictive “by-object,” as noted above, there must be consideration of the content of its provisions, its objectives, the economic and legal context of which it forms part, and the nature of the goods of services affected. The ECJ annulled the GC’s judgment, declaring that the GC had failed to properly apply the essential criteria.
The CB judgment was a rather strongly worded statement by the ECJ, and contains a cautionary message to the Commission and all national authorities and courts relying on Expedia. According to the ECJ, the concept of restriction of competition “by object” can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that there is no need to examine their effects. The ECJ’s CB judgment clarifies three important notions:
(i) an alleged restriction “by object” is to be examined on the basis of its objectives and in its economic and legal context ;
(ii) the fact that an agreement simply has the potential to restrict competition is not enough to qualify it as a restriction “by object,” and therefore if the type of coordination between undertakings does not reveal a sufficient degree of harm to competition, the Commission should examine its likely effects on competition; and
(iii) a restriction “by object” can only be found with respect to coordination that “reveals a sufficient degree of harm to competition.”
These notions imply that the ECJ favors an extensive and almost full judicial review of the Commission’s competition decisions, and also requires the Commission to apply a more detailed assessment of the arguments of the parties and the relevant factors before concluding that a restraint harms competition in such a way that it should be qualified to be a restriction “by object,” as meant by article 101 TFEU.
The Impact of the CB Decision
A similar approach as in Cartes Bancaires was taken on the same day as the ECJ decision by Advocate-General Wahl (AG Wahl), in his opinion in FNV Kunsten Informatie en Media v. Staat der Nederlanden. He considered whether a collective labor agreement between associations of employers and associations of employees, pursuant to which self-employed persons perform the same work as employees of a company, fell outside article 101 TFEU, because the provision was contained in a collective labor agreement. AG Wahl took the view that “the fact that a contractual provision in a collective agreement lays down minimum tariffs for self-employed persons in competition with workers for the same job is not in itself enough to bring those provisions within the scope of the antitrust rules.”6 The advocate general advocated a more cautious approach in this assessment, in line with the ruling of the ECJ in CB.
The same view possibly had already been considered by Advocate-General Kokott in para. 43 of her opinion in the 2012 Expedia ruling, when she stated: “Consequently the national competition authorities and courts are free to proceed against agreements between undertakings below the thresholds of the de minimis notice, provided that they have taken due account of the Commission’s guidance in the notice and that, in the particular case, there is evidence, other than the market shares of the undertakings concerned, which suggests that the effect on competition is appreciable.”
There is a reason for applying a rule of reason to alleged restrictions “by object.” Parties should not be sanctioned for intending to restrict competition when they are unable to do so.
1Case 5/69 Völk v Vervaecke  ECR 295, paras. 5-7.
2Case C-226/11 Expedia December 13, 2012, para. 37.
3See also GT Alert, “ECJ eliminates Noticeability Test in Regard to Restriction of Competition by Object” of January 2013 by Hans Urlus and Sanne Mulder, and “HvJ EU Expedia en de mededingingsrechtelijke merkbaarheid, Gevolgen voor de Nederlandse praktijk,” Markt & Mededinging, Aug. 1, 2013.
4Case C-67/13 P Groupement des cartes bancaires Sept. 11, 2014.
5Case C‐32/11, Allianz Hungária a.o./Gazdasagi Versenyhivatalon March 14, 2013.
6Opinion of Advocate-General Wahl at Case C-413/13 FNV Kunsten Informatie en Media v. Staat der Nederlanden Sept. 11, 2014 para. 99