The unseen risks of e-commerce...

...a timely AG opinion on technical measures for breaching the competition rules

Those interested in all things e-commerce and competition will want to keep an eye out for the Court of Justice's ruling on a preliminary reference made by Lithuania's Supreme Administrative Court.

The case concerns an allegation about an anti-competitive concerted practice in the online travel industry. The notable (and novel) point is that the alleged concertation was achieved entirely through the technical workings of an online travel booking system, used by around 20 travel agents (who are now subject to competition investigation).

The act giving rise to the alleged breach of Article 101 consisted in the making of a technical change which restricted the level of discounts that could be offered by the travel agents to their customers. There appears to be some very slight evidence that some of the travel agents had an interest in such a change being made, but the complaint essentially relates to the administrator’s actions in introducing the change, and sending a system notice notifying the travel agents about the change. It is unclear if the majority of the travel agency users actually saw the system notice, but the fact that they failed to distance themselves from the measure by communicating their disagreement or ceasing to use the service is alleged to amount to a concerted practice.

The opinion of AG Szpunar (not seen so often in competition cases) was published last week. The opinion takes the opportunity to engage in a bit of inter-AG dialogue, picking up on AG Wahl's very interesting opinion of a few weeks ago on the role of "cartel administrators" in AC Treuhand (currently only available in French)**.

Leaving such benign (or even beneficial) rivalry aside, AG Szpunar concludes that a unilateral communication from an IT system administrator is capable of giving rise to a concerted practice between the administrator and recipients – provide the latter at least give their tacit approval to the measure in question. According to the AG, such approval can be inferred from the fact that the recipients of the system notice remained silent following receipt of the notice, in particular in circumstances where they were aware that the same information had been communicated to competitors. While the use of systems messages is not exactly equivalent to other methods of communication between cartel participants (as the European Commission has urged), a presumption of awareness of the communication may be inferred if a “reasonably attentive and prudent economic operator” would have become aware of the system notice. Such an operator should have acted in the same way as if it had become privy to illicitly shared information, and should have taken steps to distance itself from the conduct (e.g. by informing the systems administrator). The ultimate decision on the facts will of course be left to the Lithuanian court on the basis of the full evidence, but the likely outcome (if the AG’s opinion is followed), is that the conduct amounts to an unlawful concerted practice.

In sum, this case is something of a cautionary tale for users of the-commerce systems – who would be well advised to keep an eye out for communications from systems administrators if they wish to avoid being implicated in an unexpected breach of the competition rules. The view of the Commission (that such communications are entirely equivalent to “normal” business communications) should also be noted – since the Commission will shortly be in receipt of detailed and copious information from its ecommerce questionnaires, it would not be at all surprising to see further cases of this nature emerge in the years to come.

This was of course, only an AG opinion – I, for one, will be keeping a weather eye out for the CJEU ruling.

** It has been a particularly fascinating few weeks for AG opinions in the completion field - and perhaps one where the existence of bit of internecine rivalry among the AGs can be inferred. Important recent AG opinions (aside from this one) include:

  • AG Wahl in AC Treuhand - probably the most radical of this group, suggesting that a “cartel administrator” which is not active on the market does not bear responsibility for the infringement – this is the one, in my opinion, which is the most likely of this group not to be followed;
  • AG Kokott in Post Danmark II - my least favourite - if followed, it represents a 180o change in direction since Post Danmark I, and could well be the nail in the coffin of the supposed economic approach to abuse cases (an “ephemeral trend”, to judge by AG Kokott...);
  • AG Wathelet in Toshiba - an interesting opinion on (inter alia) potential competition. This one has the potential to be unhelpful for the pending patent settlement cases (companies treated as potential competitors unless the barriers to market entry are “insurmountable”...).

Finally, I note that AG Szpunar has something of a gift for a readable opinion – following a search on a “popular search engine” I found another recent Szpunar opinion in New Media Online, relating to the Audiovisual Media Services Directive (not an instrument with which I currently claim great familiarity), which delights with the following opening paragraph:

‘Koń jaki jest, każdy widzi’ (“We all know what a horse is”). Thus read one of the definitions contained in the first Polish encyclopaedia, published in the eighteenth century. (2) The problem of defining an audiovisual media service in the internet context, which is the subject of the present case, might seem similar — intuitively everyone is capable of identifying such a service. However, when it comes to describing it in legal language, it is difficult to find terms which are at the same time sufficiently clear-cut and comprehensive.'

For those who like their law Denning-esque, AG Szpunar is certainly one to watch!