A recent ruling by the European Union’s highest court puts users of online platforms at risk of breaching competition law, even where users do not know that an online platform facilitates anti-competitive practices.
In the case before the court (Case C-74/14 Eturas and Others, ruled on January 21, 2016), the system administrator of an online booking system applied a technical restriction limiting the level of discounts which travel agencies using the system could offer their customers. The system administrator also posted a notice of this limit to the travel agencies within the system’s “Information Notices” field, but whether they had actually read the notice was not evident from the facts before the court.
In procedural terms, however, evidence is not always necessary for proof. In certain limited circumstances, EU competition law permits the European Commission and national competition authorities to prove infringements of competition law by presumption, rather than by direct evidence. For example, antitrust authorities may prove by presumption that a company has participated in a cartel merely by establishing with evidence that the company was present at a meeting where the other parties agreed to fix prices. Only if the company “publicly distanced” itself from the activities, for example by protesting and declaring that it would not take part, could it be safe from the presumption that it too was part of the illegal scheme.
The court found that, on the facts of this case, the antitrust authorities were entitled to presume that the intended recipients knew of the content of the system administrator’s notice. Such (presumed) knowledge, coupled with the fact that the travel agencies did not “distance” themselves from the notice, and the fact that they continued to operate on the market and use the system which contained the price restriction, allowed a breach of EU competition law to be found.
This judgment has relieved antitrust authorities and private litigants of an important part of the evidential hurdle otherwise necessary to prove a crucial fact in enforcing competition law against tacit agreements to fix prices. According to the court, the presumption of participation can apply so long as national procedural rules don’t make rebutting it excessively difficult or unrealistic. Subject to that limit, whether evidence of actual knowledge or active participation is required, or whether authorities can presume knowledge and participation, is a matter for national procedural law.
It is clear from the judgment that it was no defense that the system administrator implemented the restriction in order to maintain the attractiveness of the platform for the travel agencies using it; nor was it a defense that travel agencies had maintained the possibility of applying additional discounts to individual customers outside the platform.
The court did provide some guidance in respect of defenses, however. With regard to the defense of public distancing from an anti-competitive practice, the court confirmed that participants in a digital space need only to provide a clear and express objection to the practice to the administrator of the system, rather than to all other presumed participants (in this case, all other travel agencies).
Users and administrators of online platforms alike must be even more wary of accusations of coordination than before. They might be presumed to know about – and act according to – any instruction or guidance regarding their commercial activities.
Further, the possibility to presume participation in an infringement is not limited to the online world: any trade association or industry group issuing guidance or instructions on terms of business could make itself and its members vulnerable to the same presumption of illegality.