In its ruling of 19 March 2015 (Case C-286/13P) relating to the so called 'banana cartel', the Court of Justice of the EU (CJEU) has dismissed the appeal by banana importer Dole against the General Court's judgment in its entirety. The CJEU agreed with the Commission's findings, supported by the General Court, that the bilateral exchange between banana importers of pre-pricing information relating to the weekly quotation prices for bananas did amount to a concerted practice with the object of restricting competition in breach of Article 101TFEU.
The ruling confirms the EU Commission's approach to information sharing as set out in its 2011 Guidelines on horizontal co-operation agreements (the Guidelines). The CJEU held that, even though it is still necessary to consider the information exchange in its proper context, information exchanges between competitors of individualised data regarding intended future prices or quantities should be considered a restriction of competition 'by object' (i.e.as breaching the rules without any need to demonstrate an actual effect on the market). The CJEU ruling also makes it clear that the prohibition is equally applicable to more general market information that is capable of influencing future prices, and that there is no need for a direct connection between the practice and consumer prices.
Whereas other exchanges of information do not restrict competition 'by object' they may of course still have the effect of restricting competition. Assessing whether there is an anti-competitive effect requires a more detailed analysis of the context in which the exchange of information is taking place and the nature of the information. The Guidelines make it clear that the exchange between competitors of strategic data (data that reduces strategic uncertainty in the market) is more likely to be caught by Article 101 TFEU than the exchange of other types of information.
In October 2008, the Commission imposed a fine of €60.3 million on two importers of bananas, Dole and Weichert, for operating an illegal price cartel in breach of Article 101 TFEU. A third importer, Chiquita, was also found to have infringed but escaped fines as it blew the whistle and benefitted from full immunity under the Commission's Leniency Notice. The Commission found that, over a two-year period, the banana importers had engaged in bilateral pre-pricing communications during which they discussed factors relevant for the setting of their weekly quotation prices for the upcoming week, and discussed or disclosed price trends or indications of quotation prices. Once they had set their quotation prices, the parties bilaterally exchanged these prices, thereby enabling them to monitor each other’s quotation pricing decisions in the light of the pre-pricing communications. According to the Commission, the purpose of the pre-pricing communications was to reduce uncertainty as to the parties’ conduct in respect of their weekly quotation prices and therefore gave rise to a concerted practice by which they coordinated their weekly quotation prices for bananas.
In March 2013 the General Court upheld the Commission's findings and dismissed the parties' claims that the information exchanged was simply general market information or 'gossip' that was not capable of enabling coordination between them. The General Court also considered that there was sufficient evidence to contradict the parties' arguments that the quotation prices were totally irrelevant to the setting of the actual prices, and held that the Commission had sufficiently established the relevance of the quotation prices in the banana sector, which in turn made it possible to establish the existence of a concerted practice having an anti-competitive object.
Click here for a link to our e-bulletin on the General Court's ruling.
2. CJEU ruling
On appeal before the CJEU, Dole argued that the General Court had been wrong to categorise the pre-pricing communications between the various importers as a restriction by object. Dole argued that the communications concerned quotation price trends only and were therefore not capable of removing uncertainty as to the actual prices. Also, the communications took place between employees who were not responsible for setting the quotation prices.
The CJEU held that, subject to proof to the contrary, it must be presumed that companies will use commercially sensitive information shared between competitors in determining their market conduct. The General Court had examined in detail the relevance of the quotation prices in the banana sector and the responsibility of the Dole employees involved in the pre-pricing communications. The General Court had concluded that the quotation prices were relevant to the market concerned because it was possible to infer market signals, market trends or indications as to the intended development of banana prices from them. This information was important for the banana trade and the prices obtained and, in some transactions, the actual prices were directly linked to the quotation prices. The General Court had also found that the Dole employees involved in the pre-pricing communications did also participate in the internal pricing meetings.
The CJEU referred to previous case law (T-Mobile Netherlands and Others) which had already made clear that an exchange of information between competitors is incompatible with the competition rules if it reduces or removes the degree of uncertainty as to the operation of the market in question, with the result that competition between undertakings is restricted. In Dole, the CJEU also clarified that a concerted practice may have an anticompetitive object even though there is no direct connection between that practice and consumer prices.
The General Court was therefore entitled to conclude that the Commission was correct to categorise the exchange between banana importers of pre-pricing information relating to the weekly quotation prices for bananas as a concerted practice with the object of restricting competition in breach of Article 101TFEU.
Information sharing between competitors remains a high risk area and companies should carefully consider whether any communications with their competitors could give rise to a breach of Article 101 TFEU or equivalent national rules. This is a difficult area of competition law and EU law is stricter than the law of many other jurisdictions as it treats certain information exchanges as infringements 'by object'. The difficulties in this area of the law are compounded by the fact that employees will often genuinely consider such exchanges as legitimate and sound business conduct. Companies should therefore make sure they have in place an effective compliance programme in order to ensure that all employees are alive to the risk that any type of discussion with competitors could potentially result in a breach of the competition rules.