Facts

A recent European Court of Justice (ECJ) decision confirms that automated messages can implicate the recipients in price fixing. The decision concerned an alleged cartel between travel agencies. The case arose when web developer Eturas – which ran an e-commerce platform for 30 travel agencies in Lithuania – sent an administrator message to each member, stating that the e-commerce functionality allowing each travel agency to grant discounts would be capped at 3%. That message appeared in part of the system relating to "information messages".

The ECJ found that administrator messages can be the basis of illegal cartel-type conduct. Thus, it would be presumed that each travel agency had participated in price fixing where it:

  • understood the measure communicated to it; and
  • failed to distance itself from it.

That presumption could be rebutted only if the travel agency could show that it objected to the communication or systematically set prices which did not respect the new rule.

Legal implications

EU competition law takes a strict approach when commercially sensitive information is passed between competitors – often presuming that the contact led to illegal coordination. This is the case even when the contact is initiated or facilitated by a third party.

Particular care should be taken when dealing with third parties that aggregate market data, perform benchmarking or act as brokers in the market.

This case also shows that companies must take precautions regarding their IT functions and any online automation which controls pricing elements. The risk of implication in price fixing seems higher for franchises and other internet-enabled networks; however, this case highlights that it can be risky to share IT functions with competitors.

There are some positives. The ECJ has shown restraint by stating that mere delivery and receipt of a message do not lead to a presumption that its contents have been read and understood: that is a question of fact which must be checked carefully. The ECJ has arguably stopped short of simply transposing the strict EU jurisprudence developed regarding physical cartel meetings onto the online world.

The ECJ decision also gave the travel agencies a 'get-out' if they could prove that they systematically priced their services in a way which disregarded the communicated discount cap. This will be an issue for the Lithuanian court that referred the question. However, it may be a difficult hurdle for the travel agencies to clear, since it involves proving a negative (ie, that they did not take specific measures or took them independently).

Thus, in practice, the best method for managing risk will be to avoid risky exchanges of sensitive information (including through any IT systems shared with competitors), and ensure that employees know when and how to distance the company from potentially illegal coordination.

Decision

The ECJ reviewed the established case law which requires competitors to decide on their market conduct independently. If competitors share sensitive information (even passively) and remain on the market, they will be presumed to have taken this information into consideration and to have breached competition law.

However, a key question for the court was whether the mere delivery of a message may suffice to conclude that the companies were aware or should have been aware of its contents. Referring to the EU Charter of Fundamental Rights, the court concluded that the presumption of innocence should preclude this conclusion – that is, mere delivery is not enough. The Lithuanian court which will decide the case must decide whether the contents of the message were read and understood by the recipients. The ECJ decision states that the national court must be reasonable in its assessment and explains that the travel agencies could show that they were unaware of the contents because they had not received the message or they looked at it much later. The decision also points out that agencies can avoid liability if they show that they have publicly distanced themselves from the measure. The decision states that a clear and explicit message to the administrator, Eturas, would suffice in this regard.

Helpfully, the decision reminds the referring court that public distancing is not the only way that a cartel may be disproved. The rules will be breached only if the information exchange results in actual conduct on the market. Although the law presumes this to be the case, the ECJ decision clarified that the travel agencies would not have infringed the rules if they could show that they systematically offered discounts which went beyond the cap. This is a significant finding. The advocate general had argued (in non-binding opinion) that it would have been inadequate to oppose the practice by mere conduct on the market – for example, by giving individual discounts in order to counterbalance the general restriction. The advocate general's view was that without public opposition, such conduct could not easily be distinguished from simply cheating on other cartel members.

Comment

The decision confirms that EU competition law takes a strict approach to competitor contacts (especially when price or price-related factors are concerned), even if those contacts are facilitated by a third party.

Companies should be alert to situations in which this risk may arise (and where IT systems may be the cause). Training as to when a company may be exposed and how employees can publicly distance the company from illegal coordination is essential.

For further information on this topic please contact Bill Batchelor or Grant Murray at Baker & McKenzie by telephone (+32 2 639 36 11) or email (bill.batchelor@bakermckenzie.com or grant.murray@bakermckenzie.com). The Baker & McKenzie website can be accessed at www.bakermckenzie.com.

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