Competition Authority decision
On June 30 2016 the Brussels Court of Appeal annulled a Competition Authority decision of August 30 2013 which had established the existence of an anti-competitive agreement between three cement groups and their sector associations in the context of a standard-setting procedure. At the time, the authority had imposed fines totalling almost €15 million.
Competition Authority decision
The case was the result of a complaint lodged in the early 2000s by ORCEM, a Dutch producer of ground-granulated blast-furnace slags (GGBFS). GGBFS can be used as an ingredient in cement and in ready-mix concrete and a lower-cost alternative to other ingredients.
Standardisation and quality marks play an important role for all materials used in the construction sector, including cement and ready-mix concrete. It was alleged that cement groups CBR, Holcim and CCB, together with their sector associations, colluded to delay the adoption of the standards and quality marks that would facilitate the use of GGBFS in Belgium. ORCEM claimed that the launch of its activities on the Belgian market had been delayed as a result of the practices of the parties concerned.
The Competition Authority held that the behaviour of the accused parties went beyond lobbying and the normal participation in standardisation procedures. It considered that the parties had engaged in anti-competitive collusion with the objective of foreclosing GGBFS suppliers such as ORCEM from the Belgian market. The authority held that the behaviour constituted a by-object infringement.
The parties involved appealed the Competition Authority's decision, requesting its annulment on the basis of several procedural infringements and the merits. The court rejected the procedural arguments developed by the appellants, but followed them on the substance.
In its judgment the court stated that collusion can be anti-competitive only if it relates to market behaviour. It added that lobbying activities are by definition remote from the product or service markets on which the parties concerned are active. This could suggest that lobbying activities fall entirely outside the scope of competition law, but this is clearly not what the court had in mind, as it went on to examine the precise involvement of the parties concerned in the lobbying and standard-setting processes.
The court rejected the Competition Authority's argument that the parties had transgressed the boundaries of legitimate lobbying. On the basis of its reading of the authority's file, the court established that the parties had done nothing that went beyond legitimate lobbying and normal participation in the activities of standard-setting organisations. The court referred to the European Commission's horizontal guidelines, which clearly set the criteria that standard-setting organisations have to meet for their activities to remain within the scope of Article 101 of the Treaty on the Functioning of the European Union. The horizontal guidelines refer to:
- unrestricted participation;
- objective and non-discriminatory standard-setting procedures; and
- open access to the standard.
The court held that in this case, the standard-setting bodies and procedures met all of these criteria and the involvement of the parties in the process was equally in line with the requirements of the horizontal guidelines. As a result, the court concluded that the practices did not restrict competition.
The court emphasised that the technical input of the three cement groups and their sector associations was a critical part in a balanced standard-setting process. It acknowledged the risk of abuses, but noted that the public sector always remained in control of the decision-making part of the process. In particular, it noted that the three cement groups and their associations were not in a position to make a decision or even hold a majority and that their presence had always been counterbalanced by representatives with other interests.
The court's judgment is in line with the General Court judgment in Case T-432/05 to which it refers. The judgment also relates to the standard-setting process in the cement sector. In that judgment the General Court held that the participation of Cembureau (the European cement sector association) in preparatory works for a standard was not unlawful, because it had never been in a position to control the process, even if it evidently sought to defend the interests of its members.
The European Commission's horizontal guidelines clearly state the criteria that standard-setting bodies and procedures have to meet in order to fall outside the scope of competition law. The application of the criteria is often difficult in practice and is well illustrated in this particular case, where the Competition Authority and the court reached different conclusions on the basis of the same facts. The authority's position was heavily based on correspondence and internal notes from which it deduced an anti-competitive intent. The court took a more procedural approach. It validated the processes in this particular case and established that the parties had done nothing outside their normal role in these processes.
For further information on this topic please contact Koen Platteau at Simmons & Simmons LLP by telephone (+32 2 542 0960) or email ([email protected]). The Simmons & Simmons LLP website can be accessed at www.simmons-simmons.com.