By a judgment of September 11, 2014, the Court of Justice of the European Union (Court) set aside the judgment of the General Court in which that court dismissed an appeal of the Groupement des cartes bancaires (Grouping) against a decision of the European Commission (Commission) finding that the Grouping had participated in an anti-competitive infringement by object. Highlighting the inadequacy of the General Court’s assessment of the infringement by object, the Court provided clarity on the criteria which must be present to justify a finding of an infringement by object.
Finding an infringement by object offers undeniable advantages for the Commission because it exempts it from the need to demonstrate the anticompetitive effects of the challenged practice. In some cases, this may be understandable: offences might exist for which the degree of harm is so obvious that it is unnecessary to demonstrate their effects - this may be the case for a price fixing agreement, for example.
However, in recent years, the Commission had been inclined to rely more frequently on the categorisation of infringements as being ‘by object’, resulting in a lack of clarity on the scope of this concept. The judgment of the Court in the Groupement des cartes bancaires case represents an end to this trend, and thus restores the level of the applicable standard of proof.
Created in 1984 to ensure the interoperability of payment and withdrawal systems with bank cards issued by its members, the Grouping was subject in October 2007 to a decision of the Commission imposing penalties (Decision) for participating in an anticompetitive secret agreement. The latter, introduced in 2002, aimed to improve the operation of the Grouping by establishing three financial measures aiming to compensate, in this two-sided market (bank card issuing and new merchants acquisition), the fact that some members had issuing activities which were greater than their acquisition activities.
In the Decision, the Commission described the tariff measures of anticompetitive infringements in accordance with their object and effects. Following the rejection by the General Court of its appeal against the Decision, the Grouping lodged an appeal before the Court. This proved to be the right move since the latter set aside the judgment of the General Court considering the analysis carried out by the General Court on the categorisation of the infringement by object to be insufficient. Beyond the present case, the Court makes some interesting points of clarification regarding the analysis of restrictions by object.
In terms of general principles, the judgment first criticises the General Court for having decided that the existence of a restriction of competition by object should not be analyzed “narrowly”, a conclusion that the General Court had thought to draw from the “non-exhaustive” nature of the examples given by Article 101(1) of the Treaty on the functioning of the European Union. The Court also emphasises the importance of experience when analysing contested agreements to assess the existence a priori of effects that are sufficiently negative on the market.
Regarding the identification method of restrictions by object, the Court states that the “essential” legal test lies in “the finding that such coordination has, in itself, a sufficient degree of harm with regard to competition”. According to settled case law, this finding should make clear (i) the content of the provisions of the concerned agreement, (ii) its objectives, and (iii) the economic and legal context in which it is involved. A major contribution of the judgment is to clarify that separating this analysis into three limbs should not be confused with identifying the potential anti-competitive effects of the agreement. Thus, the content of the agreement concerns those “terms themselves” and the “objectives” are those directly expressed by the parties and not those, indirect, which (often) may be suspected. Finally, the analysis of the “context” is mainly used to reinforce the analysis of the first two criteria, that is to say, according to the Advocate General Wahl who has delivered his opinion in this case, to confirm or “neutralize” the findings from the agreement’s content and objectives. It is useful to consider in this regard the three hypotheses which could cast “doubt” upon the existence of an infringement by object contemplated by the Advocate General Trstenjak in her opinion in BIDS case: (i) the absence of competition or sufficient competition between the parties to the agreement, (ii) the existence of ambivalent effects on competition (restriction and incentive) of the agreement and (iii) the ancillary nature of the restriction caused by the agreement in relation to its main purpose.
In this case, the Court found that instead of conducting an “objective” analysis of the content and objectives of the measures at issue, the General Court failed first, to explain whether the evidence relied upon by the Commission enabled it correctly to conclude that the measures at issue demonstrated a sufficient degree of harm to competition and, second, to understand the objectives pursued by the agreement as set out by the parties. By seeking instead to understand how the measures at issue were “likely to restrict competition”, the General Court confused an object analysis with one of effect, thereby indirectly highlighting the absence of any anti-competitive object in this case. In addition, the Court took the opportunity to remind the General Court that it is required to assess whether the evidence relied upon by the Commission satisfies the legal tests and must not simply reproduce – and then implicitly corroborate, or not – the economic analysis submitted by the applicants.
While the judgment of the Court is not free of uncertainties (the definition of what constitutes a “sufficient degree of harm with regard to competition” would certainly feed into the debate), the desire to clarify what constitutes a restriction by object is commendable and is certainly moving in the right direction given the Commission’s tendency to extend the ‘object’ box. The Court clearly said that the procedural benefits the ‘object’ box provides are not intended to apply to complex cases including those for which the Commission does not have sufficient insight. Beyond the good news for competition law itself, this judgment is a reminder for companies that the alternative “object / effect” remains more than just a ritual formula without significance.