On 22 May 2012, the President of the Belgian Competition Council handed down its decision on interim measures imposed on Port Real Estate (PRE) as requested by Armajaro Trading Limited (Armajaro).

Armajaro is a trader in agricultural commodities, such as coffee, cocoa and sugar. Among others, Armajaro is trading robusta coffee beans on NYSE LIFFE, a futures exchange based in London. PRE owns and operates designated LIFFE warehouses in the port of Antwerp. Commodities traded through LIFFE are stored in designated LIFFE warehouses. Whenever a trade is made, the buyer receives a warrant from any designated LIFFE warehouse where the lot traded is stored. Only upon receipt of the warrant, does the buyer know the exact location of his lot. At that point, the buyer can decide (i) to keep the lot in storage at the warehouse (to the extent that the commodities stored are not perishable), (ii) to re-sell the lot through LIFFE, (iii) to have the lot relocated to another warehouse, or (iv) to sell the lot to customers or distributors and have it delivered from the warehouse. The last two options require the warehouse owner to release the lot at stake.

Armajaro submitted a complaint to the Belgian Competition Authority, alleging that PRE was abusing its dominant position by deliberately keeping the rate of release of the lots at a low level, ensuring that the lots were stored in its warehouses for longer periods, which accordingly yielded PRE extra rent. Armajaro submitted that, as a result of this, it is being prevented from making timely deliveries to its customers and is often forced to re-sell the lots on LIFFE in order to avoid expiry of the coffee beans. Along with its complaint, Armajaro submitted a request for interim measures.

The President of the Belgian Competition Council can only impose interim measures in suspense of a prima facie restrictive practice, where there is a need for urgent response in order to avoid a situation of serious, immediate and irreparable harm to the interests of the claimant or the wider public interest.

The first prong of this two-pronged test has been interpreted as implying that it should not be wholly unreasonable to characterize the alleged conduct as an infringement. This analysis is to be carried out by the Prosecutor in his report to the President of the Council. Previously, the Court of Appeals in Brussels had held that this implies that it does not fall upon the President to carry out his own investigation of the conduct, but that rather he must assess whether the report reasonably substantiates a prima facie infringement.

Prior to assessing whether there is a prima facie abuse of dominance, the presence of a dominant position first needs to be established. In his report, the Prosecutor argued that in fact each and every designated LIFFE warehouse constitutes a market in itself, since the warehouses are forced upon the buyers through the LIFFE trading system, and buyers have no possibility of switching to a warehouse other than the one mentioned on their warrants (except by physically moving the commodities to another warehouse). In his decision, the President considered that in any event, the product market was not wider than LIFFE certified robusta coffee, and the geographical market did not extend beyond the combined ports of Antwerp, Amsterdam and Rotterdam. Even under the widest conceivable market definition, PRE was held to have a dominant position.

Armajaro alleged in its complaint that PRE deliberately releases lots at an average speed of less than 200 tonnes a day. It qualifies PRE’s conduct as an exploitative abuse, namely the imposition of unfair terms and conditions and/or an unjustified restriction of output. Armajaro’s complaint is bolstered by evidence of previous complaints by coffee roasters, and initial remarks by LIFFE itself, as well as instances whereby Armajaro’s lots were not released in time for it to supply its customers. The President followed Armajaro and the Prosecutor in concluding that the deliberately low volume released from PRE’s warehouses constitutes a prima facie abuse of dominance.

As to the second prong of the test, Armajaro argued that the harm it suffered was serious, since PRE’s conduct affected the core of its trading activities, namely the timely supply of coffee beans to its customers. In addition to the supplementary rent paid, and the losses accrued from the devaluation of its coffee lots, Armajaro suffered reputational damage.

Its harm was argued to be immediate, since the bulk of coffee bought by Armajaro appears to be stored in a PRE warehouse. Finally, Armajaro submitted that the harm it suffered was irreparable, given that reputational damage cannot be recouped.

In subsidiary order, Armajaro submitted that the wider public interest was harmed, since trading on LIFFE in practice ensures continuous supply of coffee, also to other traders, without sudden price hikes as a result of a temporary shortage.

The President agreed with Armajaro’s argumentation and, based on figures provided by PRE, decided that PRE must release on average 500 tonnes of LIFFE certified coffee a day, until 31 December 2013 or 6 months after the final report of the Prosecutor on the merits of the case has been submitted to the BCA, whichever date is earliest.

A final decision on the merits is not expected until 2013.