Provisional text

OPINION OF ADVOCATE GENERAL

RANTOS

delivered on 14 July 2022 ( )

Case C‑680/20

Unilever Italia Mkt. Operations Srl

v

Autorità Garante della Concorrenza e del Mercato,

the other party to the proceedings being

La Bomba S.n.c.

(Request for a preliminary ruling from the Consiglio di Stato (Council of State, Italy))

(Reference for a preliminary ruling – Competition – Dominant position – Article 102 TFEU – Concept of ‘economic unit’ – Imputation, to the producer, of acts of distributors with which the producer has only contractual links – Abusive exploitation – Exclusivity clause – Need to demonstrate the effects on the market)





I. Introduction

1. The present request for a preliminary ruling from the Consiglio di Stato (Council of State, Italy) was submitted in the context of a dispute between Unilever Italia Mkt Operations Srl (‘Unilever’) and the Autorità Garante della Concorrenza e del Mercato (‘the AGCM’) ( ) concerning a penalty which that authority imposed on Unilever for abuse of a dominant position on the Italian market for the distribution of packaged ice cream to certain types of businesses, such as beach resorts and bars, which in turn resell those ice creams to end consumers.

2. The present case contains two questions which invite the Court to clarify certain aspects relating to the interpretation and application of Article 102 TFEU.

3. The first question referred for a preliminary ruling concerns the application of the concept of ‘single economic unit’ (‘economic unit’) to companies joined solely by contractual links. More specifically, the referring court requests the Court to define the outlines of that concept for the purposes of the application of Article 102 TFEU and, in particular, its implementation in the context of a distribution network organised exclusively on a contractual basis. While the Court’s case-law on groups of companies provides numerous helpful pointers, this question will make it possible to clarify the relevant criteria for the purpose of establishing an economic unit other than in situations in which there are capital links. ( ) That clarification is of significant importance, as the franchising, outsourcing or subcontracting of certain stages of distribution is frequent in the practices of large undertakings, to which Article 102 TFEU might apply.

4. The second question referred for a preliminary ruling relates to the possibility for a competition authority to take the view that a practice consisting in inserting exclusivity clauses in distribution contracts is by its nature capable of restricting competition, for the purposes of Article 102 TFEU, without being required to show specifically that that is the case for the contracts at issue on the basis of the ‘as efficient competitor’ test. ( )

II. The dispute in the main proceedings, the questions referred for a preliminary ruling and the procedure before the Court

5. Unilever is an undertaking active in the production and sale of mass-market consumer goods, including, in the ice cream sector, ‘Algida’ and ‘Carte d’Or’. In Italy, it distributes those ice creams in individual portions, to be consumed ‘away from consumers’ homes’, that is to say in bars, cafés, sports clubs, swimming pools or other leisure sites (‘the sales outlets’), through a network of 150 distributors.

6. On 3 April 2013, a competing company, namely La Bomba Snc, filed a complaint with the AGCM, alleging abuse of a dominant position by Unilever. ( )

7. By decision of 31 October 2017 (‘the decision at issue’), the AGCM found that Unilever had abused its dominant position on the market for the distribution and marketing of ice cream to the operators of ‘out-of-home’ sales outlets (‘the relevant market’), in breach of Article 102 TFEU. It thus imposed a fine of EUR 60 668 850.00 on Unilever and ordered it to cease the conduct found to be unlawful.

8. According to the AGCM, Unilever conducted, on the relevant market, a strategy of exclusion liable to impede its competitors’ growth. That strategy was based principally on the application to sales outlet operators of exclusivity clauses entailing the obligation to obtain supplies exclusively from Unilever for their entire ice cream requirements. Apart from the exclusivity clauses, the exclusionary strategy included the simultaneous application to those operators of a wide range of rebates and payments subject to conditions, such as achieving specific turnover targets or stocking a defined range of Unilever products in their product ranges. Those rebates and payments, which applied, according to variable combinations and procedures, to virtually all sales outlets, were designed to provide those outlets with an incentive to maintain exclusivity by discouraging them from breaking their contracts in order to obtain supplies from Unilever’s competitors.

9. That conduct was implemented by Unilever to a large extent through its network of 150 distributors (‘the distributors’) with which Unilever had established a relationship of exclusivity, whereby: (i) Unilever sold its products to only one of its distributors, which would resell them in a specific territory; and (ii) that distributor, which was therefore a concessionaire in the legal sense of that word, was prohibited from making active sales in the territories assigned exclusively to other concessionaires and was prohibited from producing or marketing the products of competing operators. That distributor was also required to acquire the equipment designed to store and display the ice cream in the sales outlets and also the marketing material, which was then to be supplied free of charge to the operators of those sales outlets.

10. Two aspects of the decision at issue are relevant for the purposes of the present reference for a preliminary ruling.

11. First, the abusive conduct targeted by the AGCM, although in fact committed by the distributors, was imputed solely to Unilever on the ground that it and its distributors formed one and the same economic entity, namely an ‘economic unit’. Unilever engaged in a ‘certain degree of interference in its distributors’ commercial policy’ and the distributors therefore did not act independently when they adopted the commercial policy consisting in setting conditions of exclusivity and providing economic incentives in order to secure the loyalty of the sales outlets and/or exclusivity for Unilever’s products, and also in applying pressure designed to protect that exclusivity.

12. Secondly, the AGCM considered that, given the particular features of the relevant market, Unilever’s conduct excluded, or at least limited, the opportunity for competing operators to compete on merit. By relying on its dominant position, Unilever provided the sales outlets with an incentive to keep in their product ranges, for as long as possible, only its products, by limiting the opportunities for the different brands to be displayed alongside each other to consumers, preventing competitors from expanding in proportion to the ‘merits’ of their respective offers.

13. Unilever challenged the decision at issue at first instance before the Tribunale amministrativo regionale per il Lazio (Regional Administrative Court, Lazio, Italy; ‘the TAR’). The TAR dismissed the action in its entirety and Unilever lodged an appeal before the Consiglio di Stato (Council of State), the referring court. In support of its appeal, Unilever took issue with the TAR for having failed, in particular, to find the existence of errors vitiating the decision at issue, relating to, first, the imputability to Unilever of the conduct implemented by its distributors and, secondly, the effects of the conduct at issue, which, it maintained, were not capable of distorting competition.

14. In that context, being uncertain as to the interpretation to be given to EU law as regards the two abovementioned pleas, the Consiglio di Stato (Council of State) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) In cases other than those involving corporate control, what are the relevant criteria for establishing whether contractual coordination among formally autonomous and independent economic operators results in the creation of a single economic entity for the purposes of Articles 101 and 102 TFEU? Specifically, can the existence of a certain level of interference in the commercial decisions of another undertaking, which is typical of cooperative commercial relationships between producers and distribution intermediaries, be deemed [a] sufficient reason to classify those undertakings as part of the same economic unit? Is it necessary for a “hierarchical” link to exist between the two undertakings, identified by the existence of a contract under which several autonomous undertakings “submit” to management and coordination by one of their number, thus making it necessary for the [competent competition authority] to prove that there is a systemic and consistent range of guidelines likely to influence the undertaking’s management decisions, namely strategic and operational decisions of a financial, industrial and commercial nature?

(2) In assessing whether there has been abuse of a dominant position implemented by means of exclusivity clauses, must Article 102 TFEU be interpreted as meaning that the [competent] competition authority has an obligation to verify whether such clauses have the effect of excluding equally efficient competitors from the market, and to examine specifically the economic analyses produced by the party concerning the actual ability of the alleged conduct to exclude equally efficient competitors from the market? In the case of exclusionary exclusivity clauses or conduct characterised by a large number of abusive practices (loyalty-inducing rebates and exclusivity clauses), does the [AGCM] have a legal obligation to base its allegation of a competition offence on the equally efficient competitor criterion?’

15. Written observations were lodged before the Court by Unilever, the AGCM, by the Italian and Greek Governments, and by the European Commission. All of those parties, moreover, made submissions at the hearing on 3 March 2022.

III. Analysis

A. The first question referred for a preliminary ruling

16. By its first question, the referring court asks about the structural link that must exist between the producer and the independent intermediaries in order for them to be regarded as constituting an economic entity for the purposes of EU competition law. More precisely, it asks, in essence, whether, in the absence of capital links, a producer and its distributors may form such an ‘economic unit’ (i) simply because of ‘a certain degree of interference’ by the producer in the ‘commercial decisions’ of its distributors or (ii) whether, for that purpose, there must be a ‘hierarchical link’, which enables the producer to compel its distributors to ‘submit’ by means of a ‘systemic and consistent range of guidelines’ likely to influence their ‘strategic and operational decisions’.

1. Admissibility

17. The AGCM and the Italian Government submit that the first question is inadmissible, on the ground that the request for a preliminary ruling lacks the necessary details. They also state that that question refers to Article 101 TFEU, although that provision was not applied by the AGCM.

18. In that regard, it must be noted that, according to settled case-law, the need to provide an interpretation of EU law which will be of use to the national court makes it necessary for the national court to define the factual and legal context of the questions it is asking or, at the very least, to explain the factual circumstances on which those questions are based. Those requirements are of particular importance in the area of competition, where the factual and legal situations are often complex. ( )

19. In this instance, I consider, first, that the information contained in the order for reference, albeit succinct, is sufficient to explain the factual circumstances on which the first question is based, namely that of the application of the concept of ‘economic unit’ to a distribution network formed by companies with no capital link with the dominant undertaking. ( ) Secondly, as regards the fact that, in formulating the first question, the referring court referred to Article 101 TFEU as well as to Article 102 TFEU, that does not seem to me to be capable of calling the preceding observation into question, especially since the concept of ‘economic unit’, to which the first question refers, is common to Articles 101 and 102 TFEU.

20. I therefore propose that the first question referred for a preliminary ruling should be considered admissible.

2. Substance

(a) Preliminary observations

21. In order to have a better understanding of the issue raised by the referring court, I note that the AGCM imputed the conduct at issue in the main proceedings solely to Unilever, although it was actually committed by the distributors, as it considered that Unilever and those distributors formed an ‘economic unit’ owing, in particular, to the fact that Unilever engaged in a certain degree of interference in those distributors’ commercial policy. Unilever, for its part, contends, in essence, that the distributors are independent businesses – as Unilever has no share in their capital and no representative on their executive boards – which freely determine their commercial policy, each in its own sector, and themselves assume the risks associated with their activities, and that the abusive activities cannot therefore be imputed to Unilever. ( )

22. It is in that context that the referring court seeks, in essence, to ascertain what, other than in cases where there are capital links, the relevant tests are for determining whether the contractual coordination between a producer and its distribution intermediaries gives rise to an economic unit for the purposes of Articles 101 and 102 TFEU. In particular, the referring court sees difficulties in the interpretation and application of the concept of ‘economic unit’ as regards the nature and extent of the evidence showing the structural link that must exist between the producer and its distributors in order for a single decision-making centre to be formed between them, with the corollary that the actions of one may also be imputed to the other.

23. In order to answer that question, it is appropriate at the outset to explain the concepts of ‘undertaking’ and ‘economic unit’ on which the logic of the imputability of an infringement of the competition rules rests ( ) (subheading (b)). Next, it is necessary to explain how the concept of ‘economic entity’ has been applied in the context of imputability where there are capital links (subheading (c)). The principles resulting from that case-law may, in my view, also be transposed in cases where no capital links exist, as in the case in the main proceedings, in particular in so far as the Court’s case-law provides only a few examples of the application of the concept of ‘economic unit’ where there are contractual links (subheading (d)).

(b) The concepts of ‘undertaking’ and ‘economic unit’ and their significance in the implementation of EU competition law

24. The term ‘undertaking’, which is found in Articles 101 and 102 TFEU, reflects the decision of the authors of the Treaties to use an autonomous term to designate the perpetrator of an infringement of competition law that would differ from the existing terms in the FEU Treaty. ( ) Although the term ‘undertaking’ is not defined in the Treaty, the content of that concept has been gradually shaped by the Court’s case-law. In accordance with that case-law, the concept of ‘undertaking’ covers any entity consisting of personal, tangible and intangible elements which is engaged in an economic activity, irrespective of its legal status and the way in which it is financed. ( )

25. Inspired by a functional approach, the Court has also considered that the concept of ‘undertaking’ designates an economic unit even if in law that economic unit consists of several persons, natural or legal. In targeting the activities of undertakings, EU competition law enshrines as the decisive criterion the existence of unity of conduct on the market, without allowing the formal separation between various companies that results from their separate legal personalities to preclude such unity for the purposes of the application of the competition rules. ( )

26. That concept of ‘economic unit’ was developed and applied in the pursuit of a twofold aim: first, so that agreements between entities belonging to the same undertaking (for example, within the same group of companies) would be excluded from the scope of Article 101 TFEU, in so far as Article 101(1) TFEU is aimed at relationships between two or more economic entities capable of competing with each other; ( ) and, secondly, so that, within a group of companies, the anti-competitive conduct of a subsidiary could be imputed to the parent company.

27. While the concept of ‘economic unit’, for the purposes of the first aim, must, in principle, be interpreted strictly, since it constitutes an exception that restricts the scope of Article 101 TFEU, ( ) the question arises whether that concept, for the purpose of the imputation of conduct, might justify a broader conception, since the concept of ‘economic unit’ is essentially aimed at expanding the practical scope and increasing the deterrent and preventive effect of the competition rules. ( )

28. First, the application of the concept of ‘economic unit’ may entail, by operation of law, joint and several liability between the entities that constituted the economic unit concerned at the time when the infringement was committed. ( ) Historically, the concept of ‘economic unit’ was applied in the context of the application of Article 101 TFEU, and in particular in relation to agreements, and that concept allowed the acts of subsidiaries operating on the territory of the European Union to be linked to the parent company situated outside the European Union, which meant that sanctions could be imposed on the parent company on the basis of EU competition law. ( ) The purpose of this method of imputing liability by means of the concept of ‘economic unit’ is to ensure that undertakings are not able to circumvent both Article 101 TFEU and Article 102 TFEU. By way of example, a dominant undertaking might put an internal restructuring in place, dividing its activities between various (non-dominant) subsidiaries in order to reduce the market share held by each distinct legal entity, without any intervention on the basis of Article 102 TFEU. If the subsidiaries’ conduct could not be imputed to the parent company, a dominant undertaking could easily circumvent the prohibition laid down in Article 102 TFEU.

29. Secondly, the concept of ‘economic unit’ allows the amount of the fine and, therefore, its deterrent effect to be increased considerably. Recourse to the economic unit makes it possible to calculate the maximum amount of the fine provided for in Article 23(2) of Regulation (EC) No 1/2003, ( ) namely 10% of turnover, on the basis of the turnover of the entities composing the economic unit and not solely on the basis of the turnover of the entity that actually committed the infringement. In addition, that concept makes it possible to increase the basic amount of the fine and facilitates the increase of that amount for aggravating circumstances, namely repeated infringement, and the increase for deterrence. ( )

30. Thirdly, at the level of the private enforcement of competition law, a victim of an anti-competitive practice may bring an action for damages, without distinction, against any undertaking constituting an economic unit. ( )

31. Does the fact that the concept of ‘economic unit’ might be interpreted restrictively or broadly, depending on the aim pursued, mean that it should be interpreted as having a ‘variable’ meaning?

32. To my mind, the answer should be in the negative.

33. First of all, from the perspective of foreseeability and legal certainty, it seems difficult to me to be able to justify the existence of such ‘variability’ in the concept of ‘economic unit’, which, moreover, finds no support in the present case-law. Next, it follows from point 25 of this Opinion that the decisive criterion is the existence of a ‘unit of conduct on the market’, a concept which should be common as regards both the applicability of Article 101 TFEU and the imputation of the conduct. Last, from a prospective viewpoint, a conception of ‘economic unit’ that is too wide might well have the consequence that anti-competitive agreements, not only horizontal but also vertical, would escape the application of Article 101 TFEU. ( )

34. Accordingly, while the present question prompts an analysis relating mainly to the imputation of anti-competitive conduct, it must not be forgotten that the classification of an economic unit for the purpose of imputing liability necessarily means that Article 101(1) TFEU does not apply within the entities forming that economic unit.

(c) The application of the concept of ‘economic unit’ in the context of companies with capital links

35. The concept of ‘economic unit’ has been applied essentially to companies which have participated in agreements and formed part of a group of companies. In the context of such groups, the Court has established that liability for the conduct of a subsidiary may be imputed to the parent company, in particular where the subsidiary does not determine independently its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities. ( ) Thus, in order for a group of companies to be able to be considered to correspond to an economic unit, and for the conduct of the subsidiary to be able to be imputed to the parent company, two cumulative conditions must be met: the parent company must be able to exercise decisive influence over its subsidiary and, above all, it must have exercised that power in practice. ( )

36. For the purpose of the rules on imputability in the context of capital links, two situations may be envisaged: the situation where the parent company holds all or virtually all of the capital of its subsidiary and the situation where the parent company owns a small share of the capital of its subsidiary, which does not give the same degree of control.

37. As regards the first situation, where a parent company holds (directly or indirectly) all or virtually all of the capital of its subsidiary which has committed an infringement of the EU competition rules, first, that parent company may exercise decisive influence over the conduct of the subsidiary and, secondly, there is a rebuttable presumption that the parent company does in fact exercise such influence, unless the parent company proves to the contrary. ( ) That presumption of decisive influence is based on the premiss that the fact of having complete control of a subsidiary necessarily presupposes the (economic) capacity to exercise such influence. Indeed, the Court has established that it is not the mere fact of holding the capital of the subsidiary in itself, but the degree of control that such holding implies, that gives rise to that presumption. ( ) Unless it is rebutted by the production of sufficient evidence of such a kind as to show that the subsidiary behaves independently on the market, ( ) such a presumption implies that the actual exercise of decisive influence by the parent company over the subsidiary is considered to be established, in such a way that the former can be held liable for the conduct of the latter, without the need for further proof. ( )

38. As regards the second situation, where that presumption does not apply, a competition authority will have to base liability on other specific evidence of decisive influence. In accordance with the Court’s settled case-law, for the purpose of examining whether the parent company is able to exercise decisive influence over the subsidiary’s conduct on the market, account must be taken of all of the relevant factors relating to the economic, organisational and legal links which tie the subsidiary to its parent company and, therefore, account must be taken of the economic reality. While instructions given by the parent company to its subsidiary affecting its market conduct can constitute sufficient evidence of such decisive influence, they are not the only permissible evidence. The actual exercise of decisive influence by the parent company over its subsidiary’s conduct may also be inferred from a body of consistent evidence, even if some of that evidence, taken in isolation, is insufficient to establish the existence of such influence. ( ) It is precisely that approach that should, in my view, be applied mutatis mutandis to companies having contractual links.

(d) The application of the concept of ‘economic unit’ in the context of companies having only contractual links

39. Although developed in connection with the relationship between a parent company and its subsidiaries, which constitutes the ‘typical’ context of the existence of an economic unit, that concept may be applied outside the sphere of a group of companies. ( ) As the General Court has held, the existence of an economic unit is not limited to cases in which companies have capital links, but also applies, in certain circumstances, to relationships between a company and its commercial representative or between a principal and his or her agent. ( )

40. In the first place, the question whether a principal and his or her agent form an economic unit, when the agent is an auxiliary organ forming an integral part of the principal’s undertaking, was raised for the purpose of determining whether conduct falls within the scope of Article 101 TFEU or Article 102 TFEU. As the Court held in the judgment in Suiker Unie and Others v Commission, if ‘an agent works for the benefit of his principal, he may in principle be treated as an auxiliary organ forming an integral part of the latter’s undertaking, who must carry out his principal’s instructions and thus, like a commercial employee, forms an economic unit with this undertaking’. ( ) It follows that an independent intermediary may form an economic unit with the principal undertaking where it carries out an activity for the benefit of that undertaking. ( )

41. In that regard, in the judgment in Minoan Lines, the General Court took two factors as the main reference parameters for determining whether or not there is an economic unit: first, whether the intermediary takes on any economic risk and, secondly, whether the services provided by the intermediary are exclusive. ( )

42. As regards the assumption of the economic risk, the Court held in the judgment in Suiker Unie that an intermediary cannot be considered to be an auxiliary organ forming an integral part of the principal’s undertaking if the agreement entered into with the principal confers upon the agent, or allows the agent to perform, duties which from an economic point of view are approximately the same as those carried out by an independent dealer, because they make provision for the intermediary to assume the financial risks of the sales or of the performance of contracts entered into with third parties. ( ) Thus, where a distributor assumes the financial risks of the sale, for example by acquiring the goods and having title in the goods before then selling them on at his or her own risk, that distributor does not, in principle, act as an auxiliary organ forming an integral part of the producer’s undertaking, and therefore does not form an economic unit. ( )

43. As regards the exclusive nature of the services provided by the intermediary, the Court has considered that the fact that, alongside the activities carried out on behalf of the principal, the intermediary undertakes, as an independent dealer, a very considerable amount of business on the market of the good or service in question, does not argue in favour of the idea of an economic unit. ( )

44. The Court, in essence, confirmed the analysis of the General Court in the judgment in Confederación Española de Empresarios de Estaciones de Servicio, in which it established that a service provider can lose its character as an independent trader if it does not determine independently its conduct on the market, but depends entirely on its principal, because it does not bear any of the financial and commercial risks resulting from the principal’s activity and operates as an auxiliary forming an integral part of the principal’s undertaking. ( ) However, those two factors cannot be exhaustive or in themselves decisive for the purpose of establishing whether anti-competitive conduct on the part of an agent can be attributed to the principal. ( )

45. In the second place, in the judgment in Remonts, ( ) the Court analysed the concept of ‘economic unit’ more generally in the context of the conduct of an independent service provider providing services to an undertaking. That judgment was adopted in a factual context that differed from that of the dispute in the main proceedings, namely concerted practices (bid rigging) in the context of a call for tenders, but allows useful reference parameters to be identified, which overlap in part with those already identified. In that case, the Court held that an undertaking can, in principle, be held liable for a concerted practice because of the behaviour of an independent service provider providing services to the undertaking if only one of the following conditions is satisfied: (i) that service provider was in fact acting under the direction or control of the undertaking concerned; ( ) or (ii) that undertaking was aware of the anti-competitive objectives pursued by its competitors and that service provider and intended to contribute to them by its own conduct; ( ) or (iii) that undertaking could reasonably have foreseen the anti-competitive acts of its competitors and the service provider and was prepared to accept the risk which they entailed. ( )

46. It is in the light of all of the foregoing considerations that it is appropriate to provide an answer to the referring court, having regard to the particular features of the conduct at issue in the main proceedings.

(e) The application of the concept of ‘economic unit’ in the context of vertical contractual relationships under Article 102 TFEU

47. In that regard, I note that the Court has, to my knowledge, not yet been required to appraise the conduct of independent distributors that might be imputed to the dominant undertaking for the purposes of the application of Article 102 TFEU. Outside the context of capital links, the concept of ‘economic unit’ is necessarily determined by the factual context of the contractual link. Thus, it is not possible to establish in advance and in abstracto factors that would permit a finding that a particular contractual configuration would be covered by the concept of ‘economic unit’. Without prejudice to the evaluation to be made by the referring court, which alone has jurisdiction to establish the facts of the main proceedings, I consider that the following factors might be useful.

48. In the first place, I note that in practice recourse to the concept of ‘economic unit’ is less frequent in the context of the application of Article 102 TFEU, which explains why questions of imputability have only rarely been analysed before the Courts of the European Union. ( ) That is attributable in part to the fact that such a classification is not always essential. I consider that, in a configuration where the abusive conduct is actually implemented through a third-party distributor, that conduct might indeed be imputed to the dominant undertaking should it transpire that the conduct was carried out by that distributor in accordance with the specific instructions given by that undertaking and therefore in implementation of a single commercial policy. If that were not so, a dominant undertaking could easily circumvent the prohibition laid down in Article 102 TFEU by delegating to its distributors or to other independent intermediaries required to follow its instructions certain abusive conduct, such as that contested in the present case by the AGCM. It is the undertaking which holds a dominant position (and not the distributors) that bears special responsibility not to undermine, by its conduct, effective and undistorted competition within the internal market, whether directly, by means of abusive conduct which it has itself put in place, or indirectly, by means of behaviour which it has delegated to independent operators required to carry out its instructions. ( ) Furthermore, in applying by analogy the test which the Court established in the judgment in Remonts, it is appropriate to ascertain whether the dominant undertaking could reasonably have foreseen the anti-competitive acts on the part of its distributors and was prepared to accept the risk which they entailed. ( )

49. In the second place, if the authority considers that it is nonetheless appropriate also to impute liability to the distributors, in the light of the case-law cited in point 38 of this Opinion, the assessment of the existence of an economic unit must be carried out in the light of the economic, organisational and legal links between the producer and those distributors, in order to establish, on the basis of a body of evidence, what decisive influence was in fact exercised by the producer over the distributors, in order to be able to establish that the distributors essentially acted as an extension of the producer. That is the case, in particular, where the distributors are, or consider themselves to be, required to reproduce, vis-à-vis operators, the exclusionary practices designed and implemented by the producer.

50. In that regard, first, as regards the economic links, and in particular in the context of a relationship between a dominant undertaking and its distributors, the factors relating to the balance of economic power may also be relevant. In that context, the following factors may be noted: (i) the extent of the producer’s dominant position, in so far as it may cause the distributor to fear, with good reason, that it would be difficult outside its relationship with that producer to find another producer whose products it could distribute; (ii) the significance of the turnover generated by sales of the dominant producer’s products represented in the distributor’s overall turnover, so that the distributor is led to fear, with good reason, losing a significant proportion of its overall turnover should it sever its relationship with that producer; (iii) the economic value of the incentives, such as the rebates or bonuses granted to the distributor by the producer, the effect of which is to influence the distributor’s decisions because it fears being refused such payments, or that they will be reduced, as a penalty for its breach of the exclusivity clauses imposed by that producer, or for its failure to apply to the operators those clauses and/or other exclusionary practices (such as loyalty rebates) defined in advance by that producer. Likewise, the competitive constraints on the part of the dominant undertaking, and, in particular, whether the distributors are in a position to switch to other producers without difficulty, and the compensatory market power of those distributors (especially in the case of large retail outlets) must be taken into account.

51. Secondly, as regards the organisational links, it seems relevant to me, for the purposes of the assessment of the existence of a unit, to check the existence of any monitoring of compliance with the exclusivity clauses or other exclusionary clauses (such as loyalty rebates or cancellation clauses) carried out in situ or otherwise by the producer in the relationship between distributors and operators.

52. Thirdly, as for the legal links, the following factors may be relevant: (i) the establishment, in advance, by the producer, of contractual formulas which the distributor will be required to apply to the operators; and (ii) the definition, in advance, by the producer, of specific sales methods to be used by the operators. In that regard, two observations are called for.

53. First, I consider that it is unnecessary to establish ‘the existence of a hierarchical subordination’ (to use the words of the question referred for a preliminary ruling) between the dominant undertaking and its distributors under which the dominant undertaking imposes its will on the distributors by means of a ‘systemic and consistent range of guidelines’ likely to influence their ‘strategic and operational decisions’. While the existence of such a hierarchical link implies that there is no doubt that the distributor is subject to the decisive influence of the producer, it is important that, outside the hierarchical links formalised by guidance, that distributor is not free to take a decision on everything that might reduce the effectiveness of the exclusionary practices decided in advance by the dominant producer, because it fears, with good reason, harmful economic consequences if it does not systematically support such conduct.

54. Secondly, as for the question of the ‘degree of interference’, it must be stated that all vertical relationships presuppose the existence of an agreement which confers on the principal a certain degree of influence over the other party. That degree of influence may be high and extend to many aspects of the commercial activities forming the subject matter of the contractual relationship, but that is not sufficient in itself to give rise to an economic unit. Mere coordination or interference in the decisions taken by another party, even if they are significant and could constitute conduct in restriction of competition for the purposes of Article 101 TFEU, cannot in themselves indicate that the distributor does not act independently.

55. In the light of the foregoing considerations, I propose that the Court’s answer to the first question referred for a preliminary ruling should be that Articles 101 and 102 TFEU must be interpreted as meaning that, apart from cases in which there are capital links, a contractual coordination between a producer and its distribution intermediaries gives rise to an ‘economic unit’, for the purposes of those articles, where, having regard to the economic, organisational and legal links between the producer and its distributors, the producer exercises decisive influence on the distributors, so that they consider themselves compelled to reproduce the conduct conceived and implemented by the producer, as they are unable to act independently on the market. That would be the case, in particular, where, by virtue of that contractual coordination, the distributors, first, bear none of the financial risks linked with the sales of the producer’s product or, secondly, enter into exclusive contracts with the producer.

B. The second question referred for a preliminary ruling

56. By its second question, the referring court asks, in essence, whether, in the case of exclusivity clauses or conduct characterised by a range of practices (in particular rebates and exclusivity clauses), a competition authority is required to base the finding of an infringement of Article 102 TFEU on the as-efficient-competitor test and, where appropriate, to examine in detail the economic analyses produced by the dominant undertaking concerning the ‘actual’ ability of the alleged conduct to exclude from the market competitors that are as efficient as the dominant undertaking. It is apparent from the grounds of the order for reference that that question arises, in particular, from the referring court’s doubts as to the interpretation of the scope of the principles laid down in the judgment in Intel.

57. To put the referring court’s concerns into context, I note that, during its investigation, the AGCM considered that it was not required to analyse the economic studies produced by Unilever in order to show that the practices at issue were not capable of excluding from the market competitors that were at least as efficient as Unilever, in so far as those studies were wholly irrelevant to the finding of the infringement at issue. ( ) Supporting the AGCM’s analysis, the TAR considered that the principles resulting from the judgment in Intel applied only in the case of exclusivity rebates and not in the case of exclusivity obligations combined with various rebates. The TAR therefore considered that there was no need to take account of the studies produced by Unilever.

58. The question submitted by the referring court is in two parts:

– the first part seeks to determine whether, even in the case of clauses imposing an exclusivity requirement, the ability of those clauses to exclude from the market competitors that are at least as efficient as the dominant undertaking must be analysed, and

– the second part seeks to ascertain whether, in the context of such analysis, a competition authority is required to take account of the economic studies submitted by the undertaking in question.

1. Preliminary observations

59. Before addressing those two parts, I consider it useful to observe that the present question is a direct extension of the third question which the same court referred in the case that gave rise to the judgment in SEN. By that question, the referring court sought to ascertain whether, for the purpose of establishing that the conduct of a dominant undertaking is abusive, the evidence produced by that undertaking with the aim of demonstrating that, notwithstanding its abstract ability to generate restrictive effects, it did not in fact produce such effects, must be considered relevant and, if so, whether the competition authority is required to examine that evidence in detail. ( )

60. While the question referred in SEN was more general in nature, the analysis carried out in my Opinion, in the light of the assistance provided by the judgment in SEN, makes it possible to place the present question in the normative context of Article 102 TFEU and to answer, in part, the questions put by the referring court.

61. First of all, it should be borne in mind that, in accordance with the Court’s settled case-law, it is not necessary, in order to establish the abusive nature of the conduct of an undertaking in a dominant position, to show that the conduct in question actually produced anti-competitive effects. A competition authority is required only to demonstrate the harmful potential (capacity) of the conduct complained of, irrespectively of whether anti-competitive effects actually materialised. Indeed, it would be contrary to the inherent logic of Article 102 TFEU, which is preventive and forward-looking in nature, if it were necessary to wait for the anti-competitive effects to occur before a finding of abuse could lawfully be made. ( )

62. It follows that evidence put forward by an undertaking for the purpose of showing the absence of anti-competitive effects, such as economic analyses, cannot serve to exonerate the undertaking or to transfer the burden of proof to the competition authority in such a way that it is obliged to demonstrate that harm did actually result from the conduct complained of. Furthermore, the anti-competitive nature of particular conduct must be assessed at the time when the conduct took place, which is consistent with the general principle of legal certainty, since the dominant undertaking must be able to assess the lawfulness of its conduct on the basis of existing evidence. ( )

63. However, the Court has also held that the assessment of the capacity to restrict competition and, in particular, to produce foreclosure effects must be carried out in the light of all the relevant factual circumstances surrounding the conduct at issue, which to my mind also includes the evidence put forward by the dominant undertaking seeking to demonstrate that, notwithstanding its abstract capacity to produce restrictive effects, the conduct at issue did not actually produce such effects. In addition, in order to respect the rights of the defence, and in particular the right to be heard, the admissibility of evidence of that type is, from a procedural perspective, indisputable. ( )

64. As regards the probative value of that type of evidence, it varies according to the factual context. For example, economic evidence demonstrating, after the conduct complained of has come to an end, the absence of exclusionary effects might support the claim that the anti-competitive effect of the conduct was purely hypothetical. Such purely hypothetical conduct cannot be considered to be abusive for the purposes of Article 102 TFEU. ( ) It was from that aspect that the Court considered in the judgment in SEN that evidence of the absence of actual exclusionary effects may indicate ‘that the conduct in question was not capable of producing the alleged exclusionary effects’ and that ‘that evidence must, however, be supplemented, by the undertaking concerned, by items of evidence intended to show that that absence of actual effects was indeed the consequence of the fact that that conduct was unable to produce such effects’. ( )

2. The first part

65. By the first part of its question, the referring court asks, in essence, whether, following the judgment in Intel, a competition authority is required to analyse, even in the case of an exclusivity clause, the capacity of that clause to exclude from the market competitors that are at least as efficient as the dominant undertaking.

66. In order to have a better understanding of that question, a brief reminder of the facts and the issues raised in the case which gave rise to the judgment in Intel is called for.

67. In 2009, the Commission adopted a decision against Intel, in which it found that Intel had committed a single and continuous infringement of Article 102 TFEU between October 2002 and December 2007, by implementing a strategy designed to exclude a competitor, namely AMD, from the market for microprocessors (x86 CPUs). That decision described two types of conduct adopted by Intel vis-à-vis its trading partners, namely conditional rebates and ‘naked restrictions’. The first type of conduct, which is relevant for the purposes of the present analysis, consisted in the grant of a rebate to four original equipment manufacturers (OEMs), namely Dell, Lenovo, HP and NEC, on condition that they purchased all or almost all of their x86 CPUs from Intel. Intel likewise awarded payments to MSH, the largest desktop computer distributor in Europe, on condition that it sold exclusively computers containing x86 CPUs made by Intel. The Commission considered that those conditional rebates granted by Intel constituted loyalty rebates and that Intel’s conditional payments to MSH presented an economic mechanism equivalent to that of the conditional rebates granted to the OEMs. In the contested decision, the Commission also provided an economic analysis concerning the capability of the rebates to foreclose a competitor as efficient as Intel, albeit not dominant. ( )

68. Intel challenged the Commission’s analysis before the General Court, which dismissed the action, ( ) holding, in essence, that the rebates granted were exclusivity rebates, in that they were conditional upon customers’ purchasing from Intel either all or most of their x86 CPU requirements. The General Court held that the classification of such a rebate as ‘abusive’ did not depend on an analysis of the circumstances of the case aimed at establishing the capability of the rebate to restrict competition. ( ) For the sake of completeness, the General Court considered that the Commission had demonstrated, to the requisite legal standard and on the basis of an analysis of the circumstances of the case, the capability of the rebates and exclusivity payments granted to restrict competition. ( )

69. Intel lodged an appeal before the Court of Justice, in support of which it claimed that the General Court had erred in law, in particular by not examining the rebates at issue in the light of all of the relevant circumstances (first ground of appeal). By the judgment in Intel, the Court of Justice upheld that plea, set aside the initial judgment and referred the case back to the General Court, which, by a new judgment, annulled the Commission’s decision in part. ( ) In its analysis of the first ground of appeal, the Court of Justice made clear, in essence, that if the undertaking concerned maintains, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, of producing the alleged foreclosure effects, the competent competition authority is required to analyse, in particular, whether the practices being investigated are in fact capable of excluding from the market competitors that are at least as efficient as the dominant undertaking. ( )

70. It is the scope of that principle that forms the subject matter of the present question. The referring court asks, essentially, whether that principle applies only in a case where an investigation relates to exclusivity rebates or whether it also applies in a case where the conduct complained of is wider, also including exclusivity obligations and other type of rebates and ‘loyalty’ payments.

71. For the following reasons, and as already stated in point 63 of this Opinion, I consider that that principle applies generally, and independently of the type of restriction, where a dominant undertaking puts forward evidence aimed at demonstrating that the conduct at issue was not capable of producing such effects.

72. In the first place, that is apparent from paragraphs 137 to 140 of the judgment in Intel.

73. First of all, in paragraph 137 of that judgment, the Court emphasised that: ‘… an undertaking which is in a dominant position on a market and ties purchasers – even if it does so at their request – by an obligation or promise on their part to obtain all or most of their requirements exclusively from that undertaking abuses its dominant position within the meaning of Article 102 TFEU, whether the obligation is stipulated without further qualification or whether it is undertaken in consideration of the grant of a rebate. The same applies if the undertaking in question, without tying the purchasers by a formal obligation, applies, either under the terms of agreements concluded with these purchasers or unilaterally, a system of loyalty rebates, that is to say, discounts conditional on the customer’s obtaining all or most of its requirements – whether the quantity of its purchases be large or small – from the undertaking in a dominant position …’ ( ) Thus, the Court characterised the two categories as ‘potentially abusive clauses’, namely pure exclusivity obligations and rebates subject to an exclusivity obligation, and drew no distinction between them as regards their ability to harm competition.

74. Next, in paragraph 138 of the judgment in Intel, the Court stated that ‘however, that case-law must be further clarified in the case where the undertaking concerned submits, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, of producing the alleged foreclosure effects’. ( ) Therefore, the Court stated that the clarification provided in the following paragraphs of that judgment relates to any undertaking which maintains, during the administrative procedure, that its conduct was not capable of restricting competition, irrespective of the type of conduct concerned. That clarification clearly applies to both categories of practices identified in the preceding paragraph of that judgment.

75. Thus, in paragraph 139 of the judgment in Intel, the Court held that ‘in that case, the Commission is not only required to analyse, first, the extent of the undertaking’s dominant position on the relevant market and, secondly, the share of the market covered by the challenged practice, as well as the conditions and arrangements for granting the rebates in question, their duration and their amount; it is also required to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market’. ( ) The Court therefore redefined the analysis which the Commission is required to carry out in response to the arguments put forward by the undertaking concerned in support of its contention that the conduct in question is not capable of restricting competition. That clearly applies as much to exclusivity obligations as to rebates subject to an exclusivity obligation.

76. Lastly, in paragraph 140 of the judgment in Intel, the Court added that ‘the analysis of the capacity to foreclose is also relevant in assessing whether a system of rebates which, in principle, falls within the scope of the prohibition laid down in Article 102 TFEU, may be objectively justified. In addition, the exclusionary effect arising from such a system, which is disadvantageous for competition, may be counterbalanced, or outweighed, by advantages in terms of efficiency which also benefit the consumer … That balancing of the favourable and unfavourable effects of the practice in question on competition can be carried out in the Commission’s decision only after an analysis of the intrinsic capacity of that practice to foreclose competitors which are at least as efficient as the dominant undertaking’. ( ) In other words, the Court made clear that the assessment of the defensive arguments put forward by the dominant undertaking, namely the objective justifications or the advantages in terms of efficiency, can be carried out only after an analysis concerning the capacity to foreclose competitors that are at least as efficient as the dominant undertaking. Although the Court referred expressly to rebates, the ratio of that paragraph of the judgment in Intel is that such arguments must be examined where it is established that the conduct at issue is capable of producing foreclosure effects vis-à-vis competitors that are at least as efficient as the dominant undertaking, which applies irrespective of the type of conduct at issue.

77. In the second place, the literal interpretation of those paragraphs of the judgment in Intel is borne out by the teleological interpretation of Article 102 TFEU. In paragraphs 133 and 134 of that judgment, the Court confirmed that ‘it is in no way the purpose of Article 102 TFEU to prevent an undertaking from acquiring, on its own merits, the dominant position on a market. Nor does that provision seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market … Thus, not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation’. ( )

78. Those two points call for two comments. First, as was analysed in greater detail in the Opinion in SEN, the concept of ‘competition on the merits’, to which the Court refers, does not correspond to a specific form of practices, remains abstract and cannot be defined in such a way as to make it possible to determine in advance whether or not particular conduct comes within the scope of such competition. The concept of ‘competition on the merits’ expresses an economic ideal, the background to which is the current trend in EU competition law to favour an analysis of the anti-competitive effects of the conduct rather than an analysis based on its form, ( ) in particular when it is now accepted that loyalty rebates are not necessarily harmful to competition. ( )

79. Secondly, and more specifically, it follows from paragraphs 138 to 140 of the judgment in Intel that Article 102 TFEU must be understood as a provision that prevents the dominant undertaking from putting in place behaviour capable of foreclosing from the market competitors that are at least as efficient as the dominant undertaking in terms of quality, innovation and choices of products offered and that the prohibition laid down in that provision refers not only to behaviour relating to prices, such as exclusivity rebates, but also to all other commercial practices which do not relate to prices, such as exclusivity obligations, in so far as it is the harmful nature of that behaviour, not its form, that will determine whether it is abusive.

3. The second part

80. By the second part of its question, the referring court seeks to ascertain whether, when analysing the effects of the exclusivity clauses, a competition authority is required to examine in detail the economic analyses produced by the dominant party concerning the actual capacity of the conduct at issue to foreclose competitors that are as efficient as the dominant party from the market.

81. As follows from point 63 of this Opinion, in order to respect the rights of the defence, and in particular the right to be heard, the admissibility of evidence of that type, from the procedural perspective, is indisputable. Therefore, in so far as the burden of proving the anti-competitive exclusionary effects is borne by the competition authorities, those authorities are required to take carefully into account the evidence submitted by the dominant undertaking when that undertaking seeks to demonstrate that, notwithstanding its (alleged) abstract capacity to produce restrictive effects, the conduct at issue did not actually produce such effects. ( )

82. In order to clarify certain practical aspects of the scope of the obligation thus placed on the competition authorities, I consider it useful to make the following remarks.

83. In the first place, where an undertaking in a dominant position maintains, on the basis of firm evidence, that its conduct is not capable of restricting competition, on the basis of an AEC test, Article 102 TFEU places an obligation on the competent competition authority to carry out an analysis in order to determine whether that is so. ( ) That analysis must be based on tangible evidence, ( ) finding a restrictive effect that is more than merely hypothetical. ( ) If, following such an analysis, it is found that the conduct at issue is not of such a kind as to foreclose competitors that are at least as efficient as the dominant undertaking from the market, the competition authority must conclude that there has been no infringement of Article 102 TFEU, whereas if that conduct is deemed to be capable of having foreclosure effects vis-à-vis competitors as efficient as the dominant undertaking, the competition authority must take into consideration any elements of defence put forward by the undertaking concerned in order to demonstrate that the conduct complained of is objectively justified or that the restrictive effects to which it gives rise are counterbalanced, or outweighed, by gains in efficiency that benefit consumers. ( )

84. In the second place, a fortiori, where the dominant undertaking produces economic evidence in order to demonstrate that its conduct is not capable of foreclosing competitors as efficient as the dominant undertaking, a competition authority cannot ignore it. As stated in points 74 and 75 of this Opinion, it is specifically the presentation of evidence demonstrating the absence of restrictive effects that gives rise to the obligation for the competition authority to examine that evidence by reference to the exclusivity obligations and the rebate practices. In those circumstances, a competition authority must assess the economic evidence produced by the undertaking during the investigation and take it into account in its analysis of the possibility that the conduct called into question may foreclose competitors as efficient as the dominant undertaking from the market.

85. Even if the competition authority considers, as in the present case, that the method used for the purposes of the economic study is not relevant, it cannot exclude outright the relevance of such a study, unless it sets out, in the decision by which it classifies conduct as ‘abusive’, the reasons why it considers that the methodology on which that study is based does not make it possible to contribute to showing that the behaviour called into question is not liable to foreclose competitors as efficient as the dominant undertaking from the market.

86. In the light of the foregoing, I propose that the Court answer the second question referred for a preliminary ruling as follows: Article 102 TFEU must be interpreted as meaning that, in order to establish the existence of an abuse of a dominant position, a competition authority is required to demonstrate, in the light of all of the relevant circumstances and taking into account, in particular, the elements relied on by the dominant undertaking, that that undertaking’s conduct was capable of restricting competition, by also analysing, where appropriate and in that regard, the evidence produced by that undertaking and showing that the conduct in question did not produce anti-competitive effects on the relevant market. That requirement applies both to exclusivity clauses and to conduct characterised by multiple practices and implies a duty on the part of the competition authority to state reasons if it considers that such evidence was not capable of demonstrating that competitors as efficient as the dominant undertaking were excluded from that market.

IV. Conclusion

87. In the light of the foregoing, I propose that the Court answer the questions referred by the Consiglio di Stato (Council of State, Italy) as follows:

1. Articles 101 and 102 TFEU must be interpreted as meaning that, apart from cases in which there are capital links, a contractual coordination between a producer and its distribution intermediaries gives rise to an ‘economic unit’, for the purposes of those articles, where, having regard to the economic, organisational and legal links between the producer and its distributors, the producer exercises decisive influence on the distributors, so that they consider themselves compelled to reproduce the conduct conceived and implemented by the producer, as they are unable to act independently on the market. That would be the case, in particular, where, by virtue of that contractual coordination, those distributors, first, bear none of the financial risks linked with the sales of that producer’s product or, secondly, enter into exclusive contracts with the producer.

2. Article 102 TFEU must be interpreted as meaning that, in order to establish the existence of an abuse of a dominant position, a competition authority is required to demonstrate, in the light of all of the relevant circumstances and taking into account, in particular, the elements relied on by the dominant undertaking, that that undertaking’s conduct was capable of restricting competition, by also analysing, where appropriate and in that regard, the evidence produced by that undertaking and showing that the conduct in question did not produce anti-competitive effects on the relevant market. That requirement applies both to exclusivity clauses and to conduct characterised by multiple practices and implies a duty on the part of the competition authority to state reasons if it considers that such evidence was not capable of demonstrating that competitors as efficient as the dominant undertaking were excluded from that market.