Keywords

Summary



Keywords

1. Procedure – Application initiating proceedings – Formal requirements

(Statute of the Court of Justice, Art. 21; Rules of Procedure of the General Court, Art. 44(1)(c))

2. Competition – Administrative procedure – Statement of objections – Necessary content – Observance of the rights of the defence – Undertakings afforded the opportunity to make known their views on the facts, objections and circumstances alleged by the Commission

(Council Regulation No 1/2003, Art. 27(1))

3. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Criteria for assessment – Analysis of conditions of competition on the market – Taking account of actual and potential competition

(Art. 81(1) and (3) EC)

4. Competition – Administrative procedure – Commission decision finding an infringement – Decision requiring a complex economic or technical assessment – Judicial review – Scope

(Art. 81(1) EC)

5. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Meaning

(Art. 81(1) EC)

6. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Description of an undertaking as a potential competitor – Criteria – Essential evidence – Ability of the undertaking to enter the relevant market

(Art. 81(1) EC)

7. Competition – Agreements, decisions and concerted practices – Proof – Assessment of the probative value of a document – Criterion – Reliability of evidence produced

(Art. 81(1) EC)

8. Competition – Agreements, decisions and concerted practices – Adverse effect on competition – Description of an undertaking as a potential competitor – Ability to enter the market at issue with speed – Meaning of speed of entry

(Art. 81(1) EC; Commission Communication 2001/C 3/02)

9. Competition – Fines – Agreement notified under Regulation No 17 and entitled to immunity from fines – Lapse of notification and end of immunity from fines at date of entry into force of Regulation No 1/2003

(Council Regulations Nos 17, Art. 15(5), and 1/2003, Art. 34(1))

10. Competition – Fines – Amount – Commission’s margin of discretion – Adjustment of level of fines

(Art. 81(1) EC; Council Regulation No 1/2003, Art. 23)

11. Competition – Fines – Discretion of the Commission – Assessment by reference to the individual conduct of the undertaking

(Art. 81(1) EC)

12. Competition – Fines – Decision imposing fines – Duty to state reasons – Scope – Indication of the factors on the basis of which the Commission assessed the gravity and the duration of the infringement

(Art. 253 CE; Council Regulation No 1/2003, Art. 23(2); Commission Communication 98/C 9/03)

13. Community law – Principles – Protection of legitimate expectations – Meaning – Commission’s statements ‘which suggested’ – Excluded

14. Competition – Administrative procedure – Obligations of the Commission – Duty to act within a reasonable time – Annulment of the decision finding an infringement because of the procedure’s excessive duration – Condition – Harm to rights of defence of the undertakings concerned

(Charter of Fundamental Rights of the European Union, Art. 41(1); Council Regulation No 1/2003, Art. 25)

15. Competition – Fines – Amount – Determination – Guidelines adopted by the Commission – Attenuating circumstances

(Council Regulation No 1/2003, Art. 23(2); Commission Communication 98/C 9/03)

16. Competition – Fines – Amount – Determination – Criteria – Gravity of the infringement – Criteria for assessment – Impact on the market – Size of geographical market

(Council Regulation No 1/2003, Art. 23(2); Commission Communication 98/C 9/03)

17. Competition – Fines – Amount – Determination – Criteria – Attenuating circumstances –Commission’s discretion to make a global assessment

(Council Regulation No 1/2003, Art. 23(2); Commission Communication 98/C 9/03, Point 3)

Summary

1. Under Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the General Court, each application is required to state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based. It is necessary, for an action to be admissible, that the basic matters of law and fact relied on be indicated, at least in summary form, coherently and intelligibly in the application itself. Whilst the body of the application may be supported and supplemented on specific points by references to certain passages in documents annexed thereto, a general reference to other documents, even those annexed to the application, cannot make up for the absence of the essential arguments in law which, in accordance with the abovementioned provisions, must appear in the application.

Furthermore, it is not for the General Court to seek and identify in the annexes the pleas and arguments on which it may consider the action to be based, since the annexes have a purely evidential and instrumental function.

A joint expert report annexed to the application, to which the applicants refer within their criticism of the Commission decision, may be taken into consideration by the Court only in so far as it supports or supplements pleas or arguments expressly set out by the applicants in the body of their written pleadings and in so far as it is possible to determine precisely what are the matters contained in that report which support or supplement those pleas or arguments.

(see paras 50-51, 53)

2. In an administrative procedure relating to competition, the statement of objections must be couched in terms that, albeit succinct, are sufficiently clear to enable the parties concerned properly to identify the conduct complained of by the Commission. Due observance of the rights of the defence in a proceeding in which sanctions may be imposed requires that the undertakings and associations of undertakings concerned must have been afforded the opportunity during the administrative procedure to make known their views effectively on the truth and relevance of the facts, objections and circumstances put forward by the Commission. That requirement is satisfied if the decision finding an infringement of Article 81 EC does not allege that those concerned have committed infringements other than those referred to in the statement of objections and only takes into consideration facts on which the persons concerned have had the opportunity of making known their views.

Further, in asserting that there was an infringement of the rights of the defence with regard to the complaints made in the contested decision, it is not sufficient for the undertakings concerned to point to the mere existence of differences between the statement of objections and the contested decision without explaining precisely and specifically why each of those differences constitutes, in the circumstances, a new complaint upon which they were not given the opportunity to comment. Since, in the statement of objections, the Commission relied on certain characteristics of the market, and, in particular, the fact that it was highly concentrated, to conclude that competition in that market was limited and since, in response to observations made by the applicants, the Commission stated, in its decision, that the competition in the market was not ‘ineffective’ and that there was scope for further competition, the Commission did not address a new complaint to the applicants nor did it rely on new factual material, but merely completed its analysis by taking into account the applicants’ observations. Accordingly, that change in the reasoning in the contested decision as compared with that to be found initially in the statement of objections, far from disclosing an infringement of the applicants’ rights of defence, proves, on the contrary, that the applicants were able to express their views on the complaint made by the Commission.

(see paras 56, 58-62)

3. In assessing an agreement, a decision of an association of undertakings or a concerted practice under Article 81(1) EC, account should be taken of the actual conditions in which they produce their effects, in particular the economic and legal context in which the undertakings concerned operate, the nature of the products or services concerned, as well as the real operating conditions and the structure of the market concerned, unless the matter at issue is an agreement containing obvious restrictions of competition such as price-fixing, market‑sharing or the control of outlets. In the latter case, such restrictions may be weighed against their claimed pro-competitive effects only in the context of Article 81(3) EC, with a view to granting an exemption from the prohibition in Article 81(1) EC.

The examination of conditions of competition on a given market must be based not only on existing competition between undertakings already present on the relevant market but also on potential competition, in order to ascertain whether, in the light of the structure of the market and the economic and legal context within which it functions, there are real concrete possibilities for the undertakings concerned to compete among themselves or for a new competitor to enter the relevant market and compete with established undertakings.

Further, if an agreement, a decision of an association of undertakings or a concerted practice is to be considered to be prohibited by reason of the distortion of competition which is its effect, the competition in question should be assessed within the actual context in which it would occur in the absence of the agreement, decision of an association of undertakings or concerted practice in dispute.

(see paras 67-69, 81, 125, 130)

4. Although as a general rule the Courts of the European Union undertake a comprehensive review of the question whether or not the conditions for the application of Article 81(1) EC are met, their review of complex economic appraisals made by the Commission is necessarily limited to verifying whether the relevant rules on procedure and on the statement of reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of appraisal or a misuse of powers. However, the recognition that the Commission has a margin of appreciation does not mean that the Courts of the European Union must decline to review the Commission’s interpretation of economic data. The Courts of the European Union must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it.

Since the structure of the market for the provision of credit and deferred debit charge card acquiring services to merchants, notwithstanding the factors which the Commission accepted would favour the access of a new entrant, means that it is difficult to conceive of a financial institution entering that market by means of a fronting arrangement which would immediately place it at a disadvantage in comparison with its main competitors established on that market, the Commission’s conclusion that the possibility of such an entry should be rejected is sufficiently justified by the arguments relating to the difficulty of finding a fronting partner and, for the sake of completeness, those relating to the additional complexity and costs engendered by such arrangements, and does not constitute the application of an incorrect legal test.

(see paras 70, 110-111)

5. The fact that the Commission recognised that competition on the market at issue is not ‘ineffective’ does not preclude its penalising conduct which has the effect of excluding a potential competitor from that market. First, since Article 81 EC, like the other competition rules of the Treaty, is designed to protect not only the interests of competitors or consumers but also to protect the structure of the market and thus competition as such, the Commission could validly rely on the high degree of concentration in the market at issue. Second, the analysis of the effects of conduct on potential competition cannot be dependent on the examination of the level of competition currently existing in the market in question. Such an approach would be incompatible with the settled case-law which requires that the examination of conditions of competition on a given market be based not only on the existing competition between undertakings already present in the market in question, but also on potential competition.

(see paras 121-131)

6. As regards the legal tests which should be applied in order to determine whether an undertaking is a potential competitor in the market in question, the Commission is required to determine whether, if a rule challenged on the basis of Article 81(1) EC had not been applied to that undertaking, there would have been real concrete possibilities for it to enter that market and to compete with established undertakings. Such a demonstration must not be based on a mere hypothesis, but must be supported by evidence or an analysis of the structures of the relevant market. Accordingly, an undertaking cannot be described as a potential competitor if its entry into a market is not an economically viable strategy. It necessarily follows that, while the intention of an undertaking to enter a market may be of relevance in order to determine whether it can be considered to be a potential competitor in that market, nonetheless the essential factor on which such a description must be based is whether it has the ability to enter that market.

(see paras 166-168)

7. As regards the probative value to be accorded to documents, in connection with the finding of an infringement of the competition rules, it must be recalled that the principle which prevails in European Union law is that of the unfettered evaluation of evidence and that the only relevant criterion for the purpose of assessing the evidence adduced is its reliability. Accordingly, in order to assess the probative value of an item of evidence, regard should be had first to the credibility of the account it contains. Account must then be taken of, inter alia, the person from whom the document originates, the circumstances in which it came into being, the person to whom it was addressed and whether, on its face, the document appears sound and reliable.

(see para. 182)

8. The Commission does not err in law by describing an economic operator as a potential competitor where (i) the Commission’s assessments of the ability of that operator to enter the market in question are not challenged and (ii) the hypothesis that that operator might enter the market in question is not merely theoretical. That conclusion is not invalidated by the fact that the Commission did not provide any estimate of the time required for that operator to enter the market in question, which appears to be inconsistent with the definition in the guidelines on the applicability of Article 81 EC to horizontal cooperation agreements, which refer to a period of one year. It is apparent from reading that definition, in footnote 9 of those guidelines, that the essential factor is the need for the potential entry to take place with sufficient speed to form a constraint on market participants, the period of one year being illustrative only.

(see paras 187-189)

9. The Commission’s power to impose a fine in relation to an agreement notified under Regulation No 17 stems from Article 34(1) of Regulation No 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty, which states that notifications are to lapse as from the date of its application. It necessarily follows that the immunity from fines for agreements notified under Article 15(5) of Regulation No 17 ended when Regulation No 1/2003 entered into force. Accordingly, the Commission is, in any event, entitled to impose a fine on the applicants for the continuation of the conduct at issue after the entry into force of Regulation No 1/2003.

(see para. 211)

10. The Commission has a margin of discretion when setting the amount of fines, since fines constitute an instrument of competition policy. As regards the fact that the Commission had not, in the past, imposed fines in relation to restrictions of competition by effect, that cannot mean that it is precluded from imposing a fine if that is necessary to ensure the implementation of competition policy. On the contrary, the proper application of the competition rules requires that the Commission be able at any time to adjust the level of fines to the needs of that policy.

(see paras 212-213)

11. It is in the specific context of each case that the Commission, in the exercise of its discretion, decides whether it is appropriate to impose a fine in order to penalise the infringement found and to protect the effectiveness of competition law. In any event, if the Commission were wrong not to impose fines in the past, the applicants’ argument amounting to a plea that undertakings penalised for infringement of the competition rules should benefit from an unlawful act committed in favour of a third party would be contrary to the principle of legality.

(see paras 218-219)

12. As regards the determination of fines for infringements of competition law, the Commission fulfils its obligation to state reasons where it indicates, in its decision, the factors on the basis of which the gravity and duration of the infringement were assessed, and is not required to include in it a more detailed account or the figures relating to the method of calculating the fines. Such information on the gravity and duration of the applicants’ criticised conduct, while relating primarily to the determination of the amount of the fine, is also such as to permit an understanding of why the Commission considered that it was appropriate to impose a fine.

(see paras 221, 288)

13. In a procedure relating to the finding of an infringement pursuant to Article 81 EC, the principle of protection of legitimate expectations extends to any individual in a situation where it is clear that the authorities have caused him to entertain legitimate expectations, it being understood that no one may plead infringement of that principle unless precise, unconditional and consistent assurances, from authorised, reliable sources, have been given to him by the authorities. It is not possible to describe ‘statements which suggested’ that the Commission was not treating this case as one in which a fine would be imposed as precise, unconditional and consistent assurances.

(see paras 223-224)

14. Compliance with the reasonable time requirement in the conduct of administrative procedures relating to competition policy constitutes a general principle of European Union law whose observance the Courts of the European Union ensure. That principle is also set out in Article 41(1) of the Charter of Fundamental Rights of the European Union. A breach of that principle can lead to the annulment of the decision finding an infringement of Article 81 EC provided that it has affected the ability of the undertakings concerned to defend themselves and, therefore, has adversely affected their rights of defence. However, that does not apply where, first, the applicants do not claim that the duration of the administrative procedure has adversely affected their rights of defence and, second, the period which elapsed between the cessation of the infringement and the contested decision imposing the fine is of a shorter duration than the limitation periods laid down in Article 25 of Regulation No 1/2003. Where there is a complete system of rules covering in detail the periods within which the Commission is entitled, without undermining the fundamental requirement of legal certainty, to impose fines on undertakings which are the subject of procedures under the competition rules, there is no room for consideration of the Commission’s duty to exercise its power to impose fines within a reasonable period.

(see paras 231-234, 238, 298 )

15. In respect of the determination of the amount of the fine imposed for an infringement of the competition rules, the Commission may not depart from rules which it has imposed on itself. In particular, where the Commission adopts guidelines intended to specify, consistent with the Treaty, the criteria which it intends to apply in the exercise of its discretion, there is a self‑imposed limitation of that discretion inasmuch as it must then follow the guidelines which it has imposed on itself.

In order to determine whether the Commission was obliged to give the applicants the benefit of the attenuating circumstance of the existence of reasonable doubt as to whether the conduct penalised was an infringement, where the fine imposed was not based on the entire period of infringement, but only from the date of the statement of objections, account must be taken of the fact that from that date the Commission set out its objections with regard to the conduct at issue and explained why it considered that that conduct was contrary to Article 81 EC. Consequently, from that date, the applicants cannot maintain that they were not aware of infringing Article 81 EC.

(see paras 246, 250-252, 297)

16. In the field of competition, the gravity of an infringement is determined in the light of numerous factors, such as the particular circumstances of the case, its context and the deterrent effect of fines, in respect of which the Commission has a margin of discretion. In assessing the gravity of the infringement, account must be taken of its nature, its actual impact in the market, where this can be measured, and the size of the relevant geographic market.

(see paras 266, 268)

17. In the field of competition, whether it is appropriate to grant a reduction of the fine on grounds of attenuating circumstances in accordance with Point 3 of the Guidelines on the method of setting fines imposed pursuant to Article 15(2) of Regulation No 17 and Article 65(5) of the ECSC Treaty must be determined on the basis of a global assessment which takes account of all the relevant circumstances. In the absence of a mandatory indication in those guidelines of the attenuating circumstances which may be taken into account, it must be held that the Commission has retained a certain discretion when making a global assessment of the size of any reduction in the fines to reflect attenuating circumstances.

(see para. 303)