Source: https://www.bristows.com/news/the-cjeu-serves-up-a-little-common-sense-in-cartes-bancaires/
Timestamp: 2019-08-25 13:17:59
Document Index: 289212818

Matched Legal Cases: ['CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ']

The CJEU serves up a little common sense in Cartes Bancaires? - Bristows
Sophie blogged a wee* while ago on the Opinion of AG Wahl in Cartes Bancaires, of interest because it discussed the distinction between agreements which are anti-competitive ‘by object’ and those which are anti-competitive ‘by effect’. AG Wahl noted that the former ought to be reserved for “conduct which presents an intrinsic risk of particularly serious prejudicial effects or of conducts where it can be presumed that the detriment to competition outweighs the pro-competitive effects” – the Court of Justice (CJEU) has in its judgment last week broadly followed this approach.
First, the CJEU criticised the General Court for blurring the boundaries between the two concepts, noting that the lower court had failed to have regard to the fact that “the essential legal criterion for ascertaining whether coordination between undertakings involves such a restriction of competition ‘by object’ is the finding that such coordination reveals in itself a sufficient degree of harm to competition” (recital 57, emphasis added). The CJEU refers frequently to its ruling in Case C-31/11 Allianz Hungária Biztosító (Allianz), though says little more about what might actually constitute a ‘sufficient degree of harm to competition’.**
Second, the CJEU followed AG Wahl in noting that a “restrictive” interpretation must be given to the question of which agreements are anti-competitive by object: “The concept of restriction of competition ‘by object’ can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects, otherwise the Commission would be exempted from the obligation to prove the actual effects on the market of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition” (recital 58). Unlike the General Court, the CJEU was clearly not in the mood to make life any easier for the Commission.
Given the interesting role of parties’ intentions in cases on the competition/IP interface, it’s also worth a comment on what the CJEU has to say on this. The case law tells us that although the parties’ intentions are not a necessary factor in determining whether an agreement is restrictive, there is nothing to prevent authorities/courts from taking intentions into account (recital 54). If authorities/courts do so, the CJEU seems to suggest (recitals 64-65) that they will have to go further than just pointing to some vague evidence of the parties’ intentions as “additional confirmation”. But perhaps I am reading too much into the following:
“Although it is apparent […] that the General Court took the view that the restrictive object of the measures at issue could be inferred from the[ir] wording [of the documents evidencing intention] alone, the fact remains that it did not at any point explain, in the context of its review of the lawfulness of the decision at issue, in what respect that wording could be considered to reveal the existence of a restriction of competition ‘by object’.”
So it seems that to the extent that intentions are relevant to determining whether or not there is a restriction of competition ‘by object’, they must explain “in what respect that restriction of competition reveals a sufficient degree of harm in order to be characterised as a restriction ‘by object’” (recitals 69 and 75). If this is right, then this could rein in the role of the parties’ intentions in many cases on the competition/IP interface which have been articulated as ‘by object’ infringements (Sophie mentions some of these here). Authorities might want to start thinking about exactly how the parties’ subjective intentions are relevant to the legal determinations that they are required to make, certainly in ‘object’ cases at least. Of course, whether evidence of an exclusionary intent should be relevant at all in cases where parties have already signalled to the world their intent to exclude others by seeking/obtaining/enforcing an exclusionary IP right, is a question that keeps many of us up at night at Bristows. Thoughts and/or comments welcome.
* For the avoidance of doubt: yes, I am a big fan of the Scottish – I’ll be going to a haggis and whisky evening on Thursday!
** Allianz commented on three relevant issues: (i) how the distinction between ‘by object’ and ‘by effect’ restrictions of competition operates, (ii) the way in which an assessment of whether an agreement constitutes a ‘by object’ restriction is to be approached, and (iii) the role of the parties’ intentions. In relation to (ii), Allianz has been criticized for blurring the boundary between ‘by object’ and ‘by effect’ restrictions by requiring there to be regard to the economic and legal context in which they appear and to the “nature of the goods and services affected as well as the real conditions of the functioning and structure of the markets in question” (see the excellent article herewhich criticises the italicised text for going too far in the direction of an effects analysis). It therefore may seem odd that the CJEU in this case relies on Allianz to re-establish a firmer distinction between the two. However, on a careful read it seems that the CJEU in Cartes Bancaires refers to this aspect (ii) of Allianz only in passing (only recitals 53 and 78 refer to taking into account of the nature of the goods and services). The principal reliance on Allianz is in relation to issue (i), i.e. simply to establish that to constitute a restriction ‘by object’ an agreement must reveal “a sufficient degree of harm to competition”. An interesting (and perhaps intentional?) reconciliation…