Antitrust Bites - NewsletterJanuary 2023
Bundeskartellamt questions Google's data processing terms
With a press release of January 11, the Bundeskartellamt announced that on December 23 it had submitted a preliminary legal assessment on the proceeding regarding Google's data processing terms. The Bundeskartellamt considered the new provisions for large digital companies (Section 19a, GWB) to be applicable to the case, and it concluded that Google should change its data processing terms and related practices.
The current data processing conditions allow Google to combine data from various services and use them to create detailed user profiles that the company can use, inter alia, for advertising purposes. This includes collecting and processing data from different services offered by Google, including Google Search, YouTube, Google Play, Google Maps, and Google Assistant, and from many third-party websites and applications.
According to the German antitrust authority, based on the current data processing terms and conditions, users are not given enough choice to decide whether and to what extent they consent to this far-reaching processing of their data, and the choices offered to users so far, if any, are prima facie considered by the Authority to be insufficiently transparent and too general. The Authority further considers that, users should instead be able to limit the processing of their data to the specific services they use in order to be able to qualify their degree of choice regarding data processing as sufficient, and they should be able to differentiate and decide between the purposes for which data are processed. The options provided to users with regard to the processing of their data should therefore not be set in a way that consumers are more likely to approve the processing of their data than the other way around.
The Bundeskartellamt plans to issue a final decision on this matter in 2023.
Order for disclosure of evidence pending formal investigation proceedings: Clarifications from the European Court of Justice
In its judgment of January 12, 2023 (Case C-57/21), the European Court of Justice ruled regarding the possibility for the national court to order the disclosure of evidence in an action for compensation for the damage suffered as a result of an anticompetitive conduct. It relates to cases where the infringement proceedings initiated by the national competition authority and the damages judgment have been suspended due to the Commission's initiation of a formal investigation proceeding concerning the infringement.
The judgment addresses the reference for a preliminary ruling made by the Czech Supreme Court. The case concerns the Czech national court's decision to order the disclosure of evidence that included information prepared by the company for the purposes of the proceedings initiated by the national competition authority. The decision relates to an action for damages resulting from an alleged abuse of a dominant position subject to a proceeding of the Czech authority and subsequently stayed since the Commission had initiated investigation proceedings on the same matter. The Czech national court, after ordering the disclosure of the evidence, had stayed the proceedings pending the Commission's conclusions on the case.
Addressing the questions raised by the referring court, the ECJ provided the following clarifications on the regime regarding the disclosure of evidence set out by Directive 104/2014/EU:
- The Directive does not automatically preclude a national court from ordering the disclosure of evidence in an action for damages relating to an infringement of competition law, even though proceedings in respect of that infringement have been initiated by the national authority and suspended following the Commission's initiation of a formal proceedings on the same conduct.
- The national courts in such a case are required to limit the disclosure to what is strictly relevant, proportionate, and necessary and ensure that the decision on the disclosure does not affect the ongoing investigation by the national competition authority.
- For the application of Article 6 para 5 of the Directive, the decision of the national authority to stay the proceeding cannot be equated to a closing of the proceedings; so national courts are not allowed, on the basis of such decision, to order the disclosure of evidence specifically produced for the purpose of a proceeding initiated by a competition authority. This information has been drafted and disclosed by the competition authority to the parties in the context of its proceedings and settlement proposals that have been withdrawn (evidence belonging to the so-called "gray list").
- National law cannot also temporally limit the disclosure of evidence that is not "prepared" for the purpose of the proceeding, but merely submitted (or acquired) as part of the proceeding and is therefore pre-existing to the proceeding (evidence that falls under the so-called "white list").
- The national court may, if allowed by national law, order the disclosure of evidence that may fall under the "gray list" before the adoption of the decision by the competition authority, for the sole purpose of seizing the evidence concerned and assessing whether and to what extent the evidence actually contains information falling under the "gray list," to which the applicant will not have access before the conclusion of the proceedings, and information falling under the "white list," to which the applicant will have access before that time.
Criteria for attributing the conduct implemented by its distributors to the dominant undertaking and assessment of the exclusionary effects: judgement C-680/20 of the Court of Justice
In its judgment of January 19, 2023, delivered in Case C-680/20, the Court of Justice of the European Union ruled on the two preliminary questions submitted by the Consiglio di Stato (Italian Council of State) in the context of an appeal against a decision of the AGCM (Italian Antitrust Authority) that found abuse of dominant position regarding the provision of exclusivity clauses.
The questions submitted to the court essentially concern: (i) the criteria for imputing to a dominant undertaking conducts carried out by its distributors; and (ii) the need for the Authority to demonstrate, in the presence of exclusivity clauses in the distribution contracts of a dominant undertaking, that such clauses exclude from the market competitors as efficient as the undertaking in a dominant position and to examine in detail the economic analyses which may have been produced by the undertaking concerned, in particular where they are based on the criterion of the "as efficient competitor."
Regarding the first question, the court observes that, in the light of the special responsibility attributed to the undertaking in a dominant position, it may also be held liable for conduct engaged, indirectly, by its distributors, if it appears that it was adopted in accordance with the instructions given by the dominant undertaking, executing a policy decided unilaterally.
Regarding the second question, the court notes that the competition authorities must prove the abusive nature of the conduct in the light of all the relevant factual circumstances surrounding the conduct. Any proof must be based on tangible evidence, showing beyond mere hypothesis, the capacity of the practice in question to produce exclusionary effects. The court notes that the production by the undertaking of evidence capable of demonstrating that its conduct is incapable of producing restrictive effects places the authority under an obligation to examine it. If the dominant undertaking has produced an economic study to demonstrate the inability of exclusivity clauses to produce restrictive effects based on the criterion of them as efficient competitor, the competent authority may not exclude its relevance without stating its reasons, even though recourse to that criterion is optional for demonstrating the unfairness of exclusivity clauses.
European Commission launches public consultation on draft Guidelines for sustainability agreements in agriculture
On January 10, 2023, the European Commission launched a public consultation and invited all stakeholders to comment on the draft proposal for Guidelines on how to design sustainability agreements in the field of agriculture (the Guidelines).
In the context of the reform of the Common Agricultural Policy, for the period 2023-2027, in 2021 the European Parliament and the Council of the European Union adopted a new exclusion from the competition rules applicable to agricultural products, under certain conditions.
The new exclusion is contained in Regulation (EC) No. 2021/2117, and states that agreements that aim to achieve sustainability objectives by applying stricter standards than those that are mandatory under European or national law, are permitted, according to antitrust regulations, provided that any restrictions of competition resulting from such agreements are indispensable to the achievement of these objectives.
The European Parliament and the Council of the European Union have entrusted the European Commission with the task of publishing guidelines on the application of this exclusion.
Article 210a of Regulation (EC) No. 1308/2013 establishing a “common organization of the markets in agricultural products” (CMO Regulation), excludes certain restrictive agreements between undertakings in the agricultural sector from the prohibition to engage in restrictive agreements on competition under Article 101 TFEU, if such agreements, although restrictive of competition, are indispensable to achieve sustainability standards.
The draft Guidelines aim to clarify how operators in the agri-food sector can develop joint sustainability initiatives in line with Article 210a.
In particular, the draft Guidelines:
- define the scope of the exclusion, which only concerns agreements concluded by agricultural producers, either among themselves or with other operators active along the agri-food chain;
- define the eligible sustainability objectives (environmental protection; reduction of pesticide use and antimicrobial resistance and animal health and welfare);
- set certain requirements for sustainability standards;
- set the test to identify indispensable restrictions to competition; and
- define the scope for ex-post interventions.
The Guidelines make it clear that the Commission and National Competition Authorities have the right to suspend sustainability agreements or request that they be amended if these agreements appear to be detrimental to competition or if the objectives of the Common Agricultural Policy, as set out in Article 39 TFEU, are deemed to be compromised.
The Guidelines are expected to enter into force no later than December 8, 2023.