Antitrust Bites Newsletter - October 2020

Dawn raids: EU General Court partially annuls Commission inspections decisions against French supermarkets

The EU General Court, with its judgments of October 5, 2020, has partially annulled the Commission’s decisions that in 2017 authorized inspections against several French supermarkets due to two suspected antitrust practices contrary to Article 101 TFEU consisting of exchanges of commercially sensitive information.

After having recalled that to ensure that an inspection decision is not arbitrary the court is called upon to verify whether the Commission has sufficient evidence for a suspicion of an infringement, such as to justify inspections, the General Court found that the European Commission had sufficient evidence only for the first suspected practice (exchange of information on discounts obtained in the upstream market and prices for the sale of services to manufacturers of branded goods), and not for the second one (exchange of information concerning the future commercial strategies of the undertaking).

In particular, the General Court considered that the disclosure of general information during a congress which had wide resonance and publicity – on which the Commission based the decision to carry out inspection for the second antitrust practice – did not constitute sufficient evidence that could justify an inspection, in consideration of the public nature of the information.

For those reasons, the court partially annulled the inspection decisions, upholding the plea of infringement of the right to inviolability of the homes regarding the second suspected antitrust practice.

AG Pitruzzella’s opinion on the determination of the duration of an agreement between undertakings in the context of a procurement procedure

In his opinion delivered on September 10, 2020, Advocate General Pitruzzella took a position on a reference for a preliminary ruling received from a Finnish court concerning the determination of the duration of an infringement of Article 101 TFEU taking the form of cooperation in the submission of tenders in a procurement procedure for construction works.

According to the Advocate General, the infringement exists as long as the collusion, formal or de facto, affects the protected legal interest, which it is for the referring court to ascertain on a case-by-case basis. In addition, the Advocate General attributes the duration of the infringement to the existence of the unlawful intention of the undertakings participating in the cartel, since he does not consider in any way relevant – for the purposes of determining the duration of the infringement – the factors beyond the control of the infringers, such as, in the case of works contracts, the arrangements for performance and for executing the works.

Therefore, in the Advocate General’s view, in a situation where a cartel participant has entered into a construction contract with a procuring entity, and where that cartel was limited to that contract, the competition infringement should be deemed to have ceased, in principle, on the date on which the infringer undertaking submitted a tender for the works concerned or entered into a contract for the execution of the works, without continuing – as envisaged by the Finnish Competition Authority – until the completion of the works.

Austrian judges provide guidance on the geographic allocation of turnover under merger control rules

The Austrian Cartel Court has recently fined a multinational group active in the automotive sector for failure to notify a concentration to the Austrian Federal Competition Authority before its implementation.

The transaction, leading to the acquisition by the group of sole control of a company producing cast metal engine parts, was notified in Germany in December 2017, whereas no filing was submitted in Austria based on the turnover figures provided by the target.

Becoming aware of the transaction, the Federal Competition Authority asked the acquiring group for information and decided to open a proceeding before the Austrian Cartel Court, finding that the target’s turnover was not correctly geographically allocated.

Indeed, the turnover to be allocated in Austria was attributed to the acquirer’s central purchasing organization seated in Germany, as responsible for negotiating prices and billing. However, in the Court’s view, the place of delivery of goods should prevail over the billing address, where – as in the case at issue – the goods are directly delivered to the subsidiaries’ sites in the various Member States, considering that the related commercial offers would be determined in accordance with the competitive conditions existing therein (price levels, transport costs).

In addition, the Cartel Court considered the acquiring group liable for the incorrect calculation of turnover due to its sufficient experience in multijurisdictional mergers.

EU Court of Justice comes back on the locus standi of competition authorities to file a request for a preliminary ruling pursuant to art. 267 TFEU

With a decision of September 16, 2020, the EU Court of Justice (ECJ) declared the request for a preliminary ruling proposed by the Spanish Competition Authority (CNMC) inadmissible for the absence of the necessary subjective conditions.

The ECJ stressed that, according to settled case-law, in order to determine whether a body may fall within the definition of “court or tribunal” under art. 267 TFEU, it is necessary to take into account a number of factors, such as whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whether its procedures are inter partes, whether it applies rules of law and whether it is independent. It is also necessary that the body in question acts as a third party in relation to the authority which adopted the decision forming the subject matter of the proceeding.

As regards the CNMC’s standing as a third party, the ECJ noted the lack of such condition, since the president of the CNMC chairs the board which adopts decisions on behalf of the CNMC and manages, coordinates and supervises all the units of the CNMC, including the Competition Directorate that submitted the proposal for the decision subject to the present request for a preliminary ruling.

The Court also found that the decisions of CNMC are administrative in nature, as it stems from the power of the authority to open a penalty proceeding ex officio and from the fact that the CNMC may be denied jurisdiction in favor of the Commission in certain circumstances. Therefore, in the EJC’s view, it is not possible to hold that the decisions of CNMC are adopted in the exercise of judicial functions.

It should be recalled that the “judicial” nature has been also rejected by the Constitutional Court in relation to the Italian Competition Authority (AGCM), which in May 2018 submitted a question on constitutionality in the context of an investigation for possible anticompetitive agreements.

With decision no. 13/2019, the Constitutional Court recognized the absence of the fundamental condition of acting as a third party, because the AGCM is a party to the administrative judicial proceeding against its decisions and there is no clear separation between the offices responsible for the investigation and the decision-making body of the Authority.

Advocate General’s opinion in cases C-152/19P e C-165/19P clarifies the scope of the Bronner judgment in the context of an abusive refusal to contract

On September 9, 2020, Advocate General Henrik Saugmandsgaard delivered his opinion in cases C-152/19P and C-165/19P before the Court of Justice of the EU. As the Advocate General writes, the cases represent an opportunity for the Court to clarify the scope of the Bronner judgment (judgment of the Court of Justice of November 26, 1998; C-7/97).

The scenario envisaged in the judgment in Bronner is that of a refusal by a dominant undertaking to make infrastructure which it owns available to one or more competing undertakings.

In the Bronner judgment, the Court laid down the cumulative conditions that must be satisfied in order for a refusal to make available to constitute an abusive practice within the meaning of Article 102 TFEU: (i) the refusal to make available must be liable to eliminate all competition on the relevant market from the competing undertaking; (ii) that refusal must not be justified; (iii) the infrastructure in question must be indispensable to the ability of the competing undertaking to carry on its business, in the sense that there is no actual or potential substitute.

The Advocate General observes that the Court, by establishing such conditions, in principle not provided for in Article 102 TFEU for the purposes of ascertaining an abuse, has set a higher legal standard for assessing the abusive nature of a refusal to make available, when other practices by dominant undertakings – such as the setting of unfair prices or other unfair contract terms – are examined without ever applying the conditions laid down in Bronner.

The reason for this differentiation – according to the Advocate General – lies in the fact that penalizing the refusal to make an infrastructure available infringes the freedom of the company in a much deeper way than simply providing unfair contract terms.

In the Advocate General’s view, it is this deeper violation of the freedom to conduct business that justifies the higher legal standard laid down in the Bronner judgment. In the light of these considerations, the Advocate General explains how “the judgment in Bronner is a special case within the regulatory landscape of Article 102 TFEU” and clarifies that the conditions provided therein must be interpreted strictly, in order to preserve the effectiveness of Article 102 TFEU.

That said, the Advocate General then goes on to consider whether the conditions laid down in Bronner judgment should also be applied with reference to the so-called implicit refusal of access, i.e. in the case of unfair contract terms imposed by an undertaking in a dominant position which – although they do not constitute an explicit refusal – would in fact lead to the same result, in other words, an implicit refusal of access to the infrastructure.

On this point, the Advocate General considers that assimilating any abusive practice to implicit denials of access would put the conditions laid down in Bronner at the very heart of Article 102 TFEU. The Bronner judgment would become the rule rather than an individual case, an outcome which would run counter to the wording of Article 102 TFEU, the scope of which is not limited to abusive practices relating to “indispensable” goods and services within the meaning of that judgment.

For this reason, the Advocate General considers that the conditions laid down in the Bronner judgment, in the specific case of an explicit refusal of access, should not apply to unfair contract terms cases.