Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

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I recently had the opportunity to sift through the recent case-law of the Court.

The CJEU ruling in Allianz Hungary, C-32/11 stands out.

Our Lords again blurred the object/effect distinction.

The Court held that “object” restrictions can be established by proof of anticompetitive effects:

§34Accordingly, where the anti-competitive object of the agreement is established it is not necessary to examine its effects on competition. Where, however, the analysis of the content of the agreement does not reveal a sufficient degree of harm to competition, the effects of the agreement should then be considered and, for it to be caught by the prohibition, it is necessary to find that factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent […]

§36. In order to determine whether an agreement involves a restriction of competition ‘by object’, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part […]. When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question […]

Of course, my positivist friends will not fail to remind me that the Court had already said this in previous cases.

But let’s call a spade a spade: the Court’s insistence on reaffirming bad precedent reveals that the virus of legal non-sense is deep ingrained.

The upshot of Allianz Hungary is to unduly expand the “object” box, meanwhile creating much legal uncertainty.

In a recent speech, A. Italianer implicitly confirmed this, by saying that restrictions by object are serious, but “not necessarily obvious“.

In practice, parties lose the ability to articulate “effects-based” (and other) defenses, and face a considerably tougher task under 101(3) TFEU.

But the most bizarre statement is elsewhere. At §44, the Court held:

With regard to determining the object of the agreements at issue in the main proceedings with respect to the car insurance market, it should be noted that, by such agreements, insurance companies such as Allianz and Generali aim to maintain or increase their market shares

You read well: for the Court it is unlawful to cast agreements with purchasers with a view to maintain or increase market  shares.

My practitioner friends often complain that it becomes impossible to advise on Article 102 TFEU. I guess that with such judgments, it is becoming equally complex to provide antitrust counseling under Article 101 TFEU.

Or is it the contrary? With such basic, formalistic reasoning, providing competition law advice under 101 and 102 TFEU is increasingly simple, since most inter-firms agreements and dominant firm conduct are unlawful as such.

Or the Court’s contribution to undermining the market for specialist competition law advice.

For more, see the excellent analysis of http://europeanlawblog.eu/?p=1664

Written by Nicolas Petit

24 October 2013 at 10:22 am

2 Responses

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  1. I think the most problematic statement in the judgment (and the one most to blame for blurring the object / effect distiction) is para 48:

    “Furthermore, those agreements would also amount to a restriction of competition by object in the event that the referring court found that it is likely that, having regard to the economic context, competition on that market would be eliminated or seriously weakened following the conclusion of those agreements..”

    So if the court finds that the effect of the agreement is that competition is seriously weakened, then this can be regarded as an object infringement (even though in case of such agreements you should not have examinsed effects in the first place, since the whole point of having the object / effect distinction is that you do not need to check effects). Quite a vicious circle there…

    Asimo

    24 October 2013 at 11:10 am

  2. Can’t let it get past me
    You’re far from plastic
    Talk about getting blasted
    I hate these blurred lines

    Robin Thicke

    24 October 2013 at 4:48 pm


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