Chillin'Competition

Note by Alfonso: Advocate General Wahl’s Opinion in Groupement de Cartes Bancaires out on Friday, and its take at clarifying the object-effect conundrum is remarkable. Pablo Ibañez Colomo offers his views on the Opinion below:

Advocate General Wahl’s opinion in Groupement des Cartes Bancaires v Commission (published last Friday, and available in French and in Greek only for the time being) is a model of lucidity and flexible thinking. It is also very much in line with an article of mine on the subject, but that is plain irrelevant. What matters, and what makes this opinion remarkable, is that it manages to capture the logic underlying the existing case law addressing the boundaries between restrictions by object and by effect. Many commentators and some advocates general have tried in the past few years to identify the elusive factors that should be considered when establishing whether an agreement restricts competition ‘by its very nature’. Paragraph 56 of the opinion sets out a formula that is, in my view, more accurate and elegant than any previous attempt (the fact that I am forced to read it in French for the moment probably adds to the latter):

 ‘Ne devraient donc être considérés comme restrictifs de concurrence par objet que les comportements dont le caractère nocif est, au vu de l’expérience acquise et de la science économique, avéré et facilement décelable, et non les accords qui, au vu du contexte dans lequel ils s’insèrent, présentent des effets ambivalents sur le marché ou qui sont porteurs d’effets restrictifs accessoires nécessaires à la poursuite d’un objectif principal non restrictif de concurrence’.

In other words, what really matters is whether, given the context in which it is concluded, an agreement is a plausible source of efficiency gains. Thus only those agreements that have no credible redeeming virtues are understood to restrict competition by object. A careful reading of the relevant case law shows, in my view, that this is the ‘default methodology’ (which is the expression I use in my article) – or, if one prefers, ‘l’appréciation plus standardisée’ (as Advocate General Wahl writes in his opinion) – followed by the ECJ when it examines the nature of agreements under Article 101(1) TFE. The methodology changes, and rightly so, when market integration as an objective is directly at stake in a case (as is true of agreements restricting parallel trade).

From Societe Technique Miniere to Pronuptia and Delimitis, and from Remia to Wouters and Asnef-Equifax (to mention just a few landmark rulings), the ECJ has followed the same approach, which revolves around an analysis of the rationale behind the agreement. The Court typically seeks to identify the reasons why two or more firms would introduce some restraints in an agreement. If it appears that such restraints are a plausible means to achieve legitimate business objectives, it concludes that the agreement does not restrict competition by its very nature. In Groupement des Cartes Bancaires, the parties to the agreement claimed that it was intended to address free-riding issues and therefore that it did not have a restrictive object. In light of the relevant case law, the question in these proceedings is whether this story is a credible one given the nature of the agreement and the context in which it was concluded.

The opinion is notable for other reasons, of which I mention a couple:

– It is sometimes claimed that the category of ‘object restrictions’ captures those agreements that can be presumed to have anticompetitive effects (the famous speed-limit analogy and variations thereof). This interpretation of the notion is problematic insofar as it sits at odds with the principle, well established in the case law, whereby an agreement may restrict competition by its very nature irrespective of the effects it produces. Advocate General Wahl emphasises, in this same vein, the importance of distinguishing between the analysis of the nature of the agreement and the analysis of its effects. If the question of whether an agreement restricts competition by object depends on its presumed effects, the two would be confused. The rulings mentioned above indeed confirm that the two are separate steps and that the Court has been careful not to mix them (and has rightly reacted when the General Court has done so, as in Glaxo Spain – also discussed in the opinion).

– The opinion shows that, when confined to its role, the use of economic analysis can be very useful and, more importantly, wholly uncontroversial. Advocate General Wahl does not rely on economic analysis for normative purposes (that is, to state how the law should be, or to claim that the case law is misguided), but as a tool (among others) to make sense of a legal issue. Economics is used in the opinion, in other words, as a guide – a code – to decipher a complex reality. I hope this opinion contributes to a more fluid dialogue between disciplines. I was pleased and surprised to even find a reference to Rochet and Tirole’s ground-breaking work on two-sided markets – which, as you all know by now from Alfonso’s last post, is ‘the single most important and fascinating subject in contemporary antitrust (and beyond)’.

Lastly, I will also mention that writing this post brings very good memories of a great seminar (and even better post-seminar!) to which Luis Ortiz Blanco and Alfonso invited me last year and in which I had the chance to discuss these questions with some luminaries from the Commission.