Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Restrictions by object after Generics and Budapest Bank: a road map

with 3 comments

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It was relatively frequent to hear, until not so long ago, that it was not possible to discern, from the case law, a clear set of principles spelling out what a restriction of competition is. I have never been of this view (as explained here) but I understand where it was coming from.

The case law that followed the adoption of Regulation 1/2003 significantly clarified matters. Generics and Budapest Bank, the two most recent landmarks, provide the answers and the vocabulary we needed to present the Court’s interpretation of the notion of restriction by object in a systematic way.

Following the analysis of the said two judgments (I look forward to sharing some more thoughts on them in due course), I told myself it could be a good idea to draw a road map of the principles underpinning the case law and the way they have been applied by the Court over the years (there appears to be a clear and consistent trend dating back to the early days).

The road map is presented below and can also be downloaded here.

When evaluating whether an agreement amounts to a ‘by object’ infringement, two separate questions arise:

  • First, what would an authority (or claimant) need to show to discharge its legal burden?
  • Second, what sort of contrary evidence would the parties to the agreement need to adduce, and to what standard?

In relation to the first question, I understand the case law, as synthesised in Generics and Budapest Bank, as revolving around the following principles:

What needs to be proved

It was clear since Murphy that the parties may show that an agreement is not capable of restricting competition (and thus not restrictive, whether by object or effect). Generics and Budapest Bank confirm (and make it explicit) that the parties may also provide evidence, for the same purposes, showing that the agreement in question is capable of having a pro-competitive or ambivalent impact. More precisely:

Adducing contrary evidence

Your comments and questions would be most welcome.

Written by Pablo Ibanez Colomo

8 April 2020 at 8:14 am

Posted in Uncategorized

3 Responses

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  1. Dear Pablo,
    Your attempts to make sense of the case law are always to be admired.
    At this stage, I cannot share the very first paragraph that you set as “principle”. You say that “an agreement amounts to a ‘by object’ infringement when it has no plausible purpose other than the restriction of competition (Generics, paras 87-90)”.
    First, in my view, what is patently missing here for this paragraph to become a “principle” is the “only” before “when”. Indeed, in the situation you describe there is a “by object” restriction, but from Generics (or other case law) it cannot be inferred that that’s the only situation where there is a restriction “by object”. There are (many?) cases where the Court has stressed that the fact that an agreement may follow other (even legitimate) purposes does not mean as such that there is not a “by object” infringement (inter alia, C-551/03 P, para 64; C-209/07, para 21; T-360/09, para 143; even AG Opinion in C-67/13 P, paras 110, 117, 122).
    Second, paras 87-90 of Generics (mentioned as basis for your principle) refer to the reasons/inducements for the conclusion of that specific agreement, and do not appear to set out any prescriptive standard. Actually, the word “plausible” only appears in para 89 (not in 87, the more general one), in a very specific context which, in my view, has nothing to do with any standard in the case law (let alone “the” standard), but relates rather to evidentiary issues about the inducements to conclude “that” agreement (“… a significant transfer of value, the sole consideration for which is their undertaking not to enter the market and no longer to challenge the patent, that indicates, in the absence of any other plausible explanation, that it is not their perception of the patent’s strength, but the prospect of that transfer of value which has induced them to refrain from entering the market and challenging the patent”). It is, in my view, an overstatement to transform this modest passage into “the” defining principle of restriction by object.
    I do not have time, at this stage, to comment on the other “principles” or the evidentiary issues that you raise.

    Joan

    8 April 2020 at 10:02 am

  2. I also respectfully disagree with the point of principle and would concur with Joan.

    If you look at para 52 of Budapest Bank,it is clearly stated that a pro-comp purpose does not exclude a finding of by object. A similar statement is then also made in para 85 of the judgment.

    Futhermore, I believe one should not neglect (or selectively cite) the important statements made in paras 51-54 of Budapest Bank, which are basically used as a mantra by now in almost each and every object case by the court (including generics,novartis,etc) and which, imho, indeed establish the relevant principles here (and which are then duly applied in latter parts of the Budapest Bank judgemnt).

    Asimo

    11 April 2020 at 12:13 pm

  3. Dear both,

    Thanks for taking the time to share your thoughts on the blog. And please, stay tuned for the posts that will follow. Allow me to clarify, if there was any doubt, that the principles outlined in this post take into account para 52 of Budapest Bank (which in turn refers to para 70 of Cartes Bancaires and, indeed, the long line of case law mentioned by Joan). It would simply not be possible to disregard that aspect of the case law (same with paras 51-54 of the judgment).

    I look forward to your comments in the following installments.

    Pablo Ibanez Colomo

    15 April 2020 at 8:17 pm


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