Chillin'Competition

As I was drafting, and thinking about, the past few posts, an idea kept coming back: the ‘by object’ category does not work like (and is very different from) per se restraints in US antitrust. Comparing the two (or presenting ‘by object’ infringements as the European version of per se prohibitions) is not accurate and can be misleading.

Some commentators like to turn to the US system and its categories (per se, ‘quick look’ and so on). to make sense of the EU law on restrictions by object. This is probably one of the reasons why there has been confusion about what the evaluation of the object of a practice entails under Article 101(1) TFEU.

If, instead of borrowing concepts from other legal systems, one reads the case law of the Court of Justice, it is easy to understand how different the two categories are.

Suffice it to compare Generics and Stephen Breyer’s Opinion in Actavis.

In Actavis, the majority agreed to examine reverse payment settlements under the rule of reason. In this sense, it went against the FTC’s position, which argued that such payments should be presumptively unlawful and subject to a ‘quick look’.

Justice Breyer explained in his opinion that the rule of reason is more appropriate as the likelihood of anticompetitive effects of this practice is very much context-dependent: the size of the reverse payment and, by the same token, the availability of justifications vary from one case to another. The majority concluded that the ‘quick look’ does not always fit all such practices.

In Generics, the Court ruled that it is necessary to evaluate, on a case-by-case basis, whether a reverse payment has an anticompetitive object in the economic and legal context of which it is a part.

The factors considered in the analysis are the same as those pondered by the US Supreme Court under the rule of reason: the size of the reverse payment and whether there is a plausible procompetitive rationale for it.

In this sense, there is an overlap between the two inquiries: the analysis at the ‘by object’ stage under Article 101(1) TFEU stretches to the point that it engages in a context-specific assessment of the nature of the practice. For the same reasons, it does not seem appropriate to draw analogies between ‘by object’ and per se.

To be sure, the purpose of the inquiry at the ‘by object’ stage and under the rule of reason is different. In Actavis, the point of the analysis is to evaluate the effects of the payment; in Generics, to make sense of the objective purpose of the practice.

In any event, I hope the bottomline is clear: the temptation to treat the ‘by object’ and per se categories may be strong, but it does not reflect the reality of what courts do and how they interpret the key provisions.

The case-by-case, context-specific approach to the identification of the most egregious infringements is a European specificity (and one that gets, in my view, the balance right).