Chillin'Competition

Super Bock was one of the major developments of the past year. It is not immediately obvious to draw this conclusion. On its face, the judgment is brief and an Advocate General Opinion was not even deemed necessary.

The substance of the ruling is not any more auspicious: the Court does little more than reiterate the consistent line of case law since Cartes Bancaires (and subsequently refined, inter alia, in cases like Maxima Latvija, Generics and Budapest Bank).

Alas, the significance of Super Bock has to do precisely with the fact that the Court held, unceremoniously, that resale price maintenance is examined in accordance with the orthodox methodology that applies to the rest of agreements.

One should bear in mind that, before Super Bock, vertical price-fixing was deemed restrictive of competition always and everywhere (that is, irrespective of the economic and legal context and irrespective of the aims of the agreement at hand).

Such was the position taken by the Court in Binon. One of the consequences of this sui generis line of case law was that the pro-competitive benefits resulting from the agreement could only be considered under Article 101(3) TFEU.

In this regard, Binon was at odds with contemporary case law, where the pro-competitive potential of an agreement is crucial in the analysis. It is, in fact, the single most relevant factor allowing the Court to identify agreements with a restrictive object.

For instance, the fact that the contentious restraints sought to address free-riding concerns was central in Cartes Bancaires. In Budapest Bank, the Court went further, in the sense that it held that evidence that the agreement is capable of improving the conditions of competition means that its object is not anticompetitive.

If anything, the ECJ was more explicit in Generics, where it held that the parties may rely on the pro-competitive effects of a practice to cast a ‘reasonable doubt’ on its object. Such effects must be ‘demonstrated, relevant and specifically related to the agreement concerned‘.

Crucially, this aspect of the case law was reiterated in Super Bock.

In fact, Generics is particularly important in relation to resale price maintenance. Unlike cartels, which lack any redeeming virtues, vertical price-fixing is known to be potentially pro-competitive. As a result, it is at least possible for the parties to an agreement to argue that, in the relevant economic and legal context, it leads to pro-competitive gains.

An example of what such evidence may look like in practice was provided by a paper by Rhys J. Williams and recently published in the Journal of Competition Law & Economics (available in Open Access here). The study, initially conducted on behalf of DG Comp, finds that regulation fixing the price of books leads to increased sales (without having a noticeable impact on price levels).

Where evidence in this sense is produced in a given case, it would be sufficient to cast doubts about the object of the agreement. As a result, an authority would only be able to establish an infringement within the meaning of Article 101(1) TFEU by considering its actual or potential effects in the relevant market.

One must remember that, if the agreement is capable of improving the conditions of competition, it is (at the very least) questionable that it pursues an anticompetitive object (for how can its objective purpose be restrictive, if it improves the competitive process?).

To sum up, the significance of Super Bock is twofold. It departs from prior case law in that the Court held that resale price maintenance is not necessarily, or not always, restrictive by object. Second, the pro-competitive effects of the practice may lead to the conclusion that, in a particular economic and legal context, its object is not restrictive.