Chillin'Competition

Of the many judgments addressing the notion of ‘by object’ infringement that came out last year (and which I discuss here), FIFA v BZ is particularly significant, not just because of the issues at stake and the way the Court addressed them, but because of the hints it gives about the future of Article 101(1) TFEU.

In several respects, the enforcement of EU competition law is entering a new era, and FIFA v BZ heralds the new times. There are, in my view, three main lessons to draw from the judgment.

The resilience of the Court’s approach to restrictions by object

The first lesson is that the Court’s methodological approach to identify restrictions by object is proving to be remarkably resilient. It is clear from the case law that, in order to determine whether an agreement infringes Article 101(1) TFEU by its very nature, it is necessary to consider not just its content, but also its objective aims and the economic and legal context of which it is a part.

More importantly, this methodological framework is not an abstract formula. As FIFA v BZ exemplifies, the Court walks the talk. You will find in the judgment a meticulous contextual evaluation of, inter alia, the content of the rules (in that regard, the Court found that there was a mismatch between the legitimate aims pursued and the breadth of the restraints), the discretion they gave FIFA (and therefore the ability to decide which aims to pursue case by case) and the latter’s position.

The resilience of the case law is notable considering the tendency among some actors in the system to rely on shortcuts that disregard the methodology mandated by the case law. The instinct to establish a ‘by object’ infringement on the basis of form alone (e.g. the fact that the practice amounts to ‘price-fixing’ or ‘market sharing’) remains particularly strong, even thought it has been consistently rejected by the Court.

Every now and then, some actors also display a tendency to infer a ‘by object’ infringement from the effects of an agreement. Object and effect are two separate, fundamentally different stages. However, it is tempting to claim that a practice is restrictive by its very nature where it is deemed to have substantial effects on competition, and conversely, to claim that no ‘by object’ violation exists based on the absence of an appreciable impact.

FIFA v BZ confirms that the two stages must not be conflated, even when doing so comes across as intuitively right. Object is not, and has never been, a presumption of effects (as the Expedia judgment clarified). The effects of an agreement (or the unlikelihood of such effects) is not a reliable guide of its object.

From public to private enforcement

The judgment also reveals that a new generation of cases is reaching the Court. The landmarks of the past decade addressing the notion, including Cartes Bancaires, Generics, Budapest Bank and Super Bock, all originated in cases before a competition authority, whether the Commission or an NCA.

The new generation of cases, including not just FIFA v BZ, but also Superleague and the recent ruling in Booking, originated in disputes between private parties. The rise of private enforcement is testament to the success of Regulation 1/2003.

The change in the nature and profile of litigants is not without consequences. By necessity, the objectives and incentives of private litigants differ from those of a public authority. This difference is likely to be manifested across a number of fronts, from the nature of the cases that reach the Court to the way the arguments are framed.

There is a chance, accordingly, that issues pertaining to the notion of restriction by object, will be approached in novel and unprecedented ways (and thus that the resilience of the case law will be tested from new angles).

A second consequence of the rise of private litigants is decentralised enforcement. The latter, in turn, risk affecting the uniformity in the interpretation and application of Article 101 (and 102) TFEU. For the same reason, the resilience of the Court’s methodology to identify ‘by object’ infringements is likely to be put to the test more frequently than in the past.

In a decentralised landscape, the inclination to rely on discredited methodological approaches is likely to be more frequent (by the same token, the risk of substantive fragmentation is likely to increase).

A more explicit style when ruling?

A salient aspect of FIFA v BZ (and Booking) relates to the approach when delivering rulings. In the context of a preliminary reference, it is for the national court to apply the law, as interpreted by the Court, to the facts of the case. However, the Court, in both judgments, was explicit about the legal characterisation of the practices at stake (holding, in FIFA v BZ, that the rules were restrictive by object and, in Booking, that the clauses were not ancillary restraints).

This tweak in terms of style is reasonable if one considers the risk of fragmentation mentioned above. It is an effective means to ensure that a preliminary ruling is not interpreted differently from one court to another and, similarly, to avoid that the same issues keep coming back before Court.

There is a chance that, for these very reasons, the Court will also be more explicit (and/or more structured) about certain aspects of the methodology it follows to identify restrictions by object. At the very least, doing so would contribute to ensuring that national courts do not fall into the old trap of formalism when conducting their analysis.