Chillin'Competition

The Court of Justice has recently delivered three consequential judgments, from a competition law perspective, revolving around the regulation of football. Tondela came in April, followed by ROGON and RRC Sports in July.

There is a great deal to unpack in these judgments, and many (or most) of the issues require a dedicated post. This said, now that Europe’s holiday month par excellence is about to start, it makes sense to share some initial thoughts on the lessons to draw from them. Hopefully it will start a conversation that we can continue once the rentrée is upon us.

First thought: the remarkable coherence and consistency of the case law. Since the late 2000s (once the decentralisation of EU competition law was underway, that is), the Court has been confronted with an unprecedented number of cases addressing the object/effect divide under Article 101(1) TFEU. Looking back, the coherence of the approach followed and the consistency with which it has been implemented in specific cases is remarkable.

In fact, the outcome of two of these cases (ROGON and RRC Sports) was already foretold in Delimitis and Cartes Bancaires. The first made it clear that an agreement that seeks to align the incentives of the parties is not restrictive by object. Cartes Bancaires, in turn, applied the same principle to the governance of joint ventures. ROGON and RRC Sports deal essentially with the governance of a particular type of joint venture and, since they follow the same approach, were decided in an identical way.

A while ago, it became cliché to argue that the case law on object restrictions is unclear and unpredictable. As I argued here, the opposite is true. The case law has, if anything, become increasingly predictable and clear over time. Which takes me to the next point.

Second thought: the ‘object-box approach’ to restrictions by object has been rejected, again. The Court has consistently rejected the ‘object-box approach’ to the identification of restrictions by object. This approach would identify agreements that are inherently inimical to competition on the basis of their form alone (e.g. a horizontal agreement that provides for price-fixing or market sharing would be by object under this school of thought).

The Court’s approach is, and has always been, contextual instead. Tondela and RRC Sports put the contextual approach to the test. The clause at issue in the former was a ‘no poach’ one, which would many saw as necessarily restrictive by its very nature. In turn, the second could be reasonably said to involve a form of ‘price-fixing’ (as the dispute at the national level shows). The Court, however, did not depart from its contextual approach and rejected the move away from the contextual approach, no matter how superficially egregious some clauses could have seemed.

Third thought: content, context, aims. Because the Court follows a contextual approach, it has become commonplace to say that ‘context is everything’ when establishing the object of an agreement under Article 101(1) TFEU. This idea is, of course, a bit of an oversimplification. It is through the interaction of the three elements identified in the case law (namely the content of the agreement, the aims it pursues and the relevant economic and legal context of which it is a part) that one can figure out the relevant object (the objective rationale, that is).

Against this background, Tondela and RRC Sports are particularly illuminating. They show how the three criteria interact in practice in the case law as well as the conclusions that the Court draws from this interaction. The richness of these contributions can only be captured in a dedicated post, if not a full-fat article.

Fourth thought: evaluating the context of the agreement is not the same as evaluating its effects. Together with the ‘object-box approach’, this aspect of the case law is the one that creates particular confusion. The need to consider the relevant economic and legal context has sometimes interpreted as a blurring of the boundary between object and effect.

However, the contextual approach is not, and cannot be, an analysis of the effects of the agreement. We must not forget the case law that insists on object and effect being alternative conditions, and neither can we ignore Expedia, which makes it clear that the significance of the effects is not relevant when considering the object of an agreement.

This is a point that the Court has consistently emphasised since Superleague. The trio of judgments illustrates how the contextual approach operates in practice. Hopefully these examples will show why object and effect are fundamentally different inquiries and, more importantly, they will provide guidance to courts and authorities so that they avoid the trap of conflating both.

Final thought (for the moment): Wouters and Meca Medina can only apply to non-object infringements. This is a point that the Court famously clarified in Superleague. To the extent that this is the case, there is no novelty. If I mention it, this is because of how obvious and inevitable the Court’s position seems when reading RRC Sports. However obvious, I promise to develop the point further in future posts.

Those who, like me, will soon be off for a few days: enjoy the time off!