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What went on at the Chillin’Competition Conference 2017 (video and summary)

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We have just received this video with the highlights of the conference featuring interviews with some of our attendees including a journalist whose name I can’t recall now. the President of the blog’s fan club, a speaker from last year, a speaker from this year, and a soon-to-be-fired colleague of mine.

And for a very good summary of the conference by our friends at Gecic Law, click here! 



Written by Alfonso Lamadrid

12 December 2017 at 6:42 pm

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Reactions to DG Comp’s beer investigation

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A few days ago the European Commission opened an investigation into an alleged abrewse of dominance to restrict beer imports into Belgium (see here).

Ale those of you that thought we would barley survive without endives will now hopfully realize that this blog is lager than one single product. At yeast, we now have a hopportunity to show that we can focus on the big pitcher.

To be sure, there have been plenty of cases concerning beer before and we have written a number of posts on this drink (see e.g. here and here). In that sense, this may seem like a déjà-brew.

Indeed, alcoholic beverages are perhaps the product that has contributed the most to EU case law and to competition law in particular. Sometimes they were the subject of cases and, even when they were not, their influence clearly emanates from the content of some decisions…

But… wheat a second…. Actually, we can’t comment on this case due to a conflict: AB Inbev was the sponsor of the brewtal open bar we held at our first Chillin’Competition conference. Anything we say could therefore be regarded as an attempt to persuade the Commission to leffe the company be and drop the investigation.

Instead of providing you with our views, we will therefore provide you with some reactions from people who typically seek reactions, the members of the “Brussels competition press corps”, who have a stella reputation as competition commentators and a thorough knowledge of the relevant market. Our sources include Aoife White and Gaspard Sebag (Bloomberg), Rochelle Toplensky (FT), Lewis Crofts and Matthew Newman (MLEX) and Nicholas Hirst (Politico).

Unfortunately, after a few drinks we don’t remember who said what, so we can’t really attribute any quotes, sorry.

According to one of our sources, the decision to open the case was adopted only in light of a special report from the Chief Economist. The aim of the report was to identify the product that enjoyed the highest consumption among officials. This was part of a strategy to first adopt a decision and then lodge a follow-on action for damages suffered by the Institution, much like what happened in the elevators case (see here).

Another Brussels-based journalist reports, on the contrary, that the case originates from an informal complaint by the College of Europe alumni association (based in Place Lux) that, reportedly, is preparing a billion euro class claim.

The “Brussels Bar Association” also claims to be thd representative of the main class affected by the case. We have no confirmation of whether they represent lawyers or actual bars.

Conversations between our sources and parties connected to the case nevertheless all converge in anticipating that defence arguments will be threefold, namely (i) -“Who ever reads the small print on beer cans??”; (ii) “Competition is just one Chimay away” and (iii) “Hasn’t anyone realized that water is more expensive in this country!?”.  Economists in turn, are wondering whether one should factor in hangovers and associated lack of activity to the consumer surplus/deadweight loss analysis.

The case is also expected to shed light on several procedural issues (“if you stop drinking, can you challenge jurisdiction?”). The investigation is nonetheless expected to leffe issue unresolved and to result in consumer uncertainty (“so where do I go to buy my Christmas Kriek supply – Lille or Eindhoven?”, is a question many are asking themselves in the wake of the Commission’s press release).

If any of you has any comments on the case, feel free to comment on this post.


Written by Alfonso Lamadrid

11 December 2017 at 2:11 pm

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Case C‑230/16, Coty Germany GmbH: common sense prevails (by Pablo)

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it is only Common sense

The Court Judgment in Case C-230/16 is out (available in French and in English). And, in the spirit of times, here is an online channel providing the first comment on it.

The judgment follows faithfully AG Wahl’s Opinion, which came out in July (and which we discussed on the blog). It seems to be also in line with the position consistently expressed by the Commission since the Guidelines on vertical restraints.

The vast majority of our readers will remember that the case is about the legality of a ban on the use of online marketplaces by the members of a selective distribution system. The Court has ruled the following:

  • Where the conditions of Metro I are fulfilled, a restraint aimed at preserving the luxury image of a product is presumptively lawful – in other words, it falls outside the scope of Article 101(1) TFEU altogether.
  • A selective distribution system that provides for an online marketplace ban is not caught by Article 101(1) TFEU where the conditions of Metro I are fulfilled (that is, where the nature of the product requires the use of the system). Such a ban does not go beyond what is necessary to preserve the luxury image of the product.
  • An online marketplace ban is not a hard-core restriction within the meaning of Article 4 of the Vertical Block Exemption Regulation if it does not limit passive sales and/or the customers to which the distributor can sell the product.
  • The ruling in Pierre Fabre is confined to the specific circumstances of that case, i.e. an absolute ban on online sales (paras 33-34).

More important than the ruling are the implications than one can infer from it, which can be summarised as follows:

  • The Court makes it clear beyond doubt that the object of an online marketplace ban is not the restriction of passive sales and/or the customers to which distributors can sell. This is in line with the position expressed by the Commission in the context of the e-commerce sector inquiry.
  • By way of consequence: the Court strongly signals that an online marketplace ban is not a restriction by object within the meaning of Article 101(1) TFEU.
  • What are the implications? The first implication is that a case-by-case analysis of effects would in any event be required for non-luxury goods. Byzantine discussions about whether Asics or Mizuno shoes qualify as luxury goods seem entirely irrelevant in this regard. The ‘by object’ shortcut would not apply, irrespective of the nature of the good.
  • Insofar as an online marketplace ban is not a hard-core restraint within the meaning of the Regulation, the benefit of the block exemption applies irrespective of the nature of the product. Again, the ‘luxury or not luxury’ dilemma will be largely irrelevant in practice as a result.

I have summarised my understanding of the ruling in the table below:

Nature of the product Outcome Hard-core restriction under VBER? Can benefit from Block Exemption?
Luxury or hi-tech product (Metro I) The ban is presumptively lawful No Yes
Other products The ban is not by object, case-by-case No Yes


Other comments

Copad was the key precedent all along

The Court approaches the question in the way I would have done it. As I mentioned in July, the key precedent was Copad, an intellectual property case. In Copad, the Court ruled that a trade mark licensor can invoke its rights to prevent a licensee from selling to non-members of a selective distribution system.

That ruling is based on a key premise: if companies cannot protect their intangible property (brand image, trade mark, goodwill) when dealing with third parties, they will refrain from licensing and from selling via independent distributors. Why would firms do something that would force them to lose control of the image they want to convey?

More importantly: why would EU law penalise firms that sell or produce via third parties and favour those that produce in-house? Copad and Coty suggest that EU law is agnostic about the business model that companies choose. There is no reason why vertical integration should be favoured over licensing and/or selling via third parties. And there are many good reasons why the latter should not be treated more strictly.

The protection of intangible property is important for all producers, not only the producers of luxury goods. Asics or Mizuno shoes may not be seen as a luxury product (it is all in the eye of the beholder). This, at the end of the day, does not really matter. What matters is that conveying a particular image may also be important for these companies.

Trade mark law seeks to protect all producers, not only producers of luxury goods. There is no reason why EU competition law should be different. Coty appears to be in line with this position.

The administrability trap in EU competition law

The ‘by object’ prohibition of online marketplace bans has been defended by many in the past few months. One of the arguments that has frequently been invoked is the ease of administration of a ‘by object’ rule. If we know that a practice can be bad for competition, is it not better to lay down a prima facie prohibition so we all know where we stand?

Coty shows that the Court was not impressed with these arguments. If everything were about the easy administration of a rule, then every practice would be prohibited by object, and this is clearly not the case.

What is more, this view ignores that prima facie legality rules are also easy to administer, and are an integral element of EU competition law.

Metro I, where the Court clarified that, in some circumstances, selective distribution systems are presumptively compatible with Article 101(1) TFEU (irrespective of the market share!) is a wonderful example. We know now that the legality rule may apply even when the agreement provides for an online marketplace ban.

Written by Pablo Ibanez Colomo

6 December 2017 at 12:19 pm

Posted in Uncategorized

Lessons from the Case Law for Competition Law Enforcement in Multi-Sided Markets (A Teaser)

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 CoRe, CCIA and the VUB held a great conference about competition law in digital markets last week in Brussels. Asked to focus on multi-sided markets, my claim was that the case law already provides enough guidance for us to apply the law to multi-sided business models. I posited –once again- that the real problem we have in competition law is that we are forgetting about the law.

Contrary to what many tend to assume, in the EU we have actually made quite some progress, at least on the judicial front. In fact, my bet is that when the SCOTUS rules on Amex (a case which some expect will provide us with quasi divine guidance), it will say nothing new as regards what we already have in EU case law.

Courts do get it. I witnessed that first hand when I was the guest lawyer at this special seminar organized by the European Association of Competition Law Judges. The problems arise when we don’t listen.

Building on a previous paper (“The Double Duality of Two-Sided Markets“) and on ideas voiced out in other occassions my intervention focused on 6 lessons from the case-law. I would like to believe they result from an objective reading of the case-law (even if, to be sure, I do advise several clients operating multi-sided business models).

The lessons I extract from the case law are the following:

  1. One cannot look at different sides of a multi-sided business model in isolation (partly discussed here);
  2. The anticompetitive value that was typically attributed to network effects needs to be nuanced (an idea partly discussed here);
  3. Cross-market anticompetitive effects require, as a minimum, a showing of anticompetitive foreclosure/elimination of effective competition in the target market (a point also made by Pablo here);
  4. The assessment of pro-competitive effects must consider the benefits flowing to all sides of a multi-sided system (see here);
  5. Multi-sidedness considerations are part of the legal and economic context to a given practice, not a side issue to examine in isolation as a last step in the analysis (idea anticipated here);
  6. The key to competition law enforcement in multi-sided markets has to do with the analysis of the counterfactual (i.e. causality/attributability) (partly discussed here).

I think I will develop these ideas in a proper article. If anyone of you has any comments on these lessons (or on others), please send them my way!


Written by Alfonso Lamadrid

5 December 2017 at 1:01 pm

Posted in Uncategorized

EVENT – Judge José Luis da Cruz Vilaça visits King’s College London

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Curia logo

For those lucky enough to be in London next week: Judge José Luis da Cruz Vilaça, President of  Chamber at the European Court of Justice, will deliver a lecture at King’s College London on 14 December. The event is organised by the Centre of European Law and will be chaired by Professor Alison Jones.

As most of our readers know, Judge da Cruz Vilaça has presided over the chamber that has delivered some of the most important recent rulings in our field. He has acted as rapporteur in Intel and Post Danmark II.

In case you were wondering: I am going! You can sign up for the event here.

Written by Pablo Ibanez Colomo

5 December 2017 at 12:19 pm

Posted in Uncategorized

On Case C‑547/16, Gasorba and others v Repsol (and, more importantly, on the nature of commitment decisions)

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Expected outcome

Last week the Court delivered a preliminary ruling in Case C‑547/16, Gasorba. Together with Case C‑248/16, Austria Asphalt (which came out in September) it is a very serious contender for the Most Predictable Ruling Award 2017.

In essence, the preliminary reference asked whether a national court can take action under Articles 101 and 102 TFEU where the European Commission has already accepted commitments in relation to the same practice.

In a very brief judgment (serious contender for that category too), the Court clearly ruled that it is – of course – possible for a national court to examine the compatibility of practices with EU competition rules in instances where the European Commission has closed a case with a commitment decision within the meaning of Article 9 of Regulation 1/2003.

I do not see how the Court could have come to a different conclusion. Regulation 1/2003 is crystal clear on this point – I remember discussing Recitals 13 and 22 of the Regulation, which could not be more explicit, back in 2005, when I was a teaching assistant in Bruges. I do not feel there has ever been any doubt (or expectation that the Court would see things differently).

I am sure some people will criticise this outcome – it may perhaps be argued that this outcome creates legal uncertainty, or that it reduces the incentives to offer commitments.

To which I am tempted to reply: if the outcome of the ruling is deemed undesirable, what should change is Regulation 1/2003, not a Court ruling echoing the unambiguous choice made by the legislature.

The Court, however, does not rule that commitment decisions are entirely irrelevant in proceedings at the national level. The judgment clarifies that national courts are expected to take into account the preliminary assessment of the Commission in a commitment decision, and this as an expression of the principle of sincere cooperation (or loyalty) enshrined in Article 4(3) TUE.

Because these weeks my research work is taking me to the old days, I thought immediately of the Lancôme ruling of 1980, in which the Court considered the status of the ‘comfort letters’ issued by the Commission under Regulation 17, and came to a similar solution. For younger readers: comfort letters are like commitment decisions avant la lettre (if you allow the cacophony and the bad pun).

More interesting than the ruling is the debate about the nature of commitment decisions. I have the impression that, to this day, these decisions are, for some reason, often taken as instruments stating what the law is. They are not. They are an expression of the discretion that the Commission enjoys when choosing which cases to pursue.

Because commitment decisions are about discretion, not about the interpretation of Articles 101 and 102 TFEU, they are only subject to limited review. Accordingly, the ‘preliminary assessment’ found in these decisions is, if at all, subject to the same ‘manifest error’ test that applies to the rejection of complaints.

In other words: curb your enthusiasm.

Written by Pablo Ibanez Colomo

1 December 2017 at 11:08 am

Posted in Uncategorized

Case T-180/15, Icap and post-Menarini Judicial Review- Almost There?

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The ICAP Judgment rendered by the GC on 10 November is one of the highlights of the year. It has taken us a few days to process it and a rainy weekend at home to write the comment (I hear that the Commission is taking quite some time to process it too) and a closer look reveals that it offers much food for thought and action.

In our view, it has many lights that make it an example for judicial review in the post-Menarini era, but also contains one important shadow that casts a doubt on this trend: the GC finds a breach of the presumption of innocence, but immediately after finds the breach not to have had legal consequences (a situation reminiscent of that illustrated in the pic above) causing some unsurprising frustration.

The Judgment is important on at least 5 counts, namely: 1) for its implications for hybrid settlements and the respect of the presumption of innocence; 2) the interpretation/expansion of AC-Treuhand and the role of the principle of legality in competition cases; 3) the practical assessment of evidence; 4) the interpretation of the “single and repeated” vs “single and continuous” infringement and 5) the statement of reasons regarding the calculation of fines. There are other interesting procedural issues for litigation geeks but I will keep those out of this post.

Background. The case concerned one of the Commission’s cases concerning manipulation of benchmarks, this time in relation to Yen Interest Rate Derivatives. In a 2013 settlement decision the Commission declared and sanctioned 6 bilateral agreements between banks, stating in the decision that ICAP had acted as a facilitator thereof (but also underlining that the facts accepted by the settling parties could not establish liability for ICAP). In February 2015 the Commission issued a separate decision addressed to ICAP, an alleged facilitator in the case that had refused to settle. ICAP was eventually fined 14 million euros and appealed to the GC which has now rendered its Judgment.

Implications for hybrid settlements. The most remarkable part of the Judgment comes towards the end. ICAP alleged that the Commission had breached its presumption of innocence by describing, in the 2013 settlement decision, how ICAP had facilitated the infringement (para. 258). Even if the Commission took the obvious precaution of not legally qualifying such conduct, the GC finds that it reveals “the existence of a position adopted by the Commission” (259) from which “a legal classification (…) could easily be inferred” (260) (admittedly, the fact that on this point the 2013 Decision reproduced the content of AC-Treuhand didn’t make it that difficult…).

The Commission’s position was that it needed to refer to ICAP’s participation to assess the guilt of those who had opted to settle and that having settlement decisions wait until the standard procedure is concluded with non-settling parties would be contrary to the objectives of efficiency and greater rapidity of the settlement procedure (para. 264). The GC’s response is that as laudable as those objectives may be (266) they cannot prevail over the principle of presumption of innocence (para. 266). Amen. That logic makes perfect sense, is fully in line with other recent case law (see e.g. our comments on Eturas here) and is rightly premised on the idea that the presumption of innocence is a higher good.

The Judgment therefore states that settlement decisions must respect the requirements flowing from this presumption and even suggests a possible solution to do so in cases where the Commission needs to refer to the conduct of the non-settling party in the settlement decision: adopt the settlement and non-settlement decisions at the same time like the Commission did in the case giving rise to the Timab Judgment endorsed by the Court (Animal Feed Phosphates). Pretty obvious, right?

Three years ago some of us anticipated these problems (see my last point at the end of this post) and I don’t think I was the only one. The Commission, however, decided to take a risk and play the fait accompli strategy (which admittedly has been effective in the past), taking staggered hybrid-settlement decisions in all but its very first hybrid case.

The problem, however, is that the same recital that declares that the presumption of innocence was breached (para. 269) then states that it cannot have a direct impact on the non-settlement decision and that one needs to verify whether the Commission’s objective impartiality was compromised (270). In para. 274 the Court holds that the Commission’s stance did not seem to be vitiated by a lack of impartiality regarding the legal classification of the conduct as revealed by the Court’s “comprehensive review” in this case (the drafting –repeated in 278- may suggest that perhaps the review was particularly comprehensive given the circumstances; see below for more on this). The Judgement goes on to explain that even if the errors identified by the GC in the assessment of evidence could have been caused by a lack of impartiality, then that wouldn’t really matter because “the contested decision must already be annulled in that regard” (277).

As regards other findings in the decision, the GC applies the case law regarding functional errors, according to which irregularities only entail the annulment of the decision it is established that absent the irregularity the content of the decision would have been different, and in this case the “comprehensive review” (second time the Judgment insists on this point) of the decision showed that the Commission got it mostly right (278).

Consequences of a breach of the presumption of innocence. In my view, the requirements stemming from the presumption of innocence are of paramount importance, they are not functional obligations that can later by remedied by a particularly thorough judicial review. Whether a breach makes a difference to the outcome of the case or not should be irrelevant.

Why? Because the solution adopted by the GC (that a breach may not matter at all if a thorough scrutiny later either a) shows that a decision was well founded or b) amends any errors by an annulment/partial annulment) effectively means that the breach in itself won’t have any consequences in any circumstance. It would only matter in case the Commission makes a manifest error in its decision, but in that case it would be annulled anyhow. That is why this solution creates perverse incentives: what incentives would the Commission have to not breach the presumption? That can’t be right.  A possible interpretation is that the GC is indirectly saying that it will be very strict and “thorough” in its review to compensate (as explained later, the assessment of evidence in this case is exemplary). But the Court should always be equally strict and thorough when it comes to evidence, precisely because the presumption of innocence requires it and because its review of evidence should not vary depending on circumstances unrelated to the objective body of evidence itself.

Possible solutions going forward. What should the Commission do now in hybrid cases?

In most cases a simple carve-out of evidence and mentions to third parties might be the best alternative.

The problem is more intense in cases like this one (facilitators or bilateral infringements), where declaring the infringement necessarily requires saying something about a non-settling party. In these situations there are several options:

  • I have heard people say that it’s enough not to mention the name of the non-settling company in the settlement decision; that doesn’t make any sense to me, as the identity of the company “could easily be inferred” (to use the words of para. 260 of this Judgment).
  • The obvious alternative is the one pointed out by the GC: adopt the two decisions at the same time. But of course the Commission would want to avoid that because that would enable “non-settlers” to delay the settlement decision and could have an impact in follow-on actions (and timing is often of great importance in these settings). That would work from the perspective of respect of the presumption of innocence, but I am afraid this option could perhaps risk leading the Commission to play hardball with companies inclined not to settle, somehow creating incentives for them to accept a settlement.
  • In my view, and in addition to the options above, part of the problem may perhaps be partly addressed with (more) careful and transparent drafting. When describing the background and facts the Commission could explicitly acknowledge the special circumstances for hybrid proceedings and note that the facts remain contested by other parties. This could be done by enabling non-settling parties to submit observations on the Preliminary Assessment sent to the settling parties, and to consider or reflect their views in the decision.
  • Any other ideas?

By object or not? The Judgment kicks off with a re-statement of the case law on object/effects (43-48) and of the controversial case law regarding concerted practices and exchanges of information (T-Mobile, Dole, etc, discussed here and here; 49-58). Applying it to the case at issue, the GC inevitably finds that the coordination of panel submissions was a restriction by object (72) and that even if examining the complementary information exchanges would not be required (73), those too would have been “by object” (74-91). Not much new under the sun on this point.

Interpretation and expansion of AC-Treuhand (+ principle of legality). ICAP contended that the requirements set in AC-Treuhand for a “facilitator” to be covered by Art.101 (summarized in para. 100 and akin to those governing single and cont infringements) were not met in this case [for our previous comments on AC-Treuhand, see here and here]. In this regard the GC first essentially re-states the content of AC-Treuhand (paras. 92-104) and then assessed the evidence in the light thereof (see next section below).

The applicants also argued that the facilitation test applied to ICAP was too broad and a novelty (because while AC-Treuhand’s intervention had made the infringement possible, ICAP had “only” contributed to it) and could not have been foreseen, so they invoked a breach of the principle of legal certainty/legality (the discussion on this point might perhaps be relevant to future/ongoing cases). The GC’s response is that foreseeability is also to be assessed having regard to the person concerned, as some companies can be expected to take special care in evaluating the risk that their activities entail (para. 196, reminiscent of the “special responsibility” logic…) and that ICAP should have been aware of the broad scope of the notion of “agreement” and “concerted practice” (this logic, particularly when  put together with what the GC said in this other Judgment, seems to suggest that companies should foresee that virtually anything comes within the scope of the competition rules).

Assessment of evidence (in theory and in practice). The GC had to assess whether the EC proved that ICAP was aware or could have reasonably foreseen the conduct planned and put into effect by other banks. As part of that exercise, the Judgment first summarizes (114-118) the general principles governing the assessment of evidence and then engages in a thorough, meritorious and commendable review of the evidence. The Judgment itself highlights its “comprehensive review” in paras. 274 and 278. That is the sort of review that one expects following Chalkor, KME,,etc. i.e. examining with care every item of evidence document by document (like we lawyers typically try to do) and only then the body of evidence altogether as a whole (like authorities typically try to do) (this methodology is evident e.g. in para. 141) That is often the trick in the assessment of evidence (as I explained here, only a draft and Spanish though). And, in the face of any doubt, the GC finds in favour of the applicant. The GC’s assessment of evidence in this case is excellent both when the GC confirms the Commission’s view (e.g. paras. 122-132 or 146-164 as well as when it quashes it (e.g. paras.  133-145) [Side note: such detailed review can also be seen in other cases won by the Commission -and that therefore did not receive that much attention; it’s not that Judgments are good only when the Commission loses something].

Single and continuous infringement vs. single and repeated infringement. The infringement at issue was committed on a daily basis, but the Commission’s evidence regarding ICAP showed regular contacts occurring at intermittent periods. It is very common in cartel cases to have some holes in the body of evidence or periods of lesser/no cartel activity. The case law on these situations had acknowledged that, depending on the circumstances, gaps of over a year do not necessarily undermine the finding of a single and continuous infringement (see e.g the case law cited in para. 218). The criteria applied in this case for infringements committed on a daily basis sets a pretty high bar for the Commission.

The Judgment explains that a single infringement may be categorized as continued or repeated depending on how it is committed (216-217). It states that in order to presume that an infringement continued uninterrupted between two specific dates the Commission must adduce evidence of fact sufficiently proximate in time (219), the length of the period depending on the context of the functioning of the cartel in question (220). In this case the GC takes into consideration the fact that the manipulation needed to be repeated on a daily basis for its effects to continue. The GC considers, for instance, that in relation to a 3 month period for which the Commission had 10 evidential items for different dates, a gap of seven weeks is enough to break the continuity (para. 235). Conversely, and although the Judgment doesn’t explicitly say it, the dates referred to in para 233 also reveal that the GC considers a gap of three weeks to be acceptable to show continuity (25 May-15 June). Where is the limit and how it should be set are relevant questions that many of us might encounter in the future.

Statement of reasons and fines. Para. 37 of the fining guidelines requires the Commission to justify any deviations from the methodology set therein. In this case the Commission justified deviating from the standard methodology because ICAP had no turnover in the markets concerned (para. 287), but it did not explain the alternative methodology that it followed. After recalling the case law on duty to state reasons, the GC states that the requirements flowing from this dusty “must be complied with all the more rigorously” when the Commission departs from the guidelines (289) and finds that a general references to gravity, duration and nature of the infringement constituted an insufficient reasoning of the methodology used (294). The fact that the Commission had discussed the methodology with ICAP or the explanations provided in the written phase of the litigation are considered irrelevant (295-296). All pretty straightforward and logical.

Written by Alfonso Lamadrid

27 November 2017 at 7:14 pm

Posted in Uncategorized