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Bernd Meyring * *Dr Bernd Meyring is a Partner with Linklaters LLP. E-mail: bernd.meyring@linklaters.com Search for other works by this author on: Oxford Academic
Journal of European Competition Law & Practice, Volume 1, Issue 1, January 2010, Pages 30–32, https://doi.org/10.1093/jeclap/lpp009
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Bernd Meyring, T-Mobile: Further confusion on information exchanges between competitors: Case C-8/08 T-Mobile Netherlands and others [2009] ECR 0000, Journal of European Competition Law & Practice, Volume 1, Issue 1, January 2010, Pages 30–32, https://doi.org/10.1093/jeclap/lpp009
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Abstract
The ECJ's ruling in the T-Mobile Netherlands case misses an opportunity to provide more clarity on the distinction between restrictions by object and restrictions by effect within the meaning of Article 81 EC. Instead, it adds to the confusion regarding the treatment of information exchanges between competitors by seemingly moving away from a more economic approach.
The ECJ's judgment looks only at first sight like a return to old school per se thinking in the legal analysis of information exchanges.
Context
Information exchanges between competitors have recently become an enforcement priority for European competition authorities. Fines against importers of bananas, suppliers of luxury cosmetics, operators of schools and hotels and other companies have contributed to shaping an increasingly conservative approach to compliance in this area. In many cases, they have deterred companies as well as trade associations from benchmarking, collecting market intelligence, publishing industry statistics, and other activities that can lead to efficiencies that outweigh anticompetitive effects.
On the other hand, the European Commission's recent Maritime Transport Guidelines (Guidelines on the application of Article 81 of the EC Treaty to maritime transport services, OJ, 2008, C 245/02) put forward an analytical framework based on a more economic approach. Assessing and balancing pro- and anticompetitive effects determines the legal analysis in this area. Some national competition authorities have followed similar approaches, most prominently when analysing the collection and publication of market data by AC Nielsen.
Does this mean that more flexibility is in the offing? At first sight, the European Court of Justice's (ECJ) preliminary ruling of 4 June 2009 seems to be a setback for the more economic approach, in that it advocates and applies old school per se thinking. However, a closer look reveals that the case was about different issues. Despite the unfortunate per se language that addresses ‘information exchanges’ the Court had in fact to deal with companies wishing to harmonise costs. Rather than clarifying the analysis of pure information exchanges, the preliminary ruling therefore gives rise to further legal uncertainty.
Facts
The five Dutch mobile network operators (the ‘parties’), held one isolated meeting. They discussed in particular the reduction of standard dealer remunerations for post-paid subscriptions. They also exchanged confidential information, but it is unclear what information precisely this was. The Dutch NMa fined the parties for entering into a concerted practice. The fine was confirmed by Dutch courts. The parties finally appealed to the College van Beroep voor het bedrijfsleven, which decided to request the ECJ's preliminary ruling on three different questions regarding the interpretation of Article 81 EC.
Analysis
It has often been highlighted that the ruling makes clear that one single meeting between competitors can be enough for a serious violation of Article 81 EC and can trigger the presumption that participants have considered what was discussed at this meeting when they determine their market conduct. The judgment is also important in that it highlights that Article 81 EC goes beyond protecting final consumers and also aims to protect competitors as well as a competitive market structure as such. Finally, the judgment contains interesting and controversial language on the assessment of information exchanges. This is the focus of this paper.
At the outset, the Court summarises its approach to the distinction between violations by object and violations by effect. It points out that both concepts are alternatives and that, contrary to the national court's view, there is no need to analyse the effects of a specific practice once it is established that its object was to restrict competition.
The role of the economic context in the assessment remains, however, unclear. On the one hand, the Court holds that the conduct must be capable of restricting competition in its ‘specific legal and economic context’, even in the framework of a restriction by object. In other words, this seems to indicate that conduct that might aim at a restriction of competition but cannot achieve this purpose because of a specific economic or regulatory context cannot be treated as a violation by object. This is in line with the statement according to which ‘the intention of the parties is not an essential factor’. On the other hand, the Court reemphasises that it is irrelevant ‘whether and to what extent’ anticompetitive effects in fact materialise.
Even though this seems to be what point 31 says (‘it is sufficient’), it would be wrong to conclude that any potential to have a negative impact is sufficient to establish that a practice is a restriction by object. First, this would do away with restrictions by effect altogether because practices that are not even capable of having anticompetitive effects will not produce such effects in any event—and all other restrictions would be restrictions by object. Second, the concept of a violation by object is a narrow one. As the Court notes in point 29, restrictions by object are only the severest forms of collusion that ‘can be regarded, by their very nature, as being injurious to the proper functioning of normal competition’. These practices are hardcore cartels and it is indeed common sense that these are prohibited, whether or not they actually turn out to be effective in the individual case. In its Guidelines on the application of Article 81(3) of the Treaty, the Commission speaks of restrictions that ‘have such a high potential of negative effects on competition that it is unnecessary … to demonstrate any actual effects on the market’ (point 21).
Practices outside this category may or may not affect competition, depending on their economic context. They merit and require a careful analysis as to their effects on competition. It would be inappropriate to circumvent this requirement by simply classifying them as restrictions by object.
The Court argues that ‘an exchange of information which is capable of removing uncertainties between participants as regards the timing, extent and details of the modifications to be adopted by the undertaking concerned must be regarded as pursuing an anticompetitive object’ (point 41). This is a bold statement and it is worth recalling that, in the case at hand, the parties had discussed contemplated modifications of their standard remuneration for dealers. This discussion related to a strategic choice that would be implemented in the future. Moreover, the request for a preliminary ruling suggests that the future levels of remuneration were not unilaterally set and then exchanged but were ‘discussed’, which implies that the aim of the conversations was to determine the right level. Advocate General Kokott sets out in her opinion that the discussions indeed resulted in a coordination of market conduct (at point 36). It is not surprising that the Court classifies such a discussion as a restriction by object. However, it seems very odd in this context to elaborate, as the Court does, on information exchanges. Where two competitors discuss, on the basis of their market knowledge and strategic planning, how their competing products should best be priced, we would hardly speak of an information exchange but rather of a price fixing cartel. And it seems obvious to treat such a discussion as a violation by object. The legal assessment of the information exchange in this framework would be irrelevant, and would only obscure the real issue. The fact that the discussion covered other conditions should not make any difference to this part of the analysis.
The phrase ‘information exchange’ appears in none of the three preliminary questions, and the legal analysis of information exchanges as such seems to be irrelevant for the case that the national Court has to decide. By focusing on the exchange of confidential information, the ECJ produced statements that are confusing and far too broad. The question in this case was not when information exchanges are legal but where precisely is the line in the sand that separates violations by object from practices that turn on the analysis of their effect. The Court has missed an opportunity to provide more clarity as to the crucial question when precisely a practice is a restriction by object. It has also failed to acknowledge, like Advocate General Kokott at point 37 of her opinion, that not every exchange of information between competitors has an anticompetitive object.
Practical significance
The judgment leads to further confusion in the competition law analysis of information exchanges. Whereas the Court's John Deere judgment had used a checklist approach to analyse the effects of an information exchange between competitors, the Maritime Transport Guidelines and the cases on AC Nielsen in Finland, Norway, and Sweden have moved to a more economic approach to effects. The ECJ's judgment in T-Mobile Netherlands should not be misinterpreted as advocating a simplistic per se approach to such cases. Rather, it makes clear that an information exchange that is ancillary to a cartel must be treated together with the cartel and as a per se violation. The Court could have stated this more clearly.
© The Author 2009. Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org
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