1. Restrictions 'by object' after Groupement des Cartes Bancaires – much ado about nothing?
Henning LEUPOLD
European Commission, Legal Service
antitrustitalia
Brussels, 19 February 2015

2. Disclaimer
The views expressed in this presentation are personal and may not be regarded as stating an official position of the European Commission. Thank you for respecting the Chatham House Rule.

3. Cartes Bancaires: the alleged restriction
Two-sided payment system:
"Issuing" cards
"Acquiring" merchants that accept the cards
Notification of new fee structure:
Fees that make issuing of cards more expensive if little "acquiring" activity
GCB: to encourage "acquiring" activity by new entrants – legitimate, to avoid free-riding
Commission: measure to foreclose new entrants to the benefit of main members of GCB – very limited scope to expand acquiring activities; fees carefully tailored so they would only affect new entrants

4. Cartes Bancaires: state of play
Commission Decision: restriction by object and effect
General Court: confirms restriction by object (no review of effects analysis)
Court of Justice: annuls General Court judgment – no restriction by object proven
Case referred back to General Court: review of Commission's effects analysis

5. Background
Several judgments on restrictions by object in last few years:
GSK
T-Mobile
Irish Beef
Pierre Fabre
Premier League
Expedia
Allianz
Cartes Bancaires
Next: Maxima, ING Pensii, Lundbeck, Servier

6. Cartes Bancaires: reasons for annulment
Court of Justice criticised that the General Court:
failed to consider that "revelation of a sufficient degree of harm" is essential criterion for restriction by object
wrongly considered that concept of restriction by object must not be interpreted restrictively
wrongly inferred from the agreement's capability to restrict competition that it had an anti-competitive object
failed to properly take into account the context of the measures
resorted to effects analysis to demonstrate anti-competitive object

7. What does this mean? Anything new?
"Sufficient degree of harm to competition":
"By their very nature harmful to the proper functioning of normal competition"
"So likely to have negative effects"
"Experience shows"
No need to show actual or potential effects for finding of a restriction by object
Criteria: content, objective, legal and economic context; intentions
Capability of restricting competition

8. Capability of restricting competition
T-Mobile: "sufficient" for restriction by object that agreement is "simply" capable of restricting competition
Cartes Bancaires: General Court has only shown capability but not anti-competitive object
No contradiction:
T-Mobile language: to highlight that no effects need to be shown in object analysis; to be seen in light of position of referring court
Cartes Bancaires: capability is not the only criterion for object analysis – but that doesn't mean it is redundant
Purpose of capability criterion is NOT to rebut anti-competitive object by claiming that there are no actual or potential effects – restriction by object not a rebuttable presumption

9. Sufficient degree of harm (I)
Formula consistently relied on by the Court of Justice since Société Technique Minière in 1966 (same as "sufficiently deleterious")
Demonstration of potential effects cannot be a substitute for the need to establish a restriction by object
But, doesn't it appear contradictory:
to require showing that an agreement is "so likely to have negative effects"
while at the same time requiring that no actual or potential effects of the agreement are assessed in the object analysis?

10. Sufficient degree of harm (II)
Showing a sufficient degree of harm and actual or potential effects are two different things
Different analyses are needed
Object analysis must be more abstract (but not wholly abstract): "by their very nature", "experience shows"
But what could that mean concretely?

11. Sufficient degree of harm (III)
"Established" restrictions by object - for example, price-fixing (see Cartes Bancaires)
Sometimes restriction by object not immediately identifiable –no need for "obviousness"
Test for both scenarios: content, objective, context; intentions

12. Sufficient degree of harm (IV)
Purpose of test in second scenario (non-obvious restriction):
NOT: showing harmful effects of agreement at issue
BUT: showing similarity to well-established categories of restrictions by object – for example, price-fixing, output restrictions, market/customer sharing, impediment of single market imperative
Does a practice effectively amount to (or is similar to) one of the widely accepted restriction by object categories?
Examples:
Court of Justice in Irish Beef: market-wide capacity reduction effectively amounted to output limitation
Commission in Fentanyl: co-marketing agreement effectively amounted to market-sharing

13. Content and objectives
"What was agreed"
Not only written clauses – don't always exist
Must be able to reveal anti-competitive object
Objective:
Not the same as parties' intentions
Whether the true purpose is to restrict competition
Not necessary that anti-competitive object is the sole aim

14. Legal and economic context (I)
To avoid entirely abstract analysis
Context cuts both ways:
Can exonerate an agreement – no anti-competitive object because of context
Can reveal anti-competitive object

15. Legal and economic context (II)
Includes a review of:
the nature of the good or services affected
the real conditions of the functioning and the structure of the market or markets in question
Doesn't include: an effects analysis
For example: in Cartes Bancaires, the two-side nature of the markets involved and their interaction should have been considered

16. Conclusions
No revolution – continuity of well-established case law on restrictions by object
No once-and-for-all pre-set threshold for determination of restrictions by object
Case-by-case approach in the light of experience, economic insight and common sense