“Groupement des Cartes Bancaires” Judgment: European Court of Justice reduces the scope of anticompetitive infringements by object

Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”) prohibits agreements or concerted practices between undertakings which have as their object or effect the prevention, restriction or distortion of competition. The anti-competitive object or effect are alternative requirements, and this distinction has an impact on infringement proceedings conducted by the European Commission (or by the national competition authorities), namely regarding the burden of proof.

In cases where there is an anti-competitive object, the competition authority in question does not have to demonstrate that the agreement or concerted practice has restrictive effects on competition in the affected markets. If there is no anticompetitive object (i.e., goal), then the competition authority has the burden of proving that the agreement in question has a significant negative effect on competition. In these circumstances, the Commission or the national authority has to conduct a more detailed analysis of the agreement or practice in order to demonstrate the effects of its implementation, taking into account its economic context, the products and services involved and the structure of the affected market(s).

Consequently, the qualification of an anti-competitive practice as an offense by object makes the competition authorities’ task regarding evidence much easier which has led to a trend, in some of the recent decision-making practices, to expand this legal concept.

However, in a judgment of 11 September 2014, in the Groupement des Cartes Bancaires¹ case, the European Court of Justice (“ECJ”) has halted that trend and confirmed that the notion of anti-competitive infringement by object must be interpreted in a restrictive manner in order to cover only the most serious anticompetitive practices.

In December, 2002, Groupement des Cartes Bancaires, an association that brings together the main French banks and manages the payment system with bank cards, notified the Commission regarding the introduction of a set of measures including: (i) a mechanism for “regulating the acquiring function”, in which the members acting predominantly or exclusively as card issuers would pay a higher contribution than the members also performing acquisition activities; (ii) an increase in the membership fees charged to new members; (iii) a “wake-up” fee for “dormant members” intended to encourage the acquisition of cards.

The Commission considered that these measures constituted a decision by an association of undertakings with an anticompetitive object that sought to limit competition between the member banks and exclude competition by new operators (such as retail and distribution outlets, online banks and foreign banks), a conclusion that was validated by the General Court (“GC”).

The ECJ, however, opposed what it considered to be an excessively flexible application of the legal concept of restriction of competition by object, having judged that this concept should be interpreted restrictively in order to cover only those types of business conduct that are, by their own nature, sufficiently harmful to competition (such as horizontal price fixing by cartels).

According to the ECJ, “The concept of restriction of competition “by object” can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects, otherwise the Commission would be exempt from the obligation to prove the actual effects on the markets of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition.” (see paragraph 58 of the judgment).

As a result, the ECJ quashed the decision under appeal and referred the case back to the GC for this Court to analyse whether the measures under review had as their effect a restriction of competition under Article 101(1) TFEU.

This recent judgment is likely to have an impact on the conduct of future investigations by the Commission and national competition authorities, discouraging them from relying too easily on the concept of an object restriction and probably leading to a more careful assessment of the facts of each case in order to identify whether an agreement has actual detrimental effects on competition.

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