The ECJ’s Expedia judgment – no de minimis defence available for restrictions by object

On 13 December 2012, the European Court of Justice (ECJ) issued a preliminary ruling that will make it simpler to enforce, and punish, anti-competitive behaviour under Article 101 TFEU, increasing the risks of infringement for small companies.

This case (Case C-226/11) concerned the creation of a joint venture between the French state railway company (SNCF) and the tour operator Expedia to expand the sale of train tickets and travel over the internet. The French Competition Authority found this agreement to be an infringement of Article 101(1) TFEU and, on appeal from this decision, Expedia claimed that the parties’ market shares had been overestimated and did not exceed the thresholds set out in the Commission’s de minimis Notice1.

The referring court asked the ECJ if Article 101(1) TFEU and Article 3(2) of Regulation No 1/2003 should be interpreted as preventing a national competition authority from punishing anti-competitive agreements if, despite the fact that they may affect trade between Member States, they involve undertakings whose individual and aggregate market shares fall below the thresholds of the de minimis Notice (10% for horizontal agreements and 15% for vertical agreements).

The ECJ made two important clarifications.

First, it emphasised that the de minimis Notice is not binding for national competition authorities or courts but merely imposes a limit on the Commission’s discretion when handling infringements of Article 101(1) TFEU. In addition, the Court stated that when assessing if a restriction of competition is appreciable, the national competition authorities may take into account the market share thresholds of the de minimis Notice but are not required to do so as those thresholds are only one of the relevant factors to be analysed «by reference to the actual circumstances of the agreement)).

Secondly, and more importantly, the ECJ held that «...an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature, and independently of any concrete effect that it may have, an appreciable restriction on competition)) (par. 37).

This means that, following this judgment, any agreements having an anti-competitive object will be deemed to constitute a material (appreciable) restriction of competition and, therefore, they will constitute an infringement of Article 101(1) TFEU no matter how small the market share of the companies involved. The safety derived from the de minimis Notice is therefore limited, from now on, to agreements with anti¬competitive effects.

This development should prompt smaller market players to carefully review existing contracts in order to make sure they contain no clauses that could be deemed to have an anticompetitive object as they will no longer have any possibility to hide behind their diminutive size to escape fines under Article 101(1) TFEU.

This article was written by lawyer Gonçalo Machado Borges.