Many AG opinions are just a forgettable ‘entremet’ between the General Court hors d’oeuvre and the main course offered by the Court of Justice. But once in a while a game-changing Advocate General Opinion is offered up – for me (and many competition lawyers, particularly those with an interest in the comp-IP interface), these would be the opinion of Sir Francis Jacobs in Oscar Bronner and that of… Sir Francis Jacobs in Syfait / GSK (a case in which the main meal was considerably delayed).
And now we have the Opinion of AG Nils Wahl in Cartes Bancaires (currently available only in French or Greek*). The central subject of the opinion is the question of whether the tariff arrangements of Cartes Bancaires (a grouping of French banks) in relation to credit cards is an agreement which restricts competition by ‘object’.
There has been a marked expansion of the object category of anti-competitive agreements over recent years. Notably, last year’s Court of Justice ruling attracted a barrage of criticism for identifying an object restriction on the basis of a complex factual analysis which many believed was more suited to an ‘effects’ case. This matters, of course, because it is considerably easier for competition authorities (and indeed, private claimants) to prove an object infringement, and considerably harder for companies to defend such an allegation.
AG Wahl takes direct aim at this blurring of the categories. His arguments are buttressed by international practice (notably the US distinction between ‘per se’ and ‘rule of reason’ infringements), and analysis of the policy reason for having object infringements at all, noting in particular the benefits of procedural economy for the regulator and legal certainty for companies operating on the market. But, he says: “Such advantages will, however, be obtained only if recourse to the notion of restriction by object is clearly circumscribed” – if this is not the case, “this could lead to the inclusion in the object category of conduct where the harmful effects on competition are not clearly established”.
For this reason, a “damaging slippage” between object and effect-type restrictions must be resisted, with the former category being reserved for “conduct which presents an intrinsic risk of particularly serious prejudicial effects or of conducts where it can be presumed that the detriment to competition outweighs the pro-competitive effects” (my underlining). Similarly, a “restrictive” interpretation must be given to the question of which agreements are anti-competitive by object. And in this case? AG Wahl has in effect said “must do better” to the General Court which, he recommends, needs to look at the case again in order to establish whether the agreement was really anti-competitive by object. In doing so, it has been given a strong steer that comments made by individuals within one or two of the (many) parties to the agreement have little or no bearing on whether the agreement is actually restrictive by object.
Attentive readers may be asking – why is this a Competition Law / IP interface issue? Well – perhaps it’s simply the case that some things are so important that we feel compelled to transcend our ‘CLIP’ remit. But it is also worth bearing in mind the implications for interface cases which are currently in the Court pipeline. For example, it is clear from comments made by Alexander Italianer (Director General of DG Comp) in a speech last year that the Commission’s recent Lundbeck decision, its standard-bearer case in the area of patent settlement agreements, is based on the identification of an object restriction. This contrasts with the US Supreme Court’s use of a ‘rule of reason’ test in Actavis, as we discussed a few months ago. The Commission’s press release announcing the Lundbeck decision also emphasises a couple of statements which suggest the parties’ ‘bad intention’. If the Court of Justice confirms AG Wahl’s analysis in relation to object infringements and the (ir)relevance of pre-contractual statements in Cartes Bancaires, the task of DG Comp’s legal service in defending its decision will have been made that little bit harder.
But for now, we will have to wait and see whether AG Wahl’s Opinion will prove to be ‘an indigestible dish’** for the Commission, or whether it will fade into insignificance when the Court of Justice rules.
* Translations – from the French – are mine, forgiveness is sought for any errors…
** Kudos for readers who can spot the Competition Law/IP interface case from which I’m quoting here…
Many AG opinions are just a forgettable ‘entremet’ between the General Court hors d’oeuvre and the main course offered by the Court of Justice. But once in a while a game-changing Advocate General Opinion is offered up – for me (and many competition lawyers, particularly those with an interest in the comp-IP interface), these would be the opinion of Sir Francis Jacobs in Oscar Bronner and that of… Sir Francis Jacobs in Syfait / GSK (a case in which the main meal was considerably delayed).
And now we have the Opinion of AG Nils Wahl in Cartes Bancaires (currently available only in French or Greek*). The central subject of the opinion is the question of whether the tariff arrangements of Cartes Bancaires (a grouping of French banks) in relation to credit cards is an agreement which restricts competition by ‘object’.
There has been a marked expansion of the object category of anti-competitive agreements over recent years. Notably, last year’s Court of Justice ruling attracted a barrage of criticism for identifying an object restriction on the basis of a complex factual analysis which many believed was more suited to an ‘effects’ case. This matters, of course, because it is considerably easier for competition authorities (and indeed, private claimants) to prove an object infringement, and considerably harder for companies to defend such an allegation.
AG Wahl takes direct aim at this blurring of the categories. His arguments are buttressed by international practice (notably the US distinction between ‘per se’ and ‘rule of reason’ infringements), and analysis of the policy reason for having object infringements at all, noting in particular the benefits of procedural economy for the regulator and legal certainty for companies operating on the market. But, he says: “Such advantages will, however, be obtained only if recourse to the notion of restriction by object is clearly circumscribed” – if this is not the case, “this could lead to the inclusion in the object category of conduct where the harmful effects on competition are not clearly established”.
For this reason, a “damaging slippage” between object and effect-type restrictions must be resisted, with the former category being reserved for “conduct which presents an intrinsic risk of particularly serious prejudicial effects or of conducts where it can be presumed that the detriment to competition outweighs the pro-competitive effects” (my underlining). Similarly, a “restrictive” interpretation must be given to the question of which agreements are anti-competitive by object. And in this case? AG Wahl has in effect said “must do better” to the General Court which, he recommends, needs to look at the case again in order to establish whether the agreement was really anti-competitive by object. In doing so, it has been given a strong steer that comments made by individuals within one or two of the (many) parties to the agreement have little or no bearing on whether the agreement is actually restrictive by object.
Attentive readers may be asking – why is this a Competition Law / IP interface issue? Well – perhaps it’s simply the case that some things are so important that we feel compelled to transcend our ‘CLIP’ remit. But it is also worth bearing in mind the implications for interface cases which are currently in the Court pipeline. For example, it is clear from comments made by Alexander Italianer (Director General of DG Comp) in a speech last year that the Commission’s recent Lundbeck decision, its standard-bearer case in the area of patent settlement agreements, is based on the identification of an object restriction. This contrasts with the US Supreme Court’s use of a ‘rule of reason’ test in Actavis, as we discussed a few months ago. The Commission’s press release announcing the Lundbeck decision also emphasises a couple of statements which suggest the parties’ ‘bad intention’. If the Court of Justice confirms AG Wahl’s analysis in relation to object infringements and the (ir)relevance of pre-contractual statements in Cartes Bancaires, the task of DG Comp’s legal service in defending its decision will have been made that little bit harder.
But for now, we will have to wait and see whether AG Wahl’s Opinion will prove to be ‘an indigestible dish’** for the Commission, or whether it will fade into insignificance when the Court of Justice rules.
* Translations – from the French – are mine, forgiveness is sought for any errors…
** Kudos for readers who can spot the Competition Law/IP interface case from which I’m quoting here…
