European Union: CJEU Narrows Scope Of "By Object" Antitrust Infringements

On Sept. 11, 2014, the Court of Justice of the European Union (CJEU) upheld an appeal by Groupement des Carte Bancaires (GCB) against a General Court judgment that had concluded that fees charged by GCB on the issuing of cards were anticompetitive and a breach of Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). The fees were higher for banks that were not sufficiently active in installing ATMs or making contracts with acquiring merchants. In practice, such banks were new members of GCB, and included online banks and the banking arms of major retailers.

The CJEU held that the General Court had erred in law with regard to the criteria that it used to determine that the fee agreement constituted a "by object" restriction of competition. The General Court held that by object restrictions must not be interpreted restrictively, and that the wording of the fee agreement made it clear that it was restrictive of competition by object. In contrast, the CJEU stated that only certain types of coordination, where the undertaking clearly reveals such a degree of harm to competition that there is no need to examine their effects, can be found to be restrictions by object.

In addition, the CJEU noted that the General Court failed to indicate what it was about the wording of the agreement that made it clear it was restrictive by object. The CJEU held that, charging more to members of GCB that do not install ATMs or make contracts with acquiring merchants to issue cards may be reasonable, because doing so prevents new market entrants from "free-riding" on the substantial investments of others. The Court stated that the concept of restrictions by object must be interpreted restrictively and did not exist to relieve the Commission of its burden to prove actual effects of agreements that have not been established to be anticompetitive by their very nature.

The CJEU set aside the General Court's judgment and referred the case back to the General Court for reconsideration.

The full CJEU judgment is available here.

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