European Union: ECJ Llimits The Scope Of Restrictions "By Object"

In a judgment of 11 September 2014, the European Court of Justice of the European Union ("ECJ") held that the measures adopted to implement the Cartes Bancaires system in France did not constitute a restriction of competition "by object" within the meaning of Article 101(1) TFEU, thereby overturning in part a decision of the European Commission and the earlier judgment of the General Court ("GC") (see VBB on Competition Law, Volume 2012, No. 12, available at www.vbb.com). Beyond the facts of this case, the judgment is particularly important as it rejects the Commission's broad interpretation of the concept of restrictions of competition "by object", which underlies a number of recent infringement decisions in other sectors. Furthermore, the ECJ criticises the GC for failing to conduct a sufficient review, making it more likely that the Commission will face heightened scrutiny in appeals of future decisions.

The case dealt with a French economic interest grouping called Groupement des cartes bancaires ("CB") created by the main banking institutions in France and consisting of 148 members. CB operates a standardised system of payments and withdrawals made by bank cards issued by CB members. In 2002, CB notified the Commission of three pricing measures to be adopted – which had as their object – to achieve a balance between issuing and acquisition activities among its members (i.e., to eliminate free-riding within the CB system).

The Commission issued a decision banning the measures, arguing that the measures had the object of restricting competition because they impeded competition from new entrants and protected the revenues of the principal CB member (see VBB on Competition Law, Volume 2007, No. 10, available at www.vbb.com). CB appealed against the decision before the GC, which dismissed the action in its entirety (see VBB on Competition Law, Volume 2012, No. 12, available at www.vbb.com), after which CB appealed the judgment before the ECJ.

In its judgment, the ECJ found that the Commission had failed to prove that the pricing measures could create a sufficient degree of harm to competition in order to qualify as restrictions "by object". The ECJ statedthat if the concept of a restriction "by object" was not interpreted restrictively, the "Commission would be exempted from the obligation to prove the actual effects on the market of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition". The ECJ went on to criticise the GC for failing to conduct a full and detailed examination of CB's arguments and stated that "it is apparent that the General Court failed to fulfil its obligation to observe the standard of review required under the case-law".

On these grounds, the ECJ set aside the GC's earlier judgment and remitted the case to the GC for it to assess whether the pricing measures at issue have as their effect a restriction of competition.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.