Extra caution must be exercised by undertakings if they want to avoid being found guilty of breaching competition rules. A single meeting between undertakings when such meeting has an anti-competitive objective is sufficient for the authorities to find a breach of competition rules, the European Court of Justice has recently confirmed.
EU competition law strictly prohibits agreements between undertakings or so-called concerted practices which have the object or effect of restricting competition in a particular market. Both the European Commission and the European Court of Justice have ascertained over and over again that both the terms "agreement" and "concerted practice" are given a very wide definition when it comes to determining whether enterprises are in breach of anti-trust law.
This means that gentleman's agreements and simple understandings have been deemed to be agreements nonetheless even though not legally binding. Similarly, any type of coordination between undertakings which has an anti-competitive object or effect has been condemned.
This particular case concerned five Dutch operators in the mobile telephony sector. Representatives of these operators set up a meeting during which they discussed the reduction of standard dealer remunerations for post-paid subscriptions. The national competition authorities found these operators to be in breach of national competition rules and proceeded to impose fines on them. These fines were challenged by the undertakings concerned and the national Court of Appeal referred the case to the European Court of Justice requesting guidance and clarification to as to what actually constitutes a concerted practice which is in breach of EU competition laws.
The ECJ proceeded to redefine a concerted practice as a form of coordination between undertakings which knowingly substitutes practical cooperation between them for the risks of competition. If such conduct has the mere capability of resulting in the prevention, restriction or distortion of competition, then it must be deemed to be anti-competitive. Any exchange of information between competitors is anti-competitive if it is capable of removing uncertainties as to the anticipated conduct of the participating undertakings and even if it has no impact on the final price paid by consumers.
Furthermore, the court confirmed that, depending on the particular market under examination and the anticompetitive objective that the undertakings concerned have in mind, a single meeting between competitors may constitute a sufficient basis for the participating undertakings to concert their market conduct.
What matters, the court noted, is not so much the frequency of meetings held between the participating undertakings but whether the meeting or meetings which took place gave them the opportunity to exchange information amongst them in such a way as to determine the conduct of each of them on the market in question and knowingly substitute practical cooperation between them for the risks of competition.
Such an affirmation by the European Court of Justice goes to show that undertakings must not take things lightly when it comes to antitrust law. Both the European Commission and the European Court of Justice will go to great lengths in order to ascertain whether the conduct of undertakings falls foul of competition rules.
Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.
mariosa@vellacardona.com