Concerted Practices





The contemporary European competition law violation of Article 101 concerted practices by anticompetitive object is a product of decades of legal analysis.  In that time, courts have interpreted and applied the legal classification of the violation in progressively restrictive ways.  At first, the view was that de facto joint conduct in the market was a sine qua non of concertation for an infringement.  Today, however, the standard may have violators asking, “have they cracked us without actus?”

Since the signing of the Treaty of Rome in 1957, the letter of the law governing competition within the Common Market of the European Union has remained unchanged.  However, the Court of Justice of the European Union (“CJEU”, “ECJ”, or, the “Court”) has modified – as Advocate General Cosmas put it in 1997 – the “legal classification” or “spirit of the rules on competition,” throughout more than a half-century of the Court’s Judgments.

Within that case law, court decisions have established precedents and carved out exceptions.  Consten and Grundig v Commission (1966) (“C&G”), was the first judgment by the ECJ to acknowledge the existence of six separate offences prohibited under Article 101.  Simply, the Court held that the drafters of Article 101 included three distinct acts, i.e., “agreements”, “decisions”, and “concerted practices”, and each act could be coupled with either an anticompetitive “object”, or an anticompetitive “effect”.  This necessarily meant that there were six separate violations caught by Article 101.  More precisely, the Court held that “for the purpose of applying Article [101](1), there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition.” See Grundig, Joined Cases 56 and 58/64, E.C.R. 299 at 342 (1966).  Once it had been established that a violative act had an anticompetitive object, analysis of whether the act had an anticompetitive effect on the market was irrelevant and unnecessary.

C&G is an essential decision pertaining to the legal classification of a concerted practice with an anticompetitive object.  While the case’s merits did not involve concerted practices, the Court’s decision fundamentally established Article 101 violations by object, and thus, requires that there be some legal distinction between concerted practices with anticompetitive objects, and concerted practices with anticompetitive effects.

At the time of the C&G decision, July 1966, Article 101 concerted practices had never been subjected to judicial scrutiny.  The first Article 101 concerted practice case the Court had to consider was ICI v Commission (1972) (“ICI”).  In his preliminary discussion, the Court’s Advocate General (“AG”)[1] Mayras stated, “Up till now, the Court has only had to consider the application or interpretation of Article [101] in relation to agreements”) (emphasis in original).  See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at 669 (1972).

In relevant part, ICI involved the investigation of ten dyestuffs producer-distributors, who then controlled approximately eighty percent of the European dyestuffs market.  There were three uniform price increases occurring in the internal dyestuffs market between January 1964 and October 1967, culminating in the European Commission’s Decision imposing fines on the undertakings for the violation of today’s equivalent of Article 101(1).  See Id. passim.

Factually, the Commission established that in October 1967, representatives of the undertakings met at the headquarters of Sandoz SA, in Basel, Switzerland.  AG Mayras found, “We clearly do not have the verbatim report of the meeting, but one thing is certain: [J. R. Geigy SA]’s representative announced the intention of that undertaking to increase prices of soluble dyestuffs based on aniline before the end of the year, and it appears from the documents on the Court file that this intention was stated in precise terms: there was to be an increase of 8% with effect from 16 October 1967.”  It was also established that representatives of two other undertakings at the meeting “were also considering an increase.”  See Id. at 679.  What followed the 1967 meeting was, in fact, a general and uniform price increase in the Common Market on those products.

Ultimately, and upon the recommendation of AG Mayras, the ECJ held that “although parallel conduct in respect of prices may well have been an attractive and risk free objective for the undertakings concerned, it is hardly conceivable that the same action could be taken spontaneously at the same time, on the same national markets and for the same range of products.”  See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at ¶ 109 (1972).  Thus, a concerted practice to increase prices existed, and the undertakings were found in violation of Article 101.

What is most essential about the ICI decision is that the Court established the first legal standard pertaining to what evidence is required to demonstrate a concerted practice either exists or had existed.

In his 1972 Opinion, AG Mayras introduced a concept related to the legal classification of concerted practices that future Advocate General, AG Vesterdorf, would call: the doctrine of attempt.  AG Mayras established that, “an objective criterion, which is basic to the concept of a concerted practice […] is that the participating undertakings must in fact have acted in the same way.”  See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at 671 (1972).   This factor would remain a requirement of law for almost twenty years, but progressively, the Court would dismiss it as an incorrect application of Article 101.

Surely, Advocate General Mayras deserves the benefit of doubt, so to speak, as not only was ICI the first European Community case pertaining to concerted practices, but also, the deliverance of his Opinion in ICI was Mayras’ first before the Court.  See Imperial Chem. Indus. v. Comm’n, at 622 (1972).

A distinguished justice, AG Mayras seems to contradict himself throughout his opinion while attempting to merge the precedent established in C&G with the concept of illicit concertation amongst undertakings.  When AG Mayras attempted to announce precisely when a violation of Article 101 occurs, the AG established that two factors must be evidenced to demonstrate a concerted practice: (1) there must be actual, or de facto parallel conduct; and (2) “origin of and reasons for the parallel conduct.”  AG Mayras states that the second element may be established by “the existence of a certain common will.”  See Imperial Chem. Indus. v. Comm’n, Case 48/69, 18 E.C.R. 619, at 673 (1972).

Perhaps what was troubling to AG Mayras was that without requiring that de facto parallel conduct be established, an undertaking could potentially be fined for anticompetitive conduct simply by coming in contact with information that could potentially distort free market competition.  In other words, the AG may have thought it overly restrictive to permit a violation to be established without requiring a demonstration that undertakings, in fact, acted in some way.

As alluded to above, in 1991, AG Vesterdorf would become the first member of the Court to review the doctrine proposed by AG Mayras almost 20 years prior.  In his Rhône-Poulenc v Commission (1991) (“R-P”) Opinion, AG Vesterdorf analyses Article 101 relating to an appeal of a disputed Commission Decision that imposed heavy fines on fifteen chemical industry undertakings.  The undertakings in R-P were alleged to have “formed a price cartel and introduced quota arrangements and other measures supporting the price cartel.”  See Rhône-Poulenc v. Comm’n, Case T-1/89, E.C.R. at 875 (1991).

AG Vesterdorf began his review of the Court’s precedent stating, “Mr. Advocate General Mayras tries to introduce a doctrine of attempt into the concept of concerted practice […].  However, the theory ventured by him has not been supported or commented upon in later judgments of Court of Justice or its Advocates General”).  See Id. at 934.

AG Vesterdorf progresses his analysis in a way that still requires de facto subsequent conduct, while also introducing new language to the legal standard for evidencing concerted practices by object.  He wrote, “In my opinion, it can therefore be maintained that in principle concertation will automatically trigger subsequent action on the market that will be determined by the concertation, whether the undertakings do one the thing or the other with regard to their market policy[.]See Id. at 941.  Though the case would later be adjudicated on other grounds, AG Vesterdorf began the elimination of the doctrine of attempt.  In other words, the 1991 Court was starting to announce that actual conduct might not be necessary to establish an Article 101 concerted practice by object violation.

In 1993, the Court again decided a case regarding concerted practices, this time pertaining to the exchange of pricing information within the woodpulp market, and again the Court began to remove the factor of de facto identical conduct.  Ahlström Osakeyhtiö and Others v Commission (1993) (“AO&O”), involved a European Commission Decision issuing fines to more than twenty producer-supplier undertakings within the bleached sulphate woodpulp market.

In his opinion, AG Darmon advanced AG Vesterdorf’s announcement from two years earlier, writing, “[…] to take the view that de facto identical conduct forms part of the concept of concerted practices would lead to a particularly restrictive conception of the Treaty, which is contrary to Article [101].”  The case would ultimately be decided on factors relating to the structure of the woodpulp market.  In AO&O, substantial and compelling expert testimony of economists established that the natural, and necessarily occurring transparent woodpulp market structure, made the fines against the undertakings inappropriate.  More importantly for European competition law, the 1972 Mayras legal standard of an Article 101 violation by concerted practice by object was amended by another subsequent decision.

In Commission v ANIC (1999) (“ANIC”), the Court decided a case precisely on the merits of an Article 101 concerted practice by object violation.  See Comm’n v Anic Partecipazioni SpA., Case C-49/92 E.C.R. 1999 at I-4125 (1999).  ANIC, concernedly, again involved the polypropylene market.  The case pertained to an appeal lodged by the European Commission seeking the dismissal of a Court of First Instance (“CFI” or “trial court”) Judgment that declared invalid a portion of a Commission Decision that determined Anic Partecipazioni SpA (“Anic”) was engaged in a concerted practice of exchanging commercially sensitive information and effectively fixing prices with ten other producers within the internal polypropylene market.  See Id. passim.  In a prevailing argument before the trial court, Anic claimed that the Commission had not established the requisite legal standard for a violation because the Commission did not evidence Anic’s attendance at various meetings.  Putting the argument another way, Anic claimed that because they did not attend certain meetings during a five-year period, the Commission’s evidence was too weak to sustain a claim against them during the later periods of the anticompetitive concerted practice.  See Id. at ¶22.

AG Cosmas went about his review of the CFI’s judgment methodically.  In an opinion the Court would later endorse, AG Cosmas effectively determined that a concerted practice by object was, and effectively still is, a violation when the spirit of the rules on competition are offended.

First, he recognized that, “[the legal classification of concerted practices by object] ha[d] been dealt with only peripherally by the Court, in Opinions of its Advocate Generals.” Then, using more pointed language, he wrote, “In those Opinions it appears that initially the view was taken that de facto joint conduct in the market was a sine qua non of concertation for an infringement of Article [101] of the Treaty to be established. […] However, in recent years there has been a discernable distancing from that position as is highlighted by the Opinion of AG Darmon in the Woodpulp cases.”  See Id. at ¶21.

It what might be an effort to justify fines on the basis of primarily presumptive facts, AG Cosmos wrote, “What constitutes a concerted practice whose ‘object’ is anticompetitive must in the end be determined on the basis of a reading of Article [101] as a whole which is such as to safeguard the rational coherence of that provision and, above all, with reference to the objective which the rules on competition seek to serve both generally and with specific regard to Article [101] (systematic and teleological interpretation).” See Id. at ¶23.

In what is today, the substantive standard of an Article 101 violation by concerted practice with an anticompetitve object, AG Cosmas announced, “Consequently, the spirit of the rules on competition [are] broken once there has been contact between undertakings with a view to disclosure of the course of conduct which they contemplate adopting on the market.”  See Id. at ¶23.

Perhaps pleonastically, AG Cosmas elaborated, adding, “At that point one is faced with a breakdown of the free-competition model upheld by the Community provisions under which each undertaking individually plans the policy which it will adopt on the market following its own appraisal of market conditions.”  See Id.

Not surprisingly, the Court’s judgment in ANIC eradicated the requirement of de facto parallel conduct from the requisite legal standard for establishing a violation of an Article 101 concerted practice.

However, in T-Mobile Netherlands BV and Others (2009) (“T-Mobile”), the Court expanded the already very restrictive standard above, holding that undertakings actually do not need to contemplate an anticompetitive adaptation on the market to violate Article 101.

T-Mobile involved five mobile telephone network operators in the Netherlands.  Representatives of the five operators held a lawful meeting on 13 June 2001.  At that meeting they discussed, inter alia, the reduction of standard dealer remunerations for postpaid subscriptions, which were to take effect in September 2001.  “In those circumstances[,]” the Press Service of the CJEU summarized, “what matters most is [if undertakings have had] the opportunity to take account of the information exchanged with their competitors in order to determine their conduct on the market in question and knowingly substitute practical cooperation between them for the risks of competition.”  Press Release 47/09, Judgment of the Court of Justice in Case C-8/08, 4 June 2009.

Currently, all that an undertaking need do to violate Article 101 is engage in anticompetitive contact that “has the potential to have a negative impact on competition.” See T-Mobile Netherlands BV and Others, Case C-8/08 at ¶31 (2009).  The Court, referencing the Opinion of AG Juliane Kokott, wrote, “as pointed out by the [AG,] in order for a concerted practice to be regarded as having an anti-competitive object, it is sufficient that it has the potential to have a negative impact on competition.  In other words, the concerted practice must simply be capable […] of resulting in the prevention, restriction or distortion of competition within the common market.  Whether, and to what extent, in fact, such anticompetitive effects result can only be of relevance for determining the amount of any fine[.]” (Emphasis added). See Id. at ¶31.

The Court went on to further announce, “this requirement of independence […] does […] strictly preclude and direct or indirect contact between such by which an undertaking may influence the conduct on the market of its actual or potential competitors or disclose to them its decisions or intentions concerning its own conduct on the market where the object or effect of such contact is to create conditions of competition which do not correspond to the normal conditions[.]See Id. at ¶33.

In a world where information seems ubiquitous, it is hardly conceivable that, as a standard of law, an undertaking can be fined for indirectly coming in contact with anything that could potentially distort the free market.  Or is it?

Prior to evaluating deterrence initiatives, it is essential to recognize the distinction between criminal antitrust violations in the United States, and the civil nature of punishments for Article 101 violations under European Competition Law.

A violation of Section 1 of the Sherman Antitrust Act, the analogous American statute to Article 101, will carry harsh, federal prison sentences, intended to deter very easily concealable, and often highly lucrative crimes.  Additionally, the distortions of free market conditions often have broad reaching reciprocal effects, which threaten to exploit unknowing and vulnerable consumers.  See United States v. Archer Daniels Midland Co. and Minn. Corn Processors LLC, 272 F.Supp2d 1 (2003)(a case made infamous by pop culture, involving international price fixing in the animal-feed-additive-lysine market, over $105 million in criminal fines, and decade long federal prison sentences).

There is no such deterrent in European Competition Law.  Instead, the EU chooses to pursue the objective of preventing anticompetitive behavior, roughly speaking, by implementing “don’t even think about it,” standard.  More precisely, the Court now unequivocally does not require the demonstration of any actual anticompetitive conduct.  See T-Mobile, at ¶43 (holding, “It is not necessary for there to be actual prevention, restriction or distortion of competition or a direct link between the concerted practice and consumer prices.”)

Today, to enforce a Commission Decision imposing a fine for violation of Article 101 contact between competitors that is merely capable of an anticompetitive result is essentially all that is required to be demonstrated.  See Id.  Put more elaborately, any contact between competitors that may influence decisions or intentions on the market, and any contact that is capable of distorting normal market conditions, is presumptively violative as matter of European Union Law.

The contact need not even be inchoate, or in anticipation of an anticompetitive result.  If contact is merely capable of an anticompetitive result, those undertakings in contact may be fined.  Everything else, that is all other facts and circumstances and actual effects, are to be taken into consideration when determining the amount of the fine.  See Id. at ¶ 31.


[1] See attached curriculum vitae of all named Justices.