Team 2011-2012

The Goal (or Goals) of Article 101

 A close reading of the T-Mobile decision raises questions regarding the goals of Article 101 of the Treaty. While this assertion may seem insignificant to the casual observer, goals actually play a pivotal role in Article 101 jurisprudence.[1]

The Treaty of Rome, signed in 1957, formed what is now commonly known as the European Union (“EU”). The signatory countries viewed the creation and preservation of a common market, unimpeded by member state borders, as both a goal of the formation of the EU as well as a necessity to achieving that goal.[2] The Treaty of Rome also created what is now called the Court of Justice of the European Union (“CJEU”), formerly the European Court of Justice (“ECJ”), as the official court to interpret the Treaty when questions of EU law arise. Unlike the courts in most common law jurisdictions, the CJEU does not apply a textual approach when interpreting the Treaty.[3] Rather, the CJEU employs a teleological method in which it interprets and applies the Treaty in light of its underlying purpose. In other words, CJEU judges decide each case based on what the outcome should be in light of the goal, or goals, of the Treaty. [4]

Analysis of the Treaty’s explicit and underlying goals is therefore critical to understanding the CJEU’s interpretation and application of specific Treaty provisions. Regarding competition policy, the preamble to the Treaty of Rome states that the member states “[r]ecogni[ze] that the removal of existing obstacles calls for concerted action in order to guarantee steady expansion, balanced trade and fair competition . . . .”[5] The “existing obstacles” referred to in the preamble were primarily pre-existing state measures, such as customs regulations and import duties that the Treaty sought to eliminate.[6] The primary goal of EU competition policy was to enable a common market within the EU by eliminating those obstacles. The drafters feared that, having accomplished this initial goal of limiting state control and cartelization, private (non-state) barriers would arise and potentially frustrate the objective of a common market.

Articles 101–109 of the Treaty provide the means to remove and prevent obstacles to fair competition within the common market. In that context, Articles 101 and 102 are the Treaty’s antitrust prohibitions that apply to private parties. For instance, Article 101 prohibits certain practices between competing firms that are deemed to be incompatible with the common market.[7] Early CJEU decisions applying Article 101 reflect interpretation in light of the EU’s goal of market integration.[8] However, over the decades, the CJEU has taken a much broader approach to interpreting Article 101.

In particular, the CJEU’s focus has gradually shifted from market protection to a consideration of the consumer. For instance, in GlaxoSmithKline v. Commission (“GSK”),[9] the CJEU explicitly acknowledged that the primary purpose of Article 101 of the Treaty was shifting to a new, consumer-centric theory of protection. The CJEU, in the GSK opinion, commented that “the primary objective of achieving the integration of national markets through the establishment of a single market” had essentially been completed and therefore, “Article 101 . . . now aims to protect not only the interests of competitors or of consumers, but also importantly the structure of the market and, in doing so, the basic premise of competition which benefits the consumer.” What initially started out as a primary concern for an integrated market seemingly expanded to a concern for the well being of the consumer and the structure of the common market.

This shift has created some confusion within the CJEU’s subsequent competition law decisions. As such, the national courts, struggling to conform to CJEU rulings, have developed a non-uniform understanding of the current goals of “competition” and “consumer protection.” In light of the modernization guidelines developed by the Commission since the year 2000, the EU has seemingly moved towards giving the National Competition Authorities (“NCAs”) more latitude with regards to Treaty interpretation and decision making power. While establishing that NCAs must apply certain presumptions or rules, the EU still grants them authority over interpreting certain acts of undertakings within their jurisdictions. This is a shift from a uniform market protection policy to more aggressive interpretation by the member states and broadens the scope of Article 101.

Upon close examination, the CJEU’s ruling in the T-Mobile case arguably adds to the confusion over how to interpret Article 101. Specifically, the outcome of the T-Mobile decision is neither based in an effort to protect the structure of the common market nor to protect consumers. Contrary to the text and primary goal of Article 101, the alleged violation in that case admittedly had no proven effect on the market and, arguably, the parties did not act with the object to affect the market. Instead of clarifying the proper application of Article 101, AG Kokott cautioned in her opinion of the T-Mobile case that consumer welfare is not always the standard by which to measure the “intrusiveness” of the European regulators.[10] The CJEU’s application of Article 101 in the T-Mobile case sparks the question: What is the goal (or what are the goals) that the CJEU looks to in interpreting and applying Article 101 of the Treaty?

By adding to the list of Article 101 interpretations, the CJEU’s expansion of the Treaty’s original goal has led to a broader scope of Article 101 violations. At the same time, as interpretation and application of Article 101 becomes increasingly broad, the CJEU seemingly lowers the burden for proving an Article 101 violation. The ECJ, in its modernization efforts, could set a standard, if not for particular acts that violate Article 101, then at least for the particular goals the CJEU (as well as national courts) will look to in interpretation and application of Article 101. This would result in greater uniformity of future CJEU decisions as well provide notice to EU competitors of what will be deemed a violation of Article 101.

[1] See Pinar Akman, Searching for the Long-Lost Soul of Article 82EC, 29 Oxford Journal of Legal Studies (2009). “No legal provision can be properly understood outside the circumstances of its adoption since only that context can explain why the provision was needed.” Id. at 46.

[2] The framers envisioned a “common market” founded on the free movement of goods, people, services, and capital within the EU.

[3] The fact that the Treaty of Rome was written in four different languages, each equally authoritative, would make textual interpretation a difficult task. An examination of the different translations of Article 101 shows certain nuances apparent in the word choices of certain languages that are not present in others. For example, in English, Article 101 prohibits certain activities “which may affect trade between Member States.” Although Article 101 is, for all intents and purposes, the same in each language, compare the English “affect” to the original Article 101 translations; the Italian translation of “affect” supplies the infinitive “preguidicare,” which has a negative connotation, “to prejudice,” while its counterpart in the French text, “d’affecter,” meaning “to affect,” is neutral. As the ECJ cannot declare one translation to be superior to another, it cannot choose the best interpretation by reading and comparing the text in each language.

[4] For an explanation of the ECJ’s teleological approach by a former Advocate General, see Nial Fennelly, Legal Interpretation of the European Court of Justice, 20 Fordham Int’l L.J. 656 (1996).

[6] For a discussion of the historical development of EU competition law and policy, see Marc S. Firestone, A Quick Look at Two Areas of Doctrinal Difference Between EU and U.S. Decision Makers, 20 Tul. J. Int’l & Comp L. 1 (2011).

[7] Article 101 provides in relevant part: “The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market . . . .” Article 101(1), Treaty on the Functioning of the European Union, 115 OJ C 88 (May 9, 2008).

[10] Opinion of Advocate General Kokott, Case C-8/08 at ¶71.