European Court of Justice simplifies classic case law and rules that all object infringements that have an effect on intersta…

On 13 December 2012, the European Court of Justice ("ECJ") ruled on a reference from the French Supreme Court in the Expedia case (Case C-226/11). The Court held that the national competition authority is not required to take into account the thresholds established in the de minimis notice in order to determine whether or not a restriction of competition is appreciable. The judgment is noteworthy, in that the Court held that an agreement that has an effect on the interstate trade and an anti-competitive object constitutes an appreciable restriction on competition per se.

The French State railway company SNCF wished to expand the sale of train tickets and travel over the internet and decided to cooperate with the internet travel company Expedia. To that end, the parties established a joint subsidiary, Agence Voyages-sncf.com ("Agence VCS"). However, the French competition authority held that the agreement establishing Agence VSC breached Article 101 TFEU and fined both companies.

Expedia appealed against the decision and claimed that the agreement fell within the Commission's de minimis notice. On further appeal, the French Cour de Cassation referred a question to the ECJ asking whether it is possible for the national competition authority to bring proceedings against undertakings whose market share is below the thresholds in the Commission's de minimis notice.

First of all, the ECJ referred to the Pfleiderer case (Case C-36/09) and held that a Commission notice, such as the de minimis notice, is not binding in relation to the Member States but is intended to give guidance. Furthermore, the ECJ held that the thresholds established in the de minimis notice are no more than factors among others that may be taken into account by a national competition authority to determine whether or not a restriction is appreciable by reference to the actual circumstances of the agreement.

Furthermore, the Cour de Cassation had concluded that the agreement between Expedia and SNCF had an anti-competitive object. Advocate General Kokott considered in her opinion that the requirements concerning proof that a restriction of competition "by object" is appreciable should under no circumstances be more stringent than the requirements concerning proof of an appreciable effect between Member States as established in Article 101 TFEU. This means that when an agreement between undertakings with an anti-competitive object is capable of appreciably affecting trade between Member States, it is given that this agreement is also capable of appreciably restricting, distorting or even preventing competition within the internal market.

The Court followed the Advocate General's approach and held that an agreement that may affect trade between Member States and which has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition.

According to the previous case law (Völck/Vervaeke (Case C-5/69)) an agreement, whether it restricts competition by object or by effect, falls outside the cartel prohibition when it "has only an insignificant effect on the markets, taking into account the weak position which the persons concerned have on the market of the product in question." The Court has now simplified the case law by ruling that agreements with the object to restrict competition that have an effect on trade between Member States will always constitute a violation of Article 101 TFEU.