Recent Developments before the Belgian Competition Council (October/November 2012)

Belgian Competition Council Again Annuls Insufficiently Reasoned Decision by College of Prosecutors Not to Prosecute

On 2 October 2012, the Competition Council annulled a decision of the College of Prosecutors to close a case because the decision was insufficiently reasoned.

The case had started with a complaint by a lawyer who considered that the code of conduct adopted by the Ordre des barreaux francophones et germanophone (“OBFG”) restricted competition between lawyers. On 17 April 2012, the College of Competition Prosecutors declared that it would not further investigate this complaint because, taking into consideration the College’s budgetary restrictions, this case was not an enforcement priority. The complainant appealed this decision before the Competition Council, arguing that the College of Prosecutors had not sufficiently stated its reasons to close the case.

The Competition Council held that the College of Prosecutors is required to state the legal and factual reasons for deciding to close a case. This does not imply that the College of Competition Prosecutors should respond to each and every argument raised in a complaint, nor does it mean that all the grounds should be contained in the body of the decision. They can also be apparent from measures of inquiry carried out by the College. However, in the present case, neither the decision nor the prosecution file contained any indication of the points of fact or law that had led to the contested decision. Therefore, the Competition Council annulled the College’s decision.

The College of Prosecutors is now free either to proceed with the investigation, or to re-adopt the same decision but with a more substantiated reasoning.

The decision of the Competition Council follows on the heels of an earlier, similar decision (See, VBB on Belgian Business Law, Volume 2012, No. 10, available at www.vbb.com) and would seem to signal an inchoate trend for the Competition Council to rein in the discretionary powers of the College of Competition Prosecutors in dismissing complaints for reasons of enforcement priority.

President of Belgian Competition Council Clarifies De Beers’ Supply Obligation to Spira

In a request lodged on 28 September 2012, De Beers, the diamond company, has asked the President of the Competition Council to clarify its decision of 13 July 2012, prolonging an order previously imposed on De Beers to continue supplying rough diamonds to Spira, a Belgian diamond trader (See, VBB on Belgian Business Law, Volume 2012, No. 8, available at www.vbb.com). More specifically, De Beers requested the President to clarify whether (i) Spira has a right of deferral of its purchases; (ii) Spira has a right to a specific type of rough diamonds; and (iii) De Beers is obliged to provide Spira access to its extranet. The request follows a claim of Spira that De Beers had infringed the decision of 13 July 2012.

The President of the Competition Council reiterated that pursuant to the decision of 13 July 2012, De Beers is obliged to supply Spira under the same conditions applicable to other companies within the Supplier of Choice system of De Beers. The President held that, consequently, Spira has a right of deferral and a right of access to De Beers’ extranet under the same conditions as other companies within the Supplier of Choice system. With respect to the right of supply of rough diamonds, the President clarified that Spira’s request to be supplied with a specific category of rough diamonds had not been granted in the decision of 13 July 2012. Apart from this exception, Spira has the same right of supply involving all categories of rough diamonds as all other companies within the Supplier of Choice system.

Competition Council Dismisses Allegations of Margin Squeezing by Belgacom

On 29 November 2012, the Competition Council decided that there are no reasons to act against the “Happy Time” tariff plan of Belgacom. The Competition Council, which indicated that it had used four different margin squeezing tests, found no evidence to conclude that the margin between Belgacom’s retail prices and wholesale prices was insufficient to cover its commercialisation costs at the retail level.

Back in 2005, Tele2 (now operating in Belgium under the “Base” umbrella) had filed a complaint alleging that Belgacom, the incumbent telecommunications operator who owns significant network infrastructure, had abused its dominant position by indulging in a margin squeeze. Tele2 argued that Belgacom charged retail prices which made it impossible for its competitors, taking account of the wholesale prices, to compete with the “Happy Time” tariff plan.

Already in 2006, Tele2 had requested interim measures against Belgacom. In a decision of 1 September 2006, the President of the Competition Council rejected Tele2’s request, indicating that Belgacom’s practices formed normal competitive behavior and that Belgacom had no incentive to try and drive Tele2 out of the market. However, the Brussels Court of Appeal annulled this decision on 18 December 2007 (See, VBB on Belgian Business Law, Volume 2008, No. 3, p. 3, available at www.vbb.com).

It is noteworthy that, in its latest decision, the Competition Council did not agree with the earlier findings of the College of Prosecutors. After performing four different price squeezing tests, the Competition Council concluded that it was not impossible for Tele2 to enter into competition with the “Happy Time” tariff plan. It thus dismissed the allegations of margin squeeze practice.

Two important methodological questions prompted the Competition Council to apply these four tests. The first question was whether the competition authorities should only examine the costs and tariffs of the dominant undertaking or whether they should, in addition, take into account the costs of competitors such as Tele2. The second question was whether the price squeezing test should be applied to the “Happy Time” tariff plan alone, or whether it should extend to the overall tariff offers of Belgacom in the voice telephony sector.

Two tests were applied taking into account the costs and tariffs of Belgacom alone. The first of these tests considered Belgacom’s entire ‘offer’. The second test only took account of the “Happy Time” tariff plan. The remaining tests also reviewed the fixed interconnection costs of Belgacom’s competitors. Again, one of these tests considered Belgacom’s complete offer, while the other only took into account Belgacom’s “Happy Time” tariff.