AG Bobek's Opinion In Budapest Bank: On Object vs. Effect, Fish And Lilies

On September 5, 2019, Advocate General Bobek published his opinion in the Budapest Bank case (C-228/18). The opinion provides very clear and practical guidance on the concept of restriction of competition by object - a subject that has long been a bone of contention among competition practitioners, enforcers and courts. The opinion is also noteworthy as it features an unorthodox, though pedagogic, metaphor on restrictions of competition involving fish and lilies. In sum, it is worth a commentary.

Quick refresher on object vs. effect

The concept of restriction of competition by object is rooted in Article 101 TFEU, which prohibits agreements "[...] which have as their object or effect the prevention, restriction or distortion of competition within the internal market [...]". The EU courts have consistently interpreted this provision as meaning that, when assessing an agreement or a coordinated practice between competitors, competition authorities should:

First, examine whether the agreement or coordinated practice reveals a sufficient degree of harm to competition, such that there is no need to examine its effects (restriction of competition by object); Second, and if the first examination did not prove successful, examine whether the agreement or coordinated practice is capable of producing anti-competitive effects (restriction of competition by effect). One of the key milestones in the development of the notion of restriction of competition by object is the judgment of the European Court of Justice (CoJ) in Groupement des Cartes Bancaires (C-67/13 P). In this case, the CoJ set out a key principle: the concept of restriction of competition by object must be interpreted restrictively. Otherwise, "the Commission would be exempted from the obligation to prove the actual effects on the market of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition". The CoJ also provided guidance on how to assess the existence of a restriction by object, emphasizing in particular the need to evaluate the restriction not in the abstract but in its economic and legal context.

While Groupement des Cartes Bancaires addressed a number of important questions, it did not exhaust the debate on object vs. effect. Against this background, AG Bobek's opinion brings a refreshing and indeed welcome perspective on the topic.

Background

Similar to Groupement des Cartes Bancaires, the Budapest Bank case...