The EU General Court Gets A Rap On Its Knuckles

In Groupement des cartes bancaires, the EU Court of Justice severely reprimanded the General Court for its failure to properly analyze a restriction of competition 'by object' within the meaning of Article 101(1) TFEU.

Brief Background to the Dispute

Groupement des cartes bancaires is a French association of banking institutions, which was set up to achieve interoperability of the systems for payment and cash withdrawal by bank cards issued by its members. In December 2002, it notified to the Commission a series of new rules, including a series of pricing measures to regulate the so-called 'acquiring' function.1 In October 2007, the Commission adopted a Decision, which was confirmed on appeal by the General Court, in which it took the view that the measures at issue constituted an infringement 'by object'. On appeal to the Court of Justice, the Groupement des cartes bancaires alleged serious errors in law in the application of the concept of restriction of competition 'by object'.

Let This Judgment Be a Lesson

In what is a landmark judgment, the Court of Justice reminded both the Commission and the General Court that not all agreements, even if affecting pricing in some way, between undertakings or decisions by an association of undertakings can be presumed to harm competition and that there is a need to examine their actual effects.

By Object vs. by Effect

Certain types of coordination between companies can be regarded, by their very nature, as being harmful to the proper functioning of normal competition. For instance, price-fixing agreements between competitors are presumed to have negative effects on competition so that proof that they actually have such effects on the market is unnecessary. On the other hand, where the nature of the agreement does not reveal a sufficiently likely risk of harm to competition, its effects on competition should be properly analyzed. For such arrangements to fall under the Article 101(1) TFEU prohibition, the Commission must establish that competition has in fact been prevented, restricted or distorted to an appreciable extent.

Relevant Criteria to Assess the Existence of a 'By Object' Restriction

The essential legal criterion for ascertaining whether coordination between companies involves a 'by object' restriction of competition is the finding that such coordination reveals in itself a sufficient degree of harm to competition.

In this case, the General Court set out the reasons why the measures were...