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Competition Law

Analysis - debate - current awareness

17 OCT 2014

Object

John Cassels

Partner

Object
In the EU, agreements between companies that have either the object or the effect of restricting or distorting competition are in principle prohibited. Agreements that have the object of restricting or distorting competition are not only those where the parties' intent is to restrict competition. Rather agreements that are by their very nature so harmful to competition that no inquiry into their effects is necessary for a finding of infringement, will also be considered an 'object infringement'.

Where the European Commission decides that an agreement has the object of restricting competition, it is relieved from proving anti-competitive effects: the burden of proof is shifted from the Commission to the parties, such that the parties must prove that the agreement will not be harmful to competition. It means that the de minimis safe harbour (which exempts agreements between companies below certain market share thresholds) cannot apply and object restrictions are also presumed to have an appreciable negative effect on competition.

Because of the evidential savings, the Commission has been categorising ever broader categories of restrictions as object restrictions and in some cases fudging the analysis by intimating that the agreement is an 'object' case, but then going on to look in a cursory manner at its effects. For example, in recent pharma cases the Commission has treated patent settlement agreements as restrictions by object.

The decision last month of the Court of Justice in the Cartes Bancaires case looks like it will bring the Commission's expansionist approach to object restrictions to an end. In this case, the Court of Justice ruled against the Commission and the EU's lower Court, both of which had proceeded on the basis of restriction by object. This means that except in cartel cases, the Commission may now struggle to proceed on an object restriction basis. Rather it will need to carry out a proper effects based analysis which, if done properly, must be a good thing.

If you are interested in these issues, please do not hesitate to contact John Cassels at john.cassels@fieldfisher.com
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