COMPETITION • EUROPEAN LAW • RESTRICTIVE AGREEMENTS
In its Guidelines No 2004/C 101/08 on the application of Article 101(3) TFEU, the Commission defines restrictions by object as those “which in light of the objectives pursued by the Community competition rules have such a high potential of negative effects on competition that it is unnecessary for the purposes of applying Article [101(1) TFEU] to demonstrate any actual effects on the market” as they have by their very nature the potential of restricting competition. According to the Court of Justice, the distinction between “infringements by object” and “infringements by effect” arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition.
In that category are hardcore cartels, which the OECD in its 1998 Recommendation described thus : “a hard core cartel is an anticompetitive agreement, anticompetitive concerted practice, or anticompetitive arrangement by competitors to fix prices, make rigged bids (collusive tenders), establish output restrictions or quotas, or share or divide markets by allocating customers, suppliers, territories, or lines of commerce“.
The Commission in its communication on the application of Article 81(3) [101(3) TFEU] of the Treaty lists several examples of restrictions by object: price fixing and market sharing, as well as the “hardcore restrictions” which are prohibited under the block exemption regulations and their guidelines. The courts also include the exchange of information in this category, particularly when they relate to participants’ pricing strategies.
According to the Court of Justice, the classification of a restriction by object must be based on “sufficiently reliable and robust experience” which shows that such behavior leads to falls in production and price increases, resulting in poor allocation of resources to the detriment of consumers. Nevertheless, even in the absence of such experience, as in the case of new practices such as “pay-for-delay” agreements in the pharmaceutical field, the EU court considers that it remains possible, in order to characterize a restriction by object, to carry out an individual and detailed examination of the agreement with regard to its content, purpose and context.
In the case of an infringement by object, the analysis of the economic and legal context in which the practice takes place may be limited to what is strictly necessary in order to conclude to such a characterization. However, when the parties to an agreement purport to rely on its pro-competitive effects, the court must, as elements of the context of that agreement, take them into account for the purpose of the characterization as a “restriction by object” insofar as they are capable of calling into question the overall assessment of whether the agreement concerned revealed a sufficient degree of harm to competition and are demonstrated, relevant and specifically related to the agreement concerned.
The Commission expressly excludes restrictions by object from the scope of application of the 2014 De Minimis Notice. As a matter of principle, restrictions by object are also excluded from the block exemption and the Commission considers that it is unlikely that they fulfill the conditions of Article 101(3). However, it reserves for undertakings “the possibility to demonstrate the existence of pro-competitive effects under Article 101(3) in an individual case“.