In its Judgment of 26 November 2015 in Maxima Latvija, C-345/14, EU:C:2015:784, the Court of Justice of the European Union (CJEU) has returned to the debate on the distinction between anticompetitive agreements by object and by effect for the purposes of the application of Art 101(1) TFEU [for background commentary of the case, see here].
Some of the consequences of the distinction remain obscure or highly theoretical, not least because Art 101(1) TFEU covers both types of anticompetitive practices, which should therefore be subjected to similar sanctions (moderated only by the magnitude of the effects, where they exist). Two main areas of debate have emerged, though, around the (practical) boundaries where the categorisation carries legal weight: on the one hand, the possibility to exempt de minimis "by object" infringements; and, on the other hand, the standard of proof applicable to "by object" anticompetitive conduct.
Regarding the possibility to exempt de minimis "by object" infringements, the debate focuses on the implications of the CJEU Judgment of 13 December 2012 in Expedia (C-226/11, EU:C:2012:795), as well as the guidelines issued by the Commission in trying to clarify the state of the law [see the Guidance on restrictions of competition "by object" for the purpose of defining which agreements may benefit from the De Minimis Notice]. For the purposes of this discussion, it is worth stressing para 36, where the CJEU clarified that "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" (emphasis added).
Regarding the standard of proof applicable to cases concerning "by object" anticompetitive conduct, the discussion revolves around the Judgment of 11 September 2014 in CB v Commission ('Cartes bancaires'; C-67/13 P, EU:C:2014:2204) [for discussion from a legal perspective, see here; and for an economic perspective, see here]. The significance of the Cartes bancaires Judgment is commonly seen as resting in the recasting of the case law in para 51, where the CJEU ruled that "it is established that certain collusive behaviour, such as that leading to horizontal price-fixing by cartels, may be considered so likely to have negative effects, in particular on the price, quantity or quality of the goods and services, that it may be considered redundant, for the purposes of applying Article [101(1) TFEU], to prove that they have actual effects on the market" (emphasis added).
In its Judgment in Maxima Latvija, the CJEU has followed the same general approach to the delineation between anticompetitive practices by object and by effect, and has consolidated the Cartes bancaires test. More specifically, the CJEU has ruled that
18 ... the concept of restriction of competition ‘by object’ ... must be interpreted restrictively and can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects ... That case-law arises from the fact that certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition ...
19 ... certain collusive behaviour, such as that leading to horizontal price-fixing by cartels, may be considered by their nature as likely to have negative effects, in particular on the price, quantity or quality of the goods and services, so that it may be considered redundant, for the purposes of applying Article 101(1) TFEU, to prove that they have actual effects on the market ... Experience shows that such behaviour leads to falls in production and price increases, resulting in poor allocation of resources to the detriment, in particular, of consumers.
20 ... the essential legal criterion for ascertaining whether an agreement involves a restriction of competition ‘by object’ is ... the finding that such an agreement reveals in itself a sufficient degree of harm to competition for it to be considered that it is not appropriate to assess its effects (C-345/14, paras 18-20, references omitted and emphasis added).
In my view, the formulation of this test is conceptually appealing. However, it is equally problematic because it relies on a test of 'balance of economic probabilities' that actually requires, in most cases, at least a quick look at the effects the anticompetitive practice has (or could have) generated. In terms of alleviating the burden of proof, this is less than clear cut. These complications are self-evident in the Maxima Latvija Judgment itself, where the CJEU applies this newly (re)formulated test as follows:
21 ... Maxima Latvija [an operator of large shops and hypermarkets] is not in a competitive situation with the shopping centres with which it has concluded the [lease] agreements at issue in the main proceedings. Although ... a fact of that nature in no way precludes an agreement from containing a restriction of competition ‘by object’ ... it must, however, be stated that the agreements at issue in the main proceedings are not among the agreements which it is accepted may be considered, by their very nature, to be harmful to the proper functioning of competition ...
22 Even if the clause at issue in the main proceedings could potentially have the effect of restricting the access of Maxima Latvija’s competitors to some shopping centres in which that company operates a large shop or hypermarket, such a fact, if established, does not imply clearly that the agreements containing that clause prevent, restrict or distort, by the very nature of the latter, competition on the relevant market, namely the local market for the retail food trade.
23 Taking account of the economic context in which agreements ... are to be applied, the analysis of the content of those agreements would not ... show, clearly, a degree of harm with regard to competition sufficient for those agreements to be considered to constitute a restriction of competition ‘by object’ within the meaning of Article 101(1) TFEU (C-345/14, paras 21-23, references omitted and emphasis added).
Looking at the application of the test in the Maxima Latvija case, two difficulties emerge. Firstly, there is no existing list of anticompetitive agreements by object (neither an open, closed or indicative list). This creates a significant complication and legal uncertainty, not least because of the potentially moving target of what constitutes "agreements which it is accepted may be considered, by their very nature, to be harmful to the proper functioning of competition".
Secondly, there is no clear indication as to what "degree of harm" (ie presumed anticompetitive effects) suffices to allow for an agreement to be categorised as "by object" rather than by effect. The need to consider the anticompetitive agreements in the "the economic context in which [those] agreements ... are to be applied" is a puzzling requirement from a legal perspective. If (one of) the main point(s) concerning the distinction between anticompetitive agreements "by object" and "by effect" is to clarify the burden of proof required for each of them (implicitly, in order to reduce the requirements for a finding of an anticompetitive agreement "by object"), then this requirement does not really help and ends up resulting in a slippery slope of relaxation of requirements depending on the general consensus (?) that some agreements are by their nature harmful.
Given the ongoing uncertainty, the test for the distinction between anticompetitive agreements by object and by effect is not likely to reduce litigation at all. Overall, then, this seems to be a never-ending discussion. In terms of legal simplicity, it could be preferable to return to a state of the law where it was clear that Art 101(1) TFEU covers both types of anticompetitive practices and triggers an enforcement procedure that needs to comply with the same requirements, regardless of whether ex post and in a specific case, it may look like some of the probatory efforts could have been spared.
The classical justification for per se prohibitions and not rule of reason approaches is fundamentally based on enforcement costs--and that is, at least in part, why they are progressively abandoned in the US (see here). It seems clear to me that trying to create that distinction in this area is, unfortunately, not leading to any savings and, in that case, it may be worth avoiding a shaky per se rule...