Case C-286/13 P Dole Food Co. v Commission: Bananas cartel, exchange of information and restriction by object

There’s a lot in the Court of Justice’s judgment of 19 March 2015 in Case C-286/13 P Dole Food Company and Dole Fresh Fruit Europe v Commission, EU:C:2015:184. There are some neat procedural points, interesting things on the calculation of competition fines and quite a section on what constitutes a restriction of competition “by object”.

It will take several posts to cover all those points so I’ll just deal with the substantive, “restriction by object” point.

A while ago on 16 September 2014, Maria wrote a post on  Case C- 67/13 P Groupement des cartes bancaires (“CB”) v European Commission. Many wondered whether that judgment would substantially change the understanding of restrictions of competition “by object” and “by effect”. A look at the Court’s judgment in Case C-286/13 P leads to the conclusion that rumours of a substantial change are either premature or unfounded.

Here’s what happened.

In 2008, the Commission fined a number of banana traders for taking part in a prohibited concerted practice in which they exchanged information on prices. Dole, amongst others, challenged that decision in the General Court. That Court dismissed their action and upheld the decision in its judgment in Dole Food and Dole Germany v Commission, T-588/08, EU:T:2013:130 (Disclaimer – I represented the Commission in that case).

In this case, the Court of Justice dismissed an appeal brought by Dole against the General Court’s judgment.

In their appeal the Dole companies claimed that the General Court had made a mistake in law by finding that the pre-pricing communications constitute a restriction of competition by object. That was an incorrect legal characterisation of the facts , they claimed, because the exchange of information which took place cannot be regarded as capable of removing uncertainty as to the intended conduct of the participating undertakings as regards the setting of actual prices.

The Court of Justice disagreed. It recalled its standard caselaw that for an agreement, a decision by an association of undertakings or a concerted practice to be prohibited by Article 101 (1) TFEU, it must have ‘as [its] object or effect’ the prevention, restriction or distortion of competition in the internal market. Thus, certain types of coordination between undertakings reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects (judgment in CB Commission, C‑67/13 P, EU:C:2014:2204, paragraph 49). Indeed, certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition (judgment in CB Commission, C‑67/13 P, EU:C:2014:2204, paragraph 50 and the case law cited).

Consequently, the Court held, 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. 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 (judgment in CB Commission, C‑67/13 P, EU:C:2014:2204, paragraph 51).

Where the analysis of a type of coordination between undertakings does not reveal a sufficient degree of harm to competition, the effects of the coordination should, on the other hand, be considered and, for the purpose of determining whether such conduct is covered by that defined in Article 101(1)) TFEU, it is necessary to find that factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent (judgment in CB v Commission, C‑67/13 P, EU:C:2014:2204, paragraph 52 and the case law cited).

According to the case-law of the Court, in order to determine whether a type of coordination between undertakings reveals a sufficient degree of harm to competition that it may be considered a restriction of competition ‘by object’ within the meaning of Article 101(1) TFEU, regard must be had, inter alia, to its objectives and the economic and legal context of which it forms a part. When determining that context, the nature of the goods or services affected must be taken into account, as well as the real conditions of the functioning and structure of the market or markets in question (judgment in CB Commission, C‑67/13 P, EU:C:2014:2204, paragraph 53 and the case law cited).

In addition, although the parties’ intention is not a necessary factor in determining whether a type of coordination between undertakings is restrictive, there is nothing prohibiting the competition authorities, the national courts or the EU Courts from taking that factor into account (judgment in CB v Commission, C 67/13 P, EU:C:2014:2204, paragraph 54 and the case law cited).

In so far as concerns, in particular, the exchange of information between competitors, it should be recalled that the criteria of coordination and cooperation necessary for determining the existence of a concerted practice are to be understood in the light of the notion inherent in the Treaty provisions on competition, according to which each economic operator must determine independently the policy which he intends to adopt on the common market (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 32 and the case-law cited).

While, the Court continued, this requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing or anticipated conduct of their competitors, it does, none the less, strictly preclude any direct or indirect contact between such operators by which an undertaking may influence the conduct on the market of its actual or potential competitors or disclose to them its decisions or intentions concerning its own conduct on the market where the object or effect of such contact is to create conditions of competition which do not correspond to the normal conditions of the market in question, regard being had to the nature of the products or services offered, the size and number of the undertakings involved and the volume of that market (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 33 and the case law cited).

The Court recalled that the exchange of information between competitors is liable to be incompatible with the competition rules if it reduces or removes the degree of uncertainty as to the operation of the market in question, with the result that competition between undertakings is restricted (judgments in Thyssen Stahl v Commission, C‑194/99 P, EU:C:2003:527, paragraph 86, and T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 35 and the case law cited).

In particular, an exchange of information which is capable of removing uncertainty between participants as regards the timing, extent and details of the modifications to be adopted by the undertakings concerned in their conduct on the market must be regarded as pursuing an anticompetitive object (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 41).

Moreover, a concerted practice may have an anticompetitive object even though there is no direct connection between that practice and consumer prices. Indeed, it is not possible on the basis of the wording of Article 101(1) TFEU to conclude that only concerted practices which have a direct effect on the prices paid by end users are prohibited (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 36).

On the contrary, Article 101(1)(a) TFEU provides that concerted practices may have an anticompetitive object if they ‘directly or indirectly fix purchase or selling prices or any other trading conditions’ (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 37).

In any event, Article 101 TFEU, like the other competition rules of the Treaty, is designed to protect not only the immediate interests of individual competitors or consumers but also to protect the structure of the market and thus competition as such. Therefore, in order to find that a concerted practice has an anticompetitive object, there does not need to be a direct link between that practice and consumer prices (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraphs 38 and 39).

The Court points out that the concept of a concerted practice, in addition to the participating undertakings concerting with each other, subsequent conduct on the market and a relationship of cause and effect between the two (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 51).

The Court repeats that, subject to proof to the contrary to be adduced by the economic operators concerned – it must be presumed that the undertakings taking part in the concerted action and remaining active on the market take account of the information exchanged with their competitors in determining their conduct on that market. In particular, the Court has concluded that such a concerted practice is caught by Article 101(1) TFEU, even in the absence of anticompetitive effects on the market (judgment in T-Mobile Netherlands and Others, C‑8/08, EU:C:2009:343, paragraph 51).

The Court concluded that It also follows that the General Court was entitled to take the view, as it did in the judgment under appeal, without erring in law, that it was permissible for the Commission to conclude that, as they made it possible to reduce uncertainty for each of the participants as to the foreseeable conduct of competitors, the pre-pricing communications had the object of creating conditions of competition that do not correspond to the normal conditions on the market and therefore gave rise to a concerted practice having as its object the restriction of competition within the meaning of Article 101 TFEU.

One thought on “Case C-286/13 P Dole Food Co. v Commission: Bananas cartel, exchange of information and restriction by object

  1. Pingback: Case C-286/13 P Dole Food Co v Commission: Bananas cartel, certain procedural aspects | EU litigation

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