Appreciable effects

TFEU prohibits agreements and concerted practices which may affect cross-border trade and which have as their object or effect the prevention, restriction or distortion of competition.

In the EU, Article 101(1) TFEU prohibits agreements and concerted practices which may affect cross-border trade and which have as their object or effect the prevention, restriction or distortion of competition.  It is (arguably) settled case law that agreements and concerted practices which have only an insignificant effect on the market, are not caught by the prohibition: there must be an appreciable effect. 

This requirement of "appreciability" is given expression in the EU Commission's de minimis notice, which states that agreements will not appreciably restrict competition if the aggregate market share of the parties to the agreement does not exceed 10%, where the agreement is made between actual or potential competitors.

What happens if parties have a market share below 10%: is an agreement between them immune from challenge?   The answer is no. 

In 2009, the French Competition Authority sought to impose fines on Expedia and SNCF, the French rail operator, for breaching Article 101 and the equivalent French rule on the basis that an agreement for the sale of travel tickets pursuant to which Expedia obtained preferential access to SNCF's website had the object and effect of restricting competition.  The parties argued that their market share was below 10% and therefore, as a matter of law, the French Authority was precluded from finding that the agreement appreciably restricted competition.  Therefore, the agreement did not infringe Article 101(1). 

On a reference to the Court of Justice, the question was answered thus:

National competition authorities and courts are free to proceed against agreements below the thresholds of the de minimis notice, provided they have taken due account of the Commission’s guidance in the notice and that, in the particular case, there is evidence, other than the market shares of the undertakings concerned, which suggests that the effect on competition is appreciable.

The Court also suggested that agreements which have an anti-competitive object will always appreciably restrict competition, regardless of any actual effect.  Taken at face value, this runs counter to the (arguably) settled case law, as it applied to agreements that restrict competition by object, noted above.  

If you would like to discuss these issues, please do not hesitate to contact John Cassels.