Articles

Court of Justice ruled on restrictions by object in relation to vertical agreements

Court of Justice ruled on restrictions by object in relation to vertical agreements

Court of Justice ruled on restrictions by object in relation to vertical agreements

01.12.2015 NL law

On 26 November 2015, the Court of Justice ruled in case C-345/14 Maxima Latvija on a request for a preliminary ruling from the Supreme Court of Latvia.

 The case concerned clauses in property leasing contracts that allow the tenant to prevent the lessor from leasing to competing parties. In line with the reasoning in the recent Cartes Bancaires judgment, the Court found that the contested clauses did not have the object to restrict competition. The Court clarified further the conditions under which contractual limitations may be considered to have the effect of restricting competition within the meaning of Article 101 (1) TFEU.

Maxima Latvija ("Maxima") is a large retailer, predominantly active in the food sector. Some of its commercial leasing agreements with shopping centers included a clause allowing Maxima to prevent the lessor from leasing to other retailers in the same shopping center. In 2012, the Latvian competition authority found that such clauses had the "object" to restrict competition and imposed a fine on Maxima. Maxima appealed the fining decision, up to the Latvian Supreme Court, which in turn sought a preliminary ruling from the Court of Justice.

The Court of Justice started by reiterating the essential criteria for establishing whether there is a restriction of competition "by object". It recalled that this concept should be interpreted restrictively and can be applied only to an agreement which reveals "in itself a sufficient degree of harm to competition for it to be considered that it is not appropriate to assess the actual effects" on the market.

The Court recalled that the fact that the parties to the agreements did not compete does not preclude the possibility of finding a restriction by object (C-32/11 Allianz Hungária). The Court then held that the "agreements at issue in the main proceedings are not among the agreements [of] which it is accepted [that they] may be considered, by their very nature, to be harmful to the proper functioning of competition."

Following this, the Court clarified under which conditions a commercial lease agreement including the contested clause would be considered to restrict competition by effect. The Court started by recalling that "the effects of an agreement on competition must be assessed in the economic and legal context in which it occurs and where it might combine with other [agreements] to have a cumulative effect on competition".

The Court explained that it must first be established whether there are concrete possibilities for a new competitor to establish itself in the catchment areas of the relevant shopping centres. Here, account should be taken of all the relevant factors which determine access to the relevant market and in particular, availability and accessibility of commercial land in the catchment areas concerned and the existence of economic, administrative and regulatory barriers should be considered. In addition, the conditions under which competitive forces operate on the relevant market should be assessed. This includes the number and the size of operators present, the degree of concentration and customer fidelity to existing brands and consumers' habits. This might depend on access to commercial property in the local market and the existence of economic, administrative and regulatory barriers to entry.

If, after carrying out this analysis, it is established that market access is made difficult by all the similar agreements found on the market, then the extent to which Maxima's agreements contribute to that "cumulative closing-off effect" has to be determined. Here, the position of the contracting parties on that market and the duration of that agreement must be taken into consideration. In the end, only agreements which contribute appreciably to the foreclosure-effect are prohibited.

This article was published in the Competition Law Newsletter of December 2015. Other articles in this newsletter:

Team

Related news

07.10.2021 NL law
Commission’s record fine for gun jumping upheld

Short Reads - Pre-closing covenants protecting the target’s value or commercial integrity pending merger clearance from the European Commission must be drafted carefully. The General Court confirmed the Commission’s record-breaking fines on Altice for violating the EU Merger Regulation’s notification and standstill obligations. According to the General Court, the mere possibility of exercising decisive influence over the target can result in a gun jumping breach.

Read more

07.10.2021 NL law
ACM walks the walk: first-ever vertical price coordination fine

Short Reads - The Dutch Competition Authority (“ACM”) has claimed a first victim in its vertical restraints battle. Samsung Electronics was fined nearly EUR 40 million for having meddled in the online resale prices for televisions at seven retailers. Compared to the European Commission’s fines on four consumer electronics producers for resale price maintenance (“RPM”), the ACM’s summary decision seems to refer to a ‘light’ version of RPM: systematic price coordination without any threats, sanctions or incentives for the retailers to stick to the price.

Read more

07.10.2021 NL law
Commission reveals first piece of antitrust sustainability puzzle

Short Reads - The European Commission has published a Policy Brief setting out its preliminary views on how to fit the European Green Deal’s sustainability goals into the EU competition rules. Companies keen to be green may be left in limbo by a looming clash with more far-reaching proposals from national competition authorities. More pieces of the antitrust sustainability puzzle will fall into place as soon as the ongoing review of the guidelines on horizontal cooperation is finalised.

Read more

13.09.2021 NL law
Adopting the new Standard Contractual Clauses to secure international personal data transfers

Short Reads - Recently, the European Commission issued an implementing decision on standard new contractual clauses (“SCCs”) for the transfer of personal data to countries outside the European Economic Area. Organisations need to use the new SCCs from 27 September 2021 and onwards. Transitional periods apply for existing international data transfer agreements. To meet their obligations under the General Data Protection Regulation, organisations need to make the appropriate changes in time.

Read more

07.10.2021 NL law
Court of Appeal provides guidance for further course of proceedings in prestressing steel litigation

Short Reads - On 27 July 2021, the Court of Appeal of Den Bosch issued an interim judgment in the Dutch prestressing steel litigation, ruling on three issues: (i) the obligation of claimant to furnish facts; (ii) the assignment of claims; and (iii) the liability of the parent companies. In short, the Court of Appeal allowed the claimant Deutsche Bahn another opportunity to supplement the facts needed to substantiate its claims in the next phase of the proceedings.

Read more

09.09.2021 BE law
Digital Law Up(to)date: (1) Parliamentary initiatives about cyber attacks; (2) ‘Zero tariff’ options before the CJEU; and (3) Council of State, GDPR and encryption

Articles - In this blog, we briefly present three interesting news in the field of digital law: (1) Parliamentary initiatives to tackle cyber attacks (2) "Zero tariff" options and open internet access do not mix! (3) Council of State, GDPR and encryption: validation of a decision of the Flemish Authorities

Read more