On 23 November 2017, the European Court of Justice delivered its judgment on a request for a preliminary ruling by the Spanish Supreme Court regarding the legal consequences of an European Commission commitment decision. The Spanish court sought guidance as to whether an EU commitment decision concerning long-term exclusive supply agreements between Spain's leading oil and gas company Repsol and its service station tenants, prevented the Spanish court from declaring that the agreements infringed competition law.
The Court of Justice ruled that an EU commitment decision is without prejudice to the powers of national courts and competition authorities to apply Articles 101 and 102 TFEU.
The supply agreements between Repsol and its service station tenants have been the subject of a preliminary assessment by the Commission since 2004. The Commission expressed concerns that these agreements would create significant foreclosure effects on the Spanish market for the retail trade in fuel. To address these concerns, Repsol offered to refrain from concluding long-term exclusivity agreements exceeding 5 years, allow tenants to terminate existing long-term contracts prematurely and ensure the service stations had complete freedom to determine their prices. The Commission adopted the commitments offered by Repsol in a decision, making them legally binding and formally ending the Commission's investigation.
During national proceedings in 2017, Gasorba, one of Repsol's service station tenants, brought an appeal before the Spanish court to annul its supply agreement, claiming that it infringed Article 101 TFEU. The Spanish court asked the Court of Justice whether a national court is precluded from finding that an agreement infringes Article 101 TFEU, when the Commission has already accepted binding commitments concerning that same agreement.
The Court of Justice first considered that the Commission, national courts and competition authorities have parallel powers to apply competition law. The uniform application of EU competition law is in particular ensured by Regulation 1/2003, which establishes that national courts cannot take decisions running counter to the decision adopted by the Commission. The Court found that the nature of a commitment decision is such that it does not establish whether there has been, or whether there is still, an infringement of competition law. Therefore, national courts and competition authorities may still conclude that a certain practice, which is subject to a commitment decision, infringes competition law. Nevertheless, national courts do have to "take into account the preliminary assessment carried out by the Commission and regard it as an indication, if not prima facie evidence, of the anticompetitive nature of the agreement at issue".
This was the first time the Court of Justice addressed a question on the legal consequences of a Commission's commitment decision. In view of the current trend to close competition investigations with commitments, this judgment adds to the legal uncertainty that is created by commitment decisions for private enforcement of competition law.
This article was published in the Competition Law Newsletter of December 2017. Other articles in this newsletter:
- Court of Justice rules on the application of competition law to agricultural producer organisations
- Court of Justice dismisses appeal of British Airways in Air Cargo case
- General Court partially annuls the Commission's ICAP decision (in the YIRD case)