New Developments in the Interpretation of “Restriction by Object” in EU Competition Law

Recent developments in European case law concerning the prohibition of anti-competitive agreements have prompted a re-evaluation of competition authorities' ability to denounce commercial practices as having the object of restricting competition. These developments may require competition authorities to conduct more thorough investigations into the effects of practices that were previously presumed to have the object of restricting competition.

In earlier case law and decisional practice throughout Europe, the “by object” category was extended beyond the practices explicitly listed in Article 101 of the Treaty on the Functioning of the European Union (TFEU), and some competition authorities focused their efforts on referring commercial practices to the “by object” category, thereby avoiding in-depth analyses of the effects on competition.

However, in recent years, the Court of Justice of the European Union (CJEU) has issued several rulings setting aside the classification of certain horizontal practices as having the object of restricting competition, such as the judgment in the “Groupement des cartes bancaires” case followed by that of the “Budapest Bank” case. According to these rulings, the “by object” concept is to be interpreted restrictively.

Recently, the CJEU has also taken a stance on the interplay between the different “hardcore restrictions” in the Vertical Block Exemption Regulation (VBER). In the recent “Super Bock” case, the CJEU held that the case concerned resale price maintenance, which is qualified as a hardcore restriction in the VBER and therefore does not benefit from the exemption from Article 101of the TFEU, but this did not automatically constitute a restriction “by object”; it required further analysis of the specific agreement to assess whether this was the case.

The recent developments in CJEU case law have taken different forms.

For instance, in the European Commission's Guidelines on Horizontal Cooperation issued in 2023 (the “Horizontal Guidelines”), the European Commission amended the former section on the “by object” concept and now explicitly states that the concept must be interpreted strictly. This indicates that the European Commission has adopted the new approach outlined by the CJEU.

Recently, the Danish Competition Appeals Tribunal (the “Tribunal”) remitted the 22 June 2022 decision of the Danish Competition Council (DCC), where the DCC concluded that the voluntary chain Botex's internal agreement – under which each member of the chain was allocated an exclusive marketing area in which other members were not allowed to market themselves – infringed the national provision corresponding to Article 101 of the TFEU. The DCC considered that the agreement restricted competition “by object”, and therefore did not conduct a detailed analysis of the agreement's effect on competition.

The Tribunal did find that, seen in isolation, the purpose was to geographically divide the market. However, the Tribunal stated that the question of whether the agreement could be construed as a “by object” restriction had to be assessed within the context of the conclusion of the agreement. Based on the Horizontal Guidelines, the Tribunal referred to the fact that what was relevant in this context was the “centre of gravity” of the entire chain co-operation.

After assessing the centre of gravity of the co-operation, the Tribunal concluded that it amounted to a joint purchasing agreement and therefore had to be assessed according to the principles of the Horizontal Guidelines. It is stated in the Horizontal Guidelines that joint purchasing agreements do not normally constitute “by object” restrictions and therefore must be assessed in their legal and economic context with regard to the actual and likely effects on competition.

As the DCC had erroneously found that the agreement had the object of restricting competition and had not carried out the required full analysis of the potential anti-competitive effects of the joint purchasing scheme, the Tribunal found that the DCC's decision should be remitted for reconsideration.

Competition authorities may be required to adopt a more detailed approach when scrutinising practices that do not inherently have the object of restricting competition, and the potential anti-competitive effects must be thoroughly examined. Both public enforcement, led by competition authorities, and private enforcement, where undertakings may bring legal actions, may require more detailed scrutiny of commercial agreements’ practical implications on competition, and the recent developments may also facilitate counter-arguments and counter-analyses in relation to both public and private enforcement, supporting that the centre of gravity of specific agreements or commercial practices is, in fact, not anti-competitive or does not appreciably restrict competition.