The story goes like this. There are five licensed mobile phone operators in the Netherlands. It is thus an oligopolistic market. Representatives of the operators met in June 2001 and discussed the reduction of standard dealer remunerations for postpaid subscriptions (where the customer is invoiced for the cost of the minutes of the calls after they are made), which was to take effect in September 2001. Confidential information came up in discussions between the participants at the meeting.
The Dutch Competition Authority, the NMa, took a decision in December 2002 finding that the five operators had entered into a concerted practice prohibited by Dutch law and imposed fines on them. The operators then challenged that decision before the NMa which largely upheld its previous findings, upheld the fines but also found the conduct to be a concerted practice prohibited by Article 81 §1 EC. The operators then challenged that new decision before the competent Dutch court.
The Dutch court had a few doubts about the case and referred three questions to the Court of Justice on the proper interpretation of Article 81 §1 EC.
First, the national court asked which criteria must be applied when assessing whether a concerted practice has as its object the prevention, restriction or distortion of competition within the common market.
The Court of Justice answered that a concerted practice pursues an anticompetitive object for the purpose of Article 81 §1 EC where, according to its content and objectives and having regard to its legal and economic context, it is capable in an individual case of resulting in the prevention, restriction or distortion of competition within the EC. It is not necessary for there to be actual prevention, restriction or distortion of competition or a direct link between the concerted practice and consumer prices. An exchange of information between competitors is tainted with an anti-competitive object if the exchange is capable of removing uncertainties concerning the intended conduct of the participating undertakings.
The Court gives a kind of crash course on what is a concerted practice. It recalled its standard definition of a “concerted practice” as a form of coordination between undertakings by which, without it having been taken to the stage where an agreement properly so-called has been concluded, practical cooperation between them is knowingly substituted for the risks of competition (Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73, 111/73, 113/73 and 114/73 Suiker Unie and Others v Commission  ECR 1663, paragraph 26, and Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85 Ahlström Osakeyhtiö and Others v Commission  ECR I-1307, paragraph 63 ("Woodpulp").
To determine whether a concerted practice is anticompetitive, close regard, the Court stated, must be paid in particular to the objectives which it is intended to attain and to its economic and legal context (Joined Cases 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82 IAZ International Belgium and Others v Commission  ECR 3369, paragraph 25, and Case C-209/07 Beef Industry Development Society and Barry Brothers  ECR I0000, paragraphs 16 and 21 - for our write up on that leading case, see here). While the intention of the parties is not an essential factor in determining whether a concerted practice is restrictive, the Commission or national authorities and courts may take it into account (IAZ International Belgium and Others v Commission, paragraphs 23 to 25).
As to the distinction between concerted practices having an anti-competitive object and those with anti-competitive effects, it must be borne in mind that an anti-competitive object and anti-competitive effects constitute not cumulative but alternative conditions in determining whether a practice falls within the prohibition in Article 81(1) EC. Since Case 56/65 LTM  ECR 235, 249, it is clear that the alternative nature of that requirement, indicated by the conjunction ‘or’, means that it is necessary, first, to consider the precise purpose of the concerted practice, in the economic context in which it is to be pursued. Where, however, an analysis of the terms of the concerted practice does not reveal the effect on competition to be sufficiently deleterious, its consequences should then be considered and, for it to be caught by the prohibition, it is necessary to find that those factors are present which establish that competition has in fact been prevented or restricted or distorted to an appreciable extent (Beef Industry Development Society and Barry Brothers, paragraph 15).
To decide whether a concerted practice is prohibited by Article 81(1) EC, there is no need to take account of its actual effects once it is apparent that its object is to prevent, restrict or distort competition within the common market (Joined Cases 56/64 and 58/64 Consten and Grundig v Commission  ECR 299, 342; Case C-105/04 P Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied v Commission  ECR I8725, paragraph 125; and Beef Industry Development Society and Barry Brothers, paragraph 16).
The distinction between ‘infringements by object’ and ‘infringements by effect’ arises, according to the Court, from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition (Beef Industry Development Society and Barry Brothers, paragraph 17). Accordingly, there is no need to consider the effects of a concerted practice where its anticompetitive object is established.
In its second question, the national court asked whether, in examining whether there is a causal connection between the concerted practice and the market conduct of the undertakings participating in the practice – a connection which must exist if it is to be established that there is a concerted practice within the meaning of Article 81(1) EC – it is required to apply the presumption of a causal connection established in the Court of Justice's case‑law (Case C‑49/92 P Commission v Anic Partecipazioni  ECR I‑4125 and Case C‑199/92 P Hüls v Commission  ECR I‑4287, according to which, where they remain active on the market, such undertakings are presumed to take account of the information exchanged with their competitors, or whether that court can apply the rules of national law pertaining to the burden of proof.
The Court recalled that in applying Article 81 EC, any interpretation that is provided by the Court is therefore binding on all the national courts of the member States.
The Court answered that the national court is required, subject to proof to the contrary, which it is for the undertakings concerned to adduce, to apply the presumption of a causal connection established in the Court’s case‑law, according to which, where they remain active on that market, such undertakings are presumed to take account of the information exchanged with their competitors.
Third, the national court asked whether, when applying the concept of concerted practices in Article 81(1) EC, there is in all cases a presumption of a causal connection between the concerted practice and the market conduct of the undertakings concerned, even if the concerted action is the result of a single meeting.
Yes, answered, the Court, a single meeting is enough: In so far as the undertaking participating in the concerted action remains active on the market in question, there is a presumption of a causal connection between the concerted practice and the conduct of the undertaking on that market, even if the concerted action is the result of a meeting held by the participating undertakings on a single occasion.
The Court stated that any other interpretation would be tantamount to a claim that an isolated exchange of information between competitors could not in any case lead to concerted action that is in breach of the EC antitrust rules. Depending on the structure of the market, the possibility cannot be ruled out that a meeting on a single occasion between competitors may, in principle, constitute a sufficient basis for the participating undertakings to concert their market conduct and thus successfully substitute practical cooperation between them for competition and the risks that that entails.
What matters is not so much the number of meetings held between the participating undertakings as whether the meeting or meetings which took place afforded them the opportunity to take account of the information exchanged with their competitors in order to determine their conduct on the market in question and knowingly substitute practical cooperation between them for the risks of competition. Where it can be established that such undertakings successfully concerted with one another and remained active on the market, they may justifiably be called upon to adduce evidence that that concerted action did not have any effect on their conduct on the market in question.
What is refreshing is how such basic issues still come up after so many years ....