Restriction of competition by object after Cartes Bancaires: further developments

How to assess whether an agreement between competitors has an anticompetitive object? In general, an agreement is known to be anticompetitive by object (or “per se”) when competitors agree on prices and quantities. However, when an agreement contains pro and anti-competitive features, a balance should be struck and the analysis is more complicated.

This assessment has an enormous impact on the burden of proof lying on competition authorities in antitrust investigations. Indeed, when competition authorities conclude that an agreement is restrictive by object, they do not have to prove the existence of an anticompetitive effect.

For decades, the antitrust community tried to  to make a clear distinction between those agreements, which are restrictive by object and the ones whose effects have to be analysed in more depth. Finally, in the last years courts around Europe have handed down a number of judgments on this issue, trying to limit the frequent recourse by competition authorities to the “object shortcut”.

Among the most significant judgments we can surely mention the CJEU’s judgment in Cartes Bancaires, where the Court established a test according to which a “restriction of competition by object” occurs only when the coordination between undertakings reveals a sufficient degree of harm to competition. In order to fulfil the “sufficiency” test, competition authorities have to assess the provisions of the agreement, its objectives and the economic and legal context where coordination takes place (see para. 53 of the decision).

Last December, the Italian Court of First Instance (TAR) issued a ruling, which further restricts Competition Authority’s discretion, as it adds a preliminary step to the Cartes Bancaires test.

In particular, in the case now referred to, the TAR annulled a decision of the Italian Competition Authority (ICA), which had imposed fines to the broadcasters Mediaset and Sky Italy, the Italian Football League (Lega Calcio) and its advisor Infront for a violation of Article 101 TFEU.

The facts in a nutshell: as a result of the auction for the assignment of TV rights of Serie A football competition for seasons 2015-2018, Sky was awarded with lots A (satellite TV rights) and B (cable rights), the most important and expensive ones. However, Lega Calcio – the legal entity appointed by Italian football clubs to sell broadcasting rights to third parties – decided to engage in a negotiation with the bidders and reallocate the lots between Sky (lot A) and Mediaset (lot B and D).

In view of the above, the ICA concluded that the agreement had apportioned the relevant market between the two incumbents (Sky and Mediaset), thus frustrating the objectives pursued by the legislator through the provision of a competitive procedure. Furthermore, according to the ICA, the agreement had foreclosed potential newcomers both as a result of the tender (since Eurosport could otherwise compete for the award of lot D) and in the future (as bid-rigging negatively affects the credibility of future calls for tenders and, therefore, potential new market entry, thus discouraging competition on the merits).

In its ruling, the TAR interestingly underlined that the analysis carried out by the ICA was not exhaustive. Indeed, before concluding that the agreement restricted competition per se, the ICA should have preliminarily ascertained whether the parties shared a “common interest” to be achieved by means of their cooperation. This initial assessment is unavoidable, the TAR laid down. Only once the existence of this joint interest has been tested, the ICA can jump to the second step, which is to assess whether the agreement is anticompetitive (by object or by effect).

Applying this reasoning to the case before them, the Italian judges concluded that the ICA omitted to check whether the parties had a common interest and erred in qualifying the agreement as anticompetitive by object without this preliminary assessment. Indeed, the ICA did not consider the interest of Lega Calcio to avoid a potentially long-lasting litigation with Mediaset (threatened by the latter) and the fact that Infront rightly advised Lega Calcio on the prohibition to sell all the lots to a single buyer. This was enough to exclude the existence of a common interest.

As to the conclusion of the ICA that the agreement was anticompetitive per se, the TAR scrutinised this assessment under Cartes Bancaires and concluded that the analysis of the relevant market had not been accurate enough and some assumptions had been done superficially, without considering a sufficient number of elements. For example, the ICA had not sufficiently proved its argument according to which if the auction had been repeated some new comers, such as Eurosport, could have theoretically entered the market. However, the circumstance that Sky and Mediaset had already owned 97% of the market before the auction would have required an effort deeper than mere theoretical speculation.

In the end, the TAR annulled the ICA’s decision and concluded that the reallocation was even a pro-competitive choice, as it allowed to keep two concurring offers available to the consumers (Sky on the satellite and Mediaset on the cable) and to avoid an increase in prices.

The need to check preliminarily whether the parties of a potentially anticompetitive agreement share a “common interest” to be achieved by means of their cooperation is an important clarification by the TAR and prohibits formalistic recourse to the “by object” shortcut. Should the decision be confirmed by the Court of Appeal (Consiglio di Stato), it would definitely reinforce companies’ prerogatives against the ICA and might be used as an argument in other EU Member States too.

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