ECJ rules that an automatic fee discount cap could amount to a concerted practice

On 21 January 2016, the Court of Justice of the European Union (ECJ) held that undertakings can demonstrate that they are not party to a concerted practice by objecting to a message calling for an automatic price cap, not sticking to the cap or distancing themselves from it.

The risks of receiving anti-competitive proposals on an internal messaging system

In June 2012, Lithuania’s Competition Council found that 30 tour operators as well as E-Turas had behaved anti-competitively by applying capped discounts on bookings made via the E-TURAS system.

The E-TURAS system is a common online travel booking system that allows travel agencies to offer travel bookings for sale on their websites through a uniform presentation method. The administrator of the system, E-Turas, announced a policy of capping the discount that travel agencies could offer to customers via the system to a maximum of 3%. This policy was communicated to the travel agents via the internal messaging system within the system. E-Turas also modified the system to make it more difficult for the travel agencies to apply a discount that exceeded 3%. The Competition Council decided that the travel agencies which had used the system without objecting to E-Turas’ new policy had infringed the competition rules. These travel agents had reasonably assumed that all the other users of the system would also limit their discounts to a maximum of 3%. A fine of €1.6m was imposed.

Most of the travel agencies appealed the fines imposed by the Competition Council. The Vilnius District Administrative Court held on 08 April 2013 that the initial ruling of the Competition Council should be upheld but that the fines should be reduced for the passive role of the travel agencies. On further appeal by the travel agencies, the Supreme Administrative Court referred the case to the ECJ, asking the Court to provide guidance on how European competition law would apply and how the national court should determine if the travel agencies had aligned their conduct.

ECJ ruling

The ECJ ruled that under Article 101(1) TFEU, the sending of the message to the travel agents relating to the discount cap within the system may - if the travel agents were aware of that message - give rise to a presumption of a concerted practice between them.

Citing Total Marketing Services v Commission, the ECJ reiterated that a concerted practice or an agreement can be presumed on the basis of inferences from a number of coincidences and indicia which, taken together and in the absence of another plausible explanation for the conduct, may constitute evidence of an infringement. In this case, the travel agencies could rebut the presumption by demonstrating that they had publicly distanced themselves from the practice or reported it to the administrative authorities. The undertakings could also adduce other evidence to rebut the presumption, such as evidence that they had systematically applied a discount exceeding the cap in question or objected to the price cap.

The national court must now examine whether, in view of all the circumstances before it, dispatching a message may constitute sufficient evidence to establish that the addressees of that message were aware of its content. In doing so, it must apply the national rules governing the assessment of evidence and the standard of proof. The ECJ made clear that the presumption of innocence precludes the national court from considering that the mere dispatch of that message constitutes sufficient evidence to establish that its addressees ought to have been aware of its content.

Commentary

The balanced approach taken by the ECJ is to be welcomed. It is clear that undertakings which are demonstrably aware of an obligation or message to cap discounts or prices, for example, can be presumed to be parties to a concerted practice. However, the ECJ emphasised that undertakings must be allowed to rebut the presumption that they were aware of a message that was sent to them without having to “take excessive or unrealistic steps” to do so. Companies who use a platform to sell their products or services should be wary of messages from the platform which announce or require price or discount caps. Recipients of such a message should take concrete steps to show that they distanced themselves from the conduct called for in the message or that they reported the matter to a competition authority. The third option - proving that the message was either not received, or not read - may prove more difficult in practice.