Skating on Thin Ice: The European Commission challenges the governance rules of an international sports association as being incompatible with European antitrust rules

By Peter Alexiadis and Pablo Figueroa[1]

The recent announcement by the European Commission (“the Commission”) that it is actively looking into the compatibility of the disciplinary measures exacted by the International Skating Union (“ISU”) with competition rules reminds us yet again of that there are few elements of modern life that are exempt from the scope of EU competition rules.  The approach being undertaken by the Commission in the ISU case constitutes a logical extension of the recent interest shown by National Competition Authorities within the EU on the compatibility of governance rules of sports organisations with national and EU competition law.[2]

I.                        The Facts

Based in Lausanne, Switzerland, the ISU is the only body recognised by the International Olympic Committee (“IOC”) with the responsibility of administering the sports of ice figure skating and speed skating. In turn, its members are the various national ice-skating associations.

The Commission had initiated proceedings in relation to ISU’s eligibility rules in October 2015 following a complaint by two Dutch professional speed skaters, Mark Tuitert (gold medal winner at the 2010 Winter Olympics) and Niels Kerstholt.[3]

After an extremely short formal investigation of less than a year, the Commission has announced that the rules imposed by the ISU might be in contravention of the EU prohibition on anti-competitive agreements under Article 101 TFEU.[4]

More precisely, the Commission has informed the ISU of its preliminary view that its rules, under which athletes face severe penalties if they participate in speed skating events which have not been authorised by ISU, might infringe EU competition rules. Competition Commissioner Margrethe Vestager has indicated that the Commission’s concerns stem from the belief “that the penalties the ISU imposes on skaters through its eligibility rules are not aimed at preserving high standards in sport but rather serve to maintain the ISU’s control over speed skating. The ISU now has the opportunity to reply to our concerns”.

These accusations are outlined in a Statement of Objections addressed to the ISU, a document which informs the parties concerned of the competition allegations raised against them and which foresees that investigated entities can reply in writing and also request an Oral Hearing.  While the issuance of a Statement of Objections does not prejudge the outcome of the investigation, it is relatively rare that the Commission backs away from its claims.

According to a blog post by the Complainants’ counsel, which includes a twitter exchange between a skate complainant and Commissioner Vestager,[5] the complaint is based on the ISU’s intention to declare skaters as “persona non grata” where they participate in events organised by Icederby International, a private entity.  Moreover, the Complainants contended that the ISU Eligibility Rules rendered ineligible a person skating or officiating in an event not endorsed by ISU and/or its Members (i.e., the individual national associations) from participating in ISU activities and competitions.[6]  According to the Complainant’s counsel, this sanction apparently applies not only to the skaters, but also extends to coaches, trainers, doctors, team attendants, team officials, judges, referees and even volunteers.

By way of rebuttal, the ISU noted in a recent press release that independent organisers can establish international tournaments on the ISU calendar, and that Icederby, an organisation which initiated the complaint that triggered the Commission’s investigation via the two speed skaters in question, recently received ISU authorisation to co-run an event.[7]

The facts of the ISU case are not entirely dissimilar to those of Fédération Internationale de l’Automobile (FIA) in the late 1990s.  In that case, the Commission closed its investigation, apparently after the FIA agreed to refrain from using its regulatory powers in relation to international motor racing in a manner that would mean that competing events were forced out of the market.[8] Continue reading

Si.mobil v European Commission (T-201/11) – ‎Undermining the Effectiveness of EU Competition law?

si.mobilPablo Figueroa and Catherine Derenne[1]

“”That’s very important,” the King said, turning to the jury.  They were just beginning to write this down on their slates, when the White Rabbit interrupted:  “Unimportant, your Majesty means, of course,” he said in a very respectful tone, but frowning and making faces at him as he spoke.

“Unimportant, of course, I meant,” the King hastily said, and went on himself in an undertone, “important—unimportant—unimportant—important—” as if he were trying which word sounded best.”

(L. Carroll:  “Alice in Wonderland”)

According to the Automec case-law (paras. 73 ff), the European Commission has discretion as to how it deals with complaints.  That said, the Court of Justice of the European Union has clearly stated that the Commission’s discretion when rejecting complaints is not “unlimited” (Ufex and Others v. Commission, para. 89).  Regulation 1/2003 awarded to the Commission two additional grounds under which to dismiss cases.  Pursuant to Article 13, the Commission can dispose of complaints where “one authority is dealing with the case” (13(1)) or where a complaint “has already been dealt with by another competition authority” (13(2)).

In late 2014, the General Court has issued a Ruling in the context of the Si.mobil case interpreting the first of these provisions in a way which further enhances the Commission’s “not unlimited” discretion when rejecting complaints (the “Si.mobil Ruling”).  More specifically, the General Court endorsed the Commission’s deference to the National Competition Authorities of the EU Member States (the “NCA”s).  In our view, in doing so, the General Court allowed the Commission to abdicate from its constitutional Role of Guardian of the Treaties and to disregard the effectiveness of the Competition provisions in those Treaties.

Moreover, the Si.mobil Ruling was issued in the context of a broader series of Rulings which further enhance the Commission’s discretion when rejecting complaints (See Alexiadis, P. and Figueroa, P., “Commission Discretion Unchained”, Competition Law Insight, 17 March 2015).  Indeed, the Si.mobil Ruling becomes particularly surprising in the light of a series of unambiguous and repeated statements of the Commission in relation to the institutional failures of certain NCAs.  Note for example the Speech of former Vice-President Almunia in May 2014 where he expressed concerns in relation to the lack of resources and independence of certain NCAs.

The Si.mobil Ruling hinged on the interpretation of Article 13(1) Regulation 1/2003, according to which, “[t]he Commission may […] reject a complaint on the ground that a competition authority of a Member State is dealing with the case”.

On 14 August 2009, Si.mobil telekomunikacijske storitve d.d. filed a complaint before the Commission against Telekom Slovenije d.d. (“TS”), the incumbent mobile operator in Slovenia, for an alleged abuse of TS’ dominant position consisting, inter alia, in margin squeezes and predatory pricing.  On 24 January 2011, the Commission rejected the complaint mainly on the grounds that the Slovenian NCA (the “UVK”) was already dealing with the case.

The Commission’s case rested on the proposition that Article 13 of Regulation 1/2003 should be interpreted in such a manner that the mere fact that an NCA claims to be dealing with a case is sufficient, in and of itself, to enable the Commission not to take the case (Commission Decision Si.mobil / Mobitel, Section 2(1)).  Under the Commission’s interpretation, even in scenarios with an effect on trade between Member States, and thereby meriting the application of the EU Competition rules, as long as such NCA claims to deal with, for example a margin squeeze case, which tends to be resource-intensive to investigate, the Commission is obliged to relinquish jurisdiction.

However, such a proposition involves a dramatic re-assessment of the Commission’s role as regards the exercise of its jurisdiction in relation to subject-matter which falls within the exclusive competence of the Union, and thus has far-reaching implications for the Community’s legal order.  By de facto completely disregarding the general legal principle of “effectiveness” from its decision to assert jurisdiction to apply European law, the Commission undermines the very foundations of the Treaties whose application is entrusted to ensure pursuant to Article 17 of the Treaty on the European Union (the “TEU”). Continue reading

A criticism of the CJEU’s ruling that allowing London taxis to use bus lanes while prohibiting private hire vehicles from doing so does not appear to involve State aid (Eventech, C-518/13)

Dr Albert Sanchez Graells, School of Law, University of Leicester

In its judgment of 14 January 2015 in Eventech (C-518/13, EU:C:2015:9), the Court of Justice of the EU (CJEU) ruled on the preliminary question referred by the Court of Appeal (England and Wales) in the Addison Lee “taxis in bus lanes” case [as part of the challenge of the High Court’s decision in Eventech Ltd (R on the application of) v Parking Adjudicator (2012) [2012] EWHC 1903 (Admin)]. The CJEU decided that allowing London taxis (black cabs) to use bus lanes while prohibiting private hire vehicles (PHVs) from doing so does not appear to involve State aid. While the Eventech judgment leaves a minimum scope for the Court of Appeals to find differently in view of the specific facts of the case and the parts of the file not referred to the CJEU, this is most likely the end of the dispute.

The decision comes at a time when the regulation of the taxi sector is under significant pressure due to the political and economic waves that sharing economy initiatives (such as Uber) create – or, in the words of AG Wahl in the Eventech Opinion, “taxis and PHVs are engaged in fierce competition with each other across Europe, and London is not the only city where conflicts have arisen” (EU:C:2014:2239, para 2). This is a sector where competition rules have always been difficult to enforce due to the heavy regulation to which it is subjected (OECD, Competition Roundtable on ‘Taxi Services: Competition and Regulation’, 2007). Some claim that it is a sector ripe for proper deregulation and liberalisation, while others claim the opposite [for recent discussion, see L Eskenazi, ‘The French Taxi Case: Where Competition Meets—and Overrides—Regulation’ (2014) Journal of European Competition Law & Practice, and Publicpolicy.ie, The Taxi Market in Ireland: To Regulate or Deregulate? (2014)]. The discussion on the State aid implications of certain privileges derived from such regulation in crisis, and particularly the privileged use of bus lanes, added one layer of complication that the CJEU seems to have been keen on taking off the table.

The legal dispute in front of the CJEU can be condensed to opposing views on whether allowing black cabs to use bus lanes while prohibiting PHVs from doing so infringed the prohibition in Article 107(1) TFEU. It can be further narrowed down to the two key issues of whether this policy involves a commitment of State resources and whether it confers on taxis a selective economic advantage. Both elements need to be present for the prohibition of Article 107(1) TFEU to apply. The CJEU found in the negative on both aspects and determined that the practice of permitting, “in order to establish a safe and efficient transport system, black cabs to use bus lanes on public roads during the hours when the traffic restrictions relating to those lanes are operational, while prohibiting minicabs from using those lanes, except in order to pick up and set down passengers who have pre-booked such vehicles, does not appear, though it is for the referring court to determine, to be such as to involve a commitment of State resources or to confer on black cabs a selective economic advantage for the purpose of Article 107(1) TFEU” (C-518/13, para 63).

In my view, the Eventech judgment is criticisable in both areas. It fails to address the issues of economic advantage and selectivity in a functional manner—not least because the analysis of the selectivity of the measure ultimately relies on an assessment of ‘equality’ or ‘comparability’ of the legal position of black cabs vis-à-vis PHVs that falls into a logic trap derived from the pre-existing regulation of black cabs. Moreover, the analysis of the element of transfer of State resources is very counterintuitive and seems to contradict both economic theory (particularly as the use of public goods is concerned) and the case law on access to essential facilities under private ownership.

The finding that State resources are not involved is partial and flawed

Following the Opinion of AG Wahl, the CJEU engages in a rather counterintuitive approach to the issue of the transfer of State resources, which focusses on whether the State is forfeiting revenue by not charging black cabs for access to the bus lanes or by not imposing fines on them when they use the bus lanes, as it does with PHVs (judgment, paras 36-46). This approach comes from the AG Opinion, where he had decided to assess the question from the perspective of the regulatory powers of the Member State and fundamentally concluded that, in the exercise of those regulatory powers, there is no obligation to impose a charge for access to public infrastructure (Opinion, paras 24-35). Continue reading

Cartel Damage Claims and the so-Called “Umbrella Pricing” Under EU Competition Law: The Kone Ruling of the CJEU

Jens-Olrik Murach and Pablo Figueroa

On June 5, 2014, the Court of Justice of the European Union (respectively, the “EU” and the “CJEU”) issued a Ruling in relation to so-called “umbrella pricing” cartel damage actions.  These claims refer to damages allegedly suffered due to the surcharge applied by non-cartelists who, independently and rationally, adapted to a price increase resulting from a cartel by increasing their own prices.

Pursuant to the Ruling of the CJEU in Case C-557/12 Kone (“Kone”), the Treaty on the Functioning of the European Union (“TFEU”) preempts the EU Member States from having in place domestic regulations which “categorically exclude” umbrella pricing claims deriving from breaches of EU Competition law.

I.   Background

In February 2007, the European Commission issued a Decision imposing fines on the members of an alleged cartel in the markets for lifts and escalators.  The members of the alleged cartel included the Finnish company Kone AG.

Relying on the “umbrella effect” of the cartel, ÖBB-Infrastruktur AG (“ÖBB”), a subsidiary of the Austrian Federal Railway, brought an action before the Austrian courts against the members of the alleged cartel, including Kone AG, claiming damages.  These damages would result from ÖBB buying from third party suppliers which were not a member of the cartel at a higher price than ÖBB would have paid but for the existence of that cartel, on the ground that those third undertakings benefited from the existence of the cartel in adapting their prices to the higher level (see Kone, at § 10).

ÖBB’s action was rejected by an Austrian Court of First Instance but it was upheld by the appellate Court.  The Austrian Supreme Court (“Oberster Gerichtshof“) asked the CJEU for a preliminary ruling on the issue of whether Article 101 TFEU (namely, the provision of EU law which prohibits anti-competitive agreements, the EU equivalent to § 1 Sherman Act) requires the recognition of “umbrella claims”.  This recognition would apparently be contrary to the requirements, applicable to damages claims under Austrian torts law, of “adequate causal link” between the conduct of the infringing entity and the injury and “unlawfulness”, that is, whether the provision infringed had as its object the protection of the interests of the injured person (see Kone, at § 13 to 15). Continue reading

Case Comment: Gascogne (C-40/12 and C-58/12) and Kendrion (C‑50/12)

40901_0159Pedro Caro de Sousa

The present note is concerned with what the appropriate remedy is when the European courts breach Article 47 of the Charter of Fundamental Rights (the “Charter”) and Article 6 of the European Convention of Human Rights (the “Convention”) by taking an excessive length of time before reaching a decision.

It looks at three recent judgments by the Court of Justice of the European Union (“CJEU”) (Case C-40/12 P Gascogne Sack Deutschland GmbH v European Commission; Case C‑50/12 P Kendrion NV v European Commission; Case C-58/12 P Group Gascogne v European Commission) on appeal from decisions by the General Court regarding the industrial bags cartel. The decisions were to the effect that:

–                whenever a European court breaches Article 47 of the Charter and/or Article 6 of the Convention by taking too long to take a decision, the appropriate remedy is an action for damages against the EU;

–                in the light of Treaty provisions, this action will need to be brought before the General Court, even if it was this court’s delay that provides the basis for the action for damages.

Beyond the relevance of these developments in themselves, these decisions also raise a number of interesting questions that the CJEU avoided for the moment but that seem destined to raise their head in the future – including:

–                does it infringe upon Article 6 of the Convention to have the General Court adjudicate on actions for damages that are based on that court’s own previous breach of Article 6 of the Convention – in particular, will this case law survive scrutiny before the European Court of Human Rights (the “Strasbourg Court”) when the EU finally accedes to the Convention?

–            what will be the consequences if this case law is found to infringe the Convention? In particular, what happens when two different sources of EU primary law (namely, Treaty provisions and the Charter) conflict? Continue reading

AG Cruz Villalon on access to leniency applications: A stringent test. Really? (C-365/12)

[ This comment originally appeared on Albert’s personal blog http://howtocrackanut.blogspot.co.uk/ ]

In his Opinion of 3 October 2013 in case C-365/12 EnBW Energie, Advocate General Cruz Villalon has proposed a holistic interpretation of the regulatory schemes relating to access to documents of the institutions and, more specifically, of access to the European Commission’s files in the context of its leniency programme. In my view, the holistic approach advocated for still leaves some important issues unresolved and, consequently, the Judgment of the CJEU in this case will be highly relevant.

According to AG Cruz Villalon, when access to the file in cartel investigations is concerned,

63. In short, the presumption [that access should be refused] must operate in relation to documents the disclosure of which is either ruled out or – in the case of Regulation No 1/2003, as compared with Regulation No 1049/2001– possible only on certain conditions. In other words, the presumption should be fully effective vis-à-vis parties who, in accordance with Regulation No 1/2003 and Regulation No 773/2004, have no right, in principle, to access the documents in cartel proceedings, as in the case of EnBW here; and this must also be the case vis-à-vis parties who have only a limited right of access or a right which is recognised solely for the purposes of safeguarding the right of defence.

64. That conclusion must carry a qualification, however. The abovementioned presumption ‘does not exclude the possibility of demonstrating that a given document, of which disclosure is sought, is not covered by that presumption or that there is a higher public interest justifying the disclosure of that document under Article 4(2) of Regulation No 1049/2001 (Commission v Technische Glaswerke Ilmenau, paragraph 62)’. Consequently, the fact that Regulation No 1/2003 does not provide for access by persons who are not parties to the proceedings means only that, in the event that such persons request access, their requests must be dealt with in accordance with Regulation No 1049/2001 (as the general legislation in the area of transparency), interpreted in the light of the general presumption that disclosure of the documents may undermine the purpose of the proceedings under Regulation No 1/2003. This presumption does not in any way rule out access pursuant to Regulation No 1049/2001: it merely imposes more stringent conditions on the access granted under that regulation (emphasis added). Continue reading

Book review: Gerardin, Layne-Farrar and Petit, EU Competition Law and Economics

Christopher Brown

Gerardin, Layne-Farrar and Petit EU Competition Law and Economics (2012, OUP)

It has taken a while to get round to reviewing a recent new treatise on EU competition law and economics by Damien Gerardin, Anne Layne-Farrar and Nicolas Petit, the book having landed on this reviewer’s desk before the summer.  Mea culpa.  Better late than never, though, especially as the book, co-authored by two lawyers with considerable experience of academia and practice and a specialist competition economist, is actually a good read.

The first question that tends to spring to mind before commencing a book review is: who is the intended audience?  That is a pertinent question here.  After all, there are now various practitioner works on EU competition law in the English language: think, in particular, of two others in the OUP stable, Bellamy and Child and Faull and Nikpay – so well known are they among practitioners that reference to the (original) authors suffices).  OUP also publishes Whish and Bailey, which is aimed primarily at students but which practitioners also find useful.  There other general practitioner works, such as Van Bael and Bellis, and a host of more specialist works.  Why, then, add another treatise on competition law to a burgeoning stable?

The answer is not, as one might expect, to be found in a preface, for there isn’t one.  The OUP website does, though, give us some insight (as, of course, does the book’s title): it says that the book “is the first EU competition law treatise that fully integrates economic reasoning in its treatment of the decisional practice of the European Commission and the case-law of the European Court of Justice.”  Continue reading

Is the NHS subject to competition law?

nhs logoLiam Goulding, University of Lancaster

The coalition government’s plans for the future of healthcare in England, through the Health and Social Care Act 2012 (HSCA), herald fundamental changes to the NHS. By experimenting with a greater role for competition it is unclear to what extent EU competition law is applicable to the NHS. In the application of the competition prohibitions, in Arts 101 and 102 TFEU, two concepts – ‘undertaking’ and ‘solidarity’ – become crucial. Unfortunately, despite the centrality of the ideas, neither is defined in the Treaty, leaving the Court of Justice of the European Union (CJEU) to develop and establish their content.

The CJEU in Höfner Case C-41/90 defines an undertaking as:

‘every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed’. Continue reading

Pfleiderer revisited: the AG Opinion in Donau Chemie

Christopher Brown

img-documentsOn 7 February, AG Jääskinen issued his Opinion in Case C-536/11 Donau Chemie, a much anticipated case (at least among competition lawyers) concerning the compatibility with EU law of an Austrian law which prohibits third party access to the court files in “public law competition proceedings” absent the parties’ consent.  The questions referred by the Austrian Cartel Court thus required the CJEU to venture into similar terrain to that covered by its Pfleiderer judgment (see this previous post for an application of Pfleiderer in a domestic case).

Continue reading

Anti-Competitive Agreements: knowing your ‘object’ from your ‘appreciable’

Angus MacCulloch

In October 2012 Christopher Brown posted an interesting blog on AG Kokott’s opinion in Case C-226/11 Expedia. The full judgment was delivered on 13 December 2012 and it seems appropriate to look at whether the Court followed the same line; or whether there was an ‘appreciable’ difference.

In brief the case was a preliminary ruling reference from the French Cour de cassation asking whether a National Competition Authority (NCA), or presumably a domestic court, could impose penalties in relation to an agreement or anticompetitive practice which fell within the terms of the European Commission’s de minimus Notice. The question arose in the context of proceedings brought by the Autorité de la concurrence (the French NCA) against a joint venture ‘Agence VSC’ between SNCF (the French Rail operator) and Expedia (the online travel company) which was to operate travel agency services. There was no dispute before the Cour de cassation that the agreement had the object of distorting competition, potentially contrary to Article 101 TFEU, but there was argument that the agreement fell below the market share thresholds set out in the Commission’s de minimus Notice.

The Court’s judgment and the AG’s Opinion both cover two main issues: the impact of the Commission Notice on the enforcement activity of an NCA, and the whether an ‘object’ agreement under Article 101 TFEU also has to have an ‘appreciable’ effect on competition before it can be considered to be an infringement. Continue reading