Common use of TFEU Clause in Contracts

TFEU. Therefore this aspect of the opinion is questionable in its accuracy. The AG should have cited STM. See also Joined cases C- that the object of an agreement is deduced from the content of its clauses, the intention of the parties “as it arises from the ‘genesis’ of the agreement or manifests itself in the circumstances in which it was implemented” and the conduct of the undertakings concerned.131 Thus, the characteristics of the measure, as well as the objectives pursued by the manufacturer inferred from its general strategy, were relevant.132 Finally, it is notable that the AG found it irrelevant that the objective pursued was not attained and therefore did not produce anticompetitive effects.133 Notably the CJEU confirmed much of the AG’s opinion. When making an assessment of object the CJEU held that: “...account must be taken not only of the terms of the agreement, but also of other factors, such as the aims pursued by the agreement in the light of the economic and legal context, in order to determine whether an agreement has a restrictive object.”134 The CJEU affirmed that such an objective can be achieved through direct and indirect means.135 The CJEU therefore held that the agreement had the object of restricting competition even though it was not explicitly obvious that the agreement had that object.136 In making its assessment, the CJEU looked at the conduct of the parties and considered what the competitive situation in the market would have been if, as in this case, export sales had not been excluded from the bonus policy. Proof of intention was not seen as a necessary factor in determining the object of the agreement.137 Such intention, however, may be taken into account when assessing the object of the agreement. 238/99 & others P Limburgse Vinyl Maatschappij v Commission [2002] ECR I-8375 on the relevance of the economic context. 131 Supra n125, General Motors, para 78. 132 Ibid, para 81. 133 Ibid, footnote 52. See also C-235/92 P Montecatini v Commission [1999] ECR I-4539, para 125. 134 Ibid, General Motors, paras 64-66. 135 Ibid, para 68. 136 This can be contrasted with the case law of the General Court in ENS (supra n4). See section 4. 137 Supra n125, General Motors, para 77. The CJEU cited Xxxxxx (supra n88) and CRAM (supra n108) in support of this point. This finding upheld the opinion, paras 77-78. Intent could also be attributed to the conduct of the parties. The need to ascertain the true objective of an agreement and the significance of an agreement’s context was again reinforced by the judgment in Asnef Equifax.138 Here, the issue concerned a horizontal credit information exchange agreement. Information exchange systems raise intriguing questions under Article 101(1) TFEU as they involve a form of collusion. Therefore, the assessment of whether such an arrangement is a restriction by object is an important and revealing one. Horizontal agreements to exchange information have been held to constitute restrictions by object when they concern future pricing intentions or where the commercial independence of an undertaking is compromised.139 The CJEU focused on the positive attributes of the information exchange system when dismissing the suggestion that the object of the agreement was anticompetitive.140 Instead it found that the “essential object of credit information exchange systems is to make available to credit providers relevant information about existing or potential borrowers”.141 The CJEU considered the positive benefits of such credit information systems, such as the lender being able to foresee the likelihood of repayment, and decided that they are in principle capable of improving the functioning of the supply of credit.142 Therefore, the register did not “by its very nature” have the object of restricting competition.143 The impact that the positive benefits of the agreement had on the outcome of the judgment is significant. The CJEU weighed, albeit briefly, the positive benefits (arguably the positive effects and aims) of the agreement against the negative aspects. As a result of this exercise, it found that the “essential object” of the agreement was not anticompetitive.144 This supports the view that the object criterion is concerned with identifying the precise purpose of the agreement by determining what the rationale behind it is, and specifically whether the agreement 138 Supra n72 Asnef Equifax. Judgment of 23 November 2006. 139 See for example Case C-204/00 P etc Aalborg Portland v Commission [2004] ECR I-123 and more generally see (Whish, 2009), p120. 140 Supra n72 Asnef Equifax, paras 46-48. 141 Ibid, para 46. 142 Ibid, para 47. 143 Ibid, para 48. 144 Ibid, para 46. is designed to restrict competition. More interestingly, the judgment leads to the conclusion that the object criterion can accommodate the consideration of the positive attributes of an agreement. Hence, if an agreement’s purpose is pro- competitive then it does not have the object of restricting competition.145 This conclusion was certainly evidenced in Louis Erauw. However, this position is controversial. Having a legitimate aim or objective, indeed an objective justification as a reason for entering into a potentially restrictive agreement did not convince the CJEU in a number of cases.146 Therefore, where the distinction lies between these concepts requires further reflection.

TFEU. Therefore this aspect 35 The CJEU considered that just because an agreement tends to restrict competition between distributors of the opinion is questionable in its accuracysame make, it does not follow that it automatically escapes the prohibition because it increases competition between producers. The AG should have cited STM. See also Joined cases C- CJEU decided that this type of argument is irrelevant, however, because if it “appears” the object of an agreement is deduced from the content of its clausesto restrict competition, the intention concrete effects do not need to be considered.36 The more analytical approach advocated by STM is supported by the Court when it says “to arrive at a true representation of the parties “as it arises from contractual position the ‘genesis’ of the agreement or manifests itself contract must be placed in the circumstances in which it was implemented” economic and the conduct of the undertakings concerned.131 Thus, the characteristics of the measure, as well as the objectives pursued by the manufacturer inferred from its general strategy, were relevant.132 Finally, it is notable that the AG found it irrelevant that the objective pursued was not attained and therefore did not produce anticompetitive effects.133 Notably the CJEU confirmed much of the AG’s opinion. When making an assessment of object the CJEU held that: “...account must be taken not only of the terms of the agreement, but also of other factors, such as the aims pursued by the agreement legal context in the light of which it was concluded by the economic and legal contextparties”.37 The Court does not thereby imply that certain agreements are presumed to automatically distort competition by object.38 Nonetheless, the judgment is somewhat incongruous with the sentiments set out in order to determine whether an agreement has a restrictive object.”134 The CJEU affirmed that such an objective can be achieved through direct and indirect means.135 The CJEU therefore held STM. What is more pertinent is that the agreement had the object of restricting competition even though it was not explicitly obvious CJEU found that the agreement had that object.136 In making its assessment, the CJEU looked at the conduct of the parties legal and considered what the competitive situation economic context plays a role in the market would have been if, as in this case, export sales had not been excluded from the bonus policy. Proof of intention was not seen as a necessary factor in determining the object of the agreement.137 Such intention, however, may be taken into account when assessing the object of the agreement. 238/99 & others P Limburgse Vinyl Maatschappij v Commission [2002] ECR I-8375 on the relevance of the economic context. 131 Supra n125, General Motors, para 78. 132 Ibid, para 81. 133 Ibid, footnote 52. See also C-235/92 P Montecatini v Commission [1999] ECR I-4539, para 125. 134 Ibid, General Motors, paras 64-66. 135 Ibid, para 68. 136 This can be contrasted with the case law of the General Court in ENS (supra n4). See section 4. 137 Supra n125, General Motors, para 77. The CJEU cited Xxxxxx (supra n88) and CRAM (supra n108) in support of this point. This finding upheld the opinion, paras 77-78. Intent could also be attributed to the conduct of the parties. The need to ascertain the true objective of an agreement and the significance determination of an agreement’s context object. The CJEU thus 33 Though subsequent chapters will show how the emphasis on different elements of the STM Test has shifted over the years, which is why the object concept is seen to be so confusing. 34 Supra n27, Consten & Grundig, p342. 35 Ibid, p342. 36 Ibid, p342. 37 Ibid, p343: “since the agreement thus aims at isolating the French market for Grundig products and maintaining, artificially, for products of a very well-known brand, separate national markets within the Community”. Emphasis added. The goal of preserving the single market was again reinforced an important aspect of the case and considered as part of the agreement’s legal and economic context. 38 It is possible that the ‘no concrete effects’ rule led to the proposition that object restrictions have ‘necessary effect’, ie: certain restrictions are presumed to have a restrictive effect on competition due to their known anticompetitive effects and thus, by their nature, restrict competition. builds upon the judgment in Asnef Equifax.138 HereSTM by referring, not just to the economic, but also to the legal context. Again, the issue concerned a horizontal credit information exchange agreement. Information exchange systems raise intriguing questions under Article 101(1) TFEU as they involve a form of collusion. Therefore, the assessment of whether such an arrangement is a restriction by object is an important and revealing one. Horizontal agreements to exchange information have been held to constitute restrictions by object when they concern future pricing intentions or where the commercial independence of an undertaking is compromised.139 The CJEU focused on the positive attributes of the information exchange system when dismissing the suggestion notion that the object of the agreement was anticompetitive.140 Instead it found that the “essential object of credit information exchange systems concept is to make available to credit providers relevant information about existing or potential borrowers”.141 The CJEU considered the positive benefits of such credit information systems, such as the lender being able to foresee the likelihood of repayment, and decided that they are in principle capable of improving the functioning of the supply of credit.142 Therefore, the register did not “by its very nature” have the object of restricting competition.143 The impact that the positive benefits of the agreement had based on the outcome classification of particular agreements is absent, though the judgment is significant. The CJEU weighed, albeit briefly, the positive benefits (arguably the positive effects and aims) precise delineation of the agreement against the negative aspects. As a result of this exercise, it found that the “essential object” of the agreement was not anticompetitive.144 This supports the view that how the object criterion is concerned with identifying applied to agreements is admittedly somewhat vague. What the precise purpose judgments in STM and Consten & Grundig attest to, is that the approach of the agreement by determining what European Courts is far more nuanced than the rationale behind Article 81(3) Guidelines suggest. A further series of cases illustrate how the CJEU expands upon and refines aspects of the STM Test. This can be seen in particular when assessing how it is, and specifically whether the agreement 138 Supra n72 Asnef Equifax. Judgment of 23 November 2006. 139 See for example Case C-204/00 P etc Aalborg Portland v Commission [2004] ECR I-123 and more generally see (Whish, 2009), p120. 140 Supra n72 Asnef Equifax, paras 46-48. 141 Ibid, para 46. 142 Ibid, para 47. 143 Ibid, para 48. 144 Ibid, para 46. is designed to restrict competition. More interestinglyproceeds when confronted with agreements that, the judgment leads to the conclusion orthodox approach would automatically depict as restrictions by object.39 However it is also evident, as aptly highlighted in STM and Consten & Grundig, that the object criterion can accommodate CJEU has a somewhat haphazard approach.40 For instance, the consideration of the positive attributes of an agreement. Hence, if an agreement’s purpose is pro- competitive then it Court does not have always differentiate between object and effect despite the clear reference to this requirement in STM.41 Nonetheless, the cases demonstrate how the Court applies an economics-based approach as opposed to automatically condemning agreements as restrictive by object of restricting competition.145 This conclusion was certainly evidenced in Louis Erauw. However, this position is controversial. Having a legitimate aim or objective, indeed an objective justification as a reason for entering into a potentially restrictive agreement did not convince the CJEU in a number of cases.146 Therefore, where the distinction lies between these concepts requires further reflection.per se.42

TFEU. Therefore this aspect In principle applicable also to infringements by “object”, ref. Case T-168/01, GlaxoSmithKline v Commission, Case T-17/93, Matra Hachette v Commission – True cartels will rarely have an efficiency rationale, let alone be “indispensible” • Sanctions – leniency, calculation of fines, parent liability etc. • Organic peroxides: AC Treuhand (Switzerland) as ”secretariat” – € 1000 fine (first time offence) • Commission press release – “the opinion message is questionable clear: organisers or facilitators of cartels, not just the cartel members, must fear that they will be found and heavy sanctions imposed from now on.” • Upheld by General Court in Case T-99/04 – The notion of «agreement» «implies that an undertaking may infringe [Article 101] where the purpose of its accuracy. The AG should have cited STM. See also Joined cases C- conduct (…) is to restrict competition on a specific relevant market (…) and that does not mean that the undertaking may be active on the relevant market itself.» (para 122) • Crisis cartels / industrial restructuring agreements – Typically agreements between undertakings in an industry facing common difficulties to reduce “overcapacity” or to reduce competition e.g. to avoid bankruptcy • Case C-209/07, Beef Industry Development Society (BIDS) – Agreements between the ten principal Irish beef and veal producers e.g. to reduce production capacity by 25 % – «even supposing it to be established that the parties (…) acted without any subjective intention of restricting competition, but with the object of remedying the effects of a crisis in their sector, such considerations are irrelevant for the purposes of applying [Article 101(1)]. Indeed an agreement is deduced from the content of its clauses, the intention of the parties “may be regarded as it arises from the ‘genesis’ of the agreement or manifests itself in the circumstances in which it was implemented” and the conduct of the undertakings concerned.131 Thus, the characteristics of the measure, as well as the objectives pursued by the manufacturer inferred from its general strategy, were relevant.132 Finally, it is notable that the AG found it irrelevant that the objective pursued was not attained and therefore did not produce anticompetitive effects.133 Notably the CJEU confirmed much of the AG’s opinion. When making an assessment of object the CJEU held that: “...account must be taken not only of the terms of the agreement, but also of other factors, such as the aims pursued by the agreement in the light of the economic and legal context, in order to determine whether an agreement has having a restrictive object.”134 The CJEU affirmed that such an objective can be achieved through direct and indirect means.135 The CJEU therefore held that the agreement had the object of restricting competition even though it was not explicitly obvious that the agreement had that object.136 In making its assessment, the CJEU looked at the conduct of the parties and considered what the competitive situation in the market would have been if, as in this case, export sales had not been excluded from the bonus policy. Proof of intention was not seen as a necessary factor in determining the object of the agreement.137 Such intention, however, may be taken into account when assessing the object of the agreement. 238/99 & others P Limburgse Vinyl Maatschappij v Commission [2002] ECR I-8375 on the relevance of the economic context. 131 Supra n125, General Motors, para 78. 132 Ibid, para 81. 133 Ibid, footnote 52. See also C-235/92 P Montecatini v Commission [1999] ECR I-4539, para 125. 134 Ibid, General Motors, paras 64-66. 135 Ibid, para 68. 136 This can be contrasted with the case law of the General Court in ENS (supra n4). See section 4. 137 Supra n125, General Motors, para 77. The CJEU cited Xxxxxx (supra n88) and CRAM (supra n108) in support of this point. This finding upheld the opinion, paras 77-78. Intent could also be attributed to the conduct of the parties. The need to ascertain the true objective of an agreement and the significance of an agreement’s context was again reinforced by the judgment in Asnef Equifax.138 Here, the issue concerned a horizontal credit information exchange agreement. Information exchange systems raise intriguing questions under Article 101(1) TFEU as they involve a form of collusion. Therefore, the assessment of whether such an arrangement is a restriction by object is an important and revealing one. Horizontal agreements to exchange information have been held to constitute restrictions by object when they concern future pricing intentions or where the commercial independence of an undertaking is compromised.139 The CJEU focused on the positive attributes of the information exchange system when dismissing the suggestion that the object of the agreement was anticompetitive.140 Instead it found that the “essential object of credit information exchange systems is to make available to credit providers relevant information about existing or potential borrowers”.141 The CJEU considered the positive benefits of such credit information systems, such as the lender being able to foresee the likelihood of repayment, and decided that they are in principle capable of improving the functioning of the supply of credit.142 Therefore, the register did not “by its very nature” have the object of restricting competition.143 The impact that the positive benefits of the agreement had on the outcome of the judgment is significant. The CJEU weighed, albeit briefly, the positive benefits (arguably the positive effects and aims) of the agreement against the negative aspects. As a result of this exercise, it found that the “essential object” of the agreement was not anticompetitive.144 This supports the view that the object criterion is concerned with identifying the precise purpose of the agreement by determining what the rationale behind it is, and specifically whether the agreement 138 Supra n72 Asnef Equifax. Judgment of 23 November 2006. 139 See for example Case C-204/00 P etc Aalborg Portland v Commission [2004] ECR I-123 and more generally see (Whish, 2009), p120. 140 Supra n72 Asnef Equifax, paras 46-48. 141 Ibid, para 46. 142 Ibid, para 47. 143 Ibid, para 48. 144 Ibid, para 46. is designed to restrict competition. More interestingly, the judgment leads to the conclusion that the object criterion can accommodate the consideration of the positive attributes of an agreement. Hence, if an agreement’s purpose is pro- competitive then it does not have the object restriction of restricting competition.145 This conclusion was certainly evidenced in Louis Erauwcompetition as its sole aim but also pursues other legitimate objectives». However(para 21) – Article 101 (3) TFEU – potentially applicable, this position is controversial. Having a legitimate aim or objective, indeed an objective justification as a reason for entering into a potentially restrictive agreement did not convince the CJEU in a number of cases.146 Therefore, where the distinction lies between these concepts requires further reflection.but strict conditions

TFEU. Therefore this aspect Indeed, it is extremely unlikely that a large reverse payment would generate qualitative efficiencies, let alone cost efficiencies, that can be passed on to consumers. In relation to qualitative efficiency, suffice it to say that, as explained above, 123 Xxxxxx and Xxxxxxxx, supra n 14, 297; S Brankin, “Patent Settlement and Competition Law: Where is the European Commission Going?” (2010) 5 Journal of the opinion is questionable in its accuracyIntellectual Property Law C Practice 23, 28. The AG should have cited STM124 Ibid. 125 See, generally, Xxxxxx and Xxxxxxxxx, supra n 30, 2046; X Xxxxxxx, “Antitrust Analysis of Patent Settlements Between Rivals” (2003) 17 Antitrust 70, 72. 126 Ibid. 127 Ibid. See also Joined Actavis, supra n 43. large payments are usually made when the patent is weak and has little or no innovative effect. Similarly, no cost efficiencies are possible if the patentee and the generics share the monopoly profits by agreeing on a large payment. In this regard, some authors have argued that in some cases C- a large payment can be justified by the risk aversion of the parties. Although this argument may sound convincing at first sight, it has no apparent legal basis.128 However, identifying “large payments” is not an easy task, but there is a criterion to identifying “suspect” payments. All reverse payments which exceed the avoided litigation costs should be considered presumptively anticompeti- tive.129 This presumption can be rebutted by demonstrating, for example, that the object payment was made in exchange for other goods or services received by the patentee.130 At this juncture, one could argue that this approach would probably entail the risk of false positives. Be that as it may, it cannot be denied that refusing this indirect assessment of patent validity would considerably increase the number of false negatives. Neither choice is costless and riskless.131 Still, an agreement is deduced from indirect scrutiny of patent invalidity in the content framework of its clausesArticle 101(3) TFEU would enable the Commission and EU courts to shape EU competition policy vis-à-vis reverse payments in accordance with the regulatory and economic context in which they are placed. Despite the harmonisation of national legislations on patent enforcement, there remains a tremendous difference in terms of length and cost of patent suits between Member States. Indeed, the intention duration of the parties “as it arises patent suits ranges from the ‘genesis’ seven months in France to more than six years in Italy and Portugal. Moreover, although, on average, legal fees per case amount to €230,000, they can vary considerably from Member State to Member State.132 The situation is further complicated if one considers that a patentee often has to initiate several parallel patent suits in different Member States to protect its patent. In this context, reverse payments may also represent a legitimate choice for a firm. Instead of the agreement or manifests itself in the circumstances in which it was implemented” and the conduct of the undertakings concerned.131 Thus, the characteristics of the measure, embarking on several proceedings characterised by relatively high costs as well as the objectives pursued by risk of different lengths and outcomes, they may decide to enter 128 Compare the manufacturer inferred from its general strategyarguments offered against this claim in AS Xxxxx, were relevant.132 FinallyXX Xxxxxxxx, it is notable that the AG found it irrelevant that the objective pursued was not attained X Xxxxxxxxx and therefore did not produce anticompetitive effects.133 Notably the CJEU confirmed much C Xxxxxxx, “Activating Actavis” (2013) 28 Antitrust 16, 18; XX Xxxxxx, XX Xxxxxx, XX Xxxxxx and MB Xxxxxx, “Activating Actavis: A More Complete Story” (2014) 28 Antitrust 83, 85. 129 C Xxxxxxx, “Antitrust Limits to Patent Settlements” (2003) 34 RAND Journal of the AG’s opinionEconomics 391, 408; M Xxxxxx and X Xxxxxxx, “Probabilistic Patents” (2004) 19 Journal of Economic Perspectives 75, 93. When making an assessment of object the CJEU held that: “...account must be taken not only of the terms of the agreement130 Xxxxxxx, but also of other factorssupra n 124, such as the aims pursued by the agreement in the light of the economic and legal context, in order to determine whether an agreement has a restrictive object.”134 The CJEU affirmed that such an objective can be achieved through direct and indirect means.135 The CJEU therefore held that the agreement had the object of restricting competition even though it was not explicitly obvious that the agreement had that object.136 In making its assessment, the CJEU looked at the conduct of the parties and considered what the competitive situation in the market would have been if, as in this case, export sales had not been excluded from the bonus policy72. Proof of intention was not seen as a necessary factor in determining the object of the agreement.137 Such intentionThis test, however, may be taken raises delicate measurement issues. See generally X Xxxx and XX Xxxxx, “Measuring Reverse Payments in the Wake of Actavis” (2013) 28 Antitrust 29, 30–34. 131 See generally XX Xxxxxxxxx, “Antitrust Implications of Patent Settlements: Balancing Patent Policy, Antitrust Law, and the Practical Limits of Litigation” (2008) 9 Engage 89. 132 For instance, litigation costs are 20 times higher in the UK than in Austria. European Commission, supra n 8, paras 636–37. into account when assessing such agreements. Hopefully, the object new UPC will probably reduce these dis- parities, but it will not eliminate reverse payments or the need for an indirect scrutiny of patent validity and scope in the course of antitrust litigation.133 In addition, due to the role of the agreement. 238/99 & others P Limburgse Vinyl Maatschappij v Commission [2002] ECR I-8375 NHSs on the relevance demand side, the pharma- ceutical market in Europe loosely resembles a bilateral monopoly (see supra Section E). EU competition policy cannot overlook these crucial features of the economic contextEuropean pharmaceutical market. 131 Supra n125In this setting, General Motorsdistinguishing between “good” and “bad” reverse payments is of paramount importance, para 78as it would allow EU courts and the Commission to uphold reverse payments which are not anticompetitive. 132 Ibid, para 81. 133 Ibid, footnote 52. See also C-235/92 P Montecatini v Commission [1999] ECR I-4539, para 125. 134 Ibid, General Motors, paras 64-66. 135 Ibid, para 68. 136 This can be contrasted with the case law The amount of the General Court in ENS (supra n4). See section 4. 137 Supra n125, General Motors, para 77. The CJEU cited Xxxxxx (supra n88) and CRAM (supra n108) in support of this point. This finding upheld the opinion, paras 77-78. Intent could also be attributed to the conduct of the parties. The need to ascertain the true objective of an agreement and the significance of an agreement’s context was again reinforced by the judgment in Asnef Equifax.138 Here, the issue concerned a horizontal credit information exchange agreement. Information exchange systems raise intriguing questions under Article 101(1) TFEU as they involve a form of collusion. Therefore, the assessment of whether such an arrangement is a restriction by object payment is an important appropriate and revealing one. Horizontal agreements to exchange information have been held to constitute restrictions by object when they concern future pricing intentions or where the commercial independence of an undertaking is compromised.139 The CJEU focused on the positive attributes of the information exchange system when dismissing the suggestion that the object of the agreement was anticompetitive.140 Instead it found that the “essential object of credit information exchange systems is to make available to credit providers relevant information about existing or potential borrowers”.141 The CJEU considered the positive benefits of such credit information systems, such as the lender being able to foresee the likelihood of repayment, and decided that they are in principle capable of improving the functioning of the supply of credit.142 Therefore, the register did not “by its very nature” have the object of restricting competition.143 The impact that the positive benefits of the agreement had on the outcome of the judgment is significant. The CJEU weighed, albeit briefly, the positive benefits (arguably the positive effects and aims) of the agreement against the negative aspects. As a result of this exercise, it found that the “essential object” of the agreement was not anticompetitive.144 This supports the view that the object criterion is concerned with identifying the precise purpose of the agreement by determining what the rationale behind it is, and specifically reliable tool for evaluating whether the agreement 138 Supra n72 Asnef Equifax. Judgment of 23 November 2006. 139 See for example Case C-204/00 P etc Aalborg Portland v Commission [2004] ECR I-123 and more generally see (Whish, 2009), p120. 140 Supra n72 Asnef Equifax, paras 46-48. 141 Ibid, para 46. 142 Ibid, para 47. 143 Ibid, para 48. 144 Ibid, para 46. is designed to restrict competition. More interestingly, the judgment leads to the conclusion that the object criterion can accommodate the consideration of the positive attributes of an agreement. Hence, if an agreement’s purpose is pro- competitive then it does not have the object of restricting competition.145 This conclusion was certainly evidenced in Louis Erauw. However, this position is controversial. Having seeks a legitimate aim objective or objective, indeed an objective justification as a reason for entering into a potentially restrictive agreement did not convince the CJEU in a number of cases.146 Therefore, where the distinction lies between these concepts requires further reflectionaims at restricting competition.

TFEU. Therefore this aspect 35 The CJEU considered that just because an agreement tends to restrict competition between distributors of the opinion is questionable in its accuracysame make, it does not follow that it automatically escapes the prohibition because it increases competition between producers. The AG should have cited STM. See also Joined cases C- CJEU decided that this type of argument is irrelevant, however, because if it “appears” the object of an agreement is deduced from the content of its clausesto restrict competition, the intention concrete effects do not need to be considered.36 The more analytical approach advocated by STM is supported by the Court when it says “to arrive at a true representation of the parties “as it arises from contractual position the ‘genesis’ of the agreement or manifests itself contract must be placed in the circumstances in which it was implemented” economic and the conduct of the undertakings concerned.131 Thus, the characteristics of the measure, as well as the objectives pursued by the manufacturer inferred from its general strategy, were relevant.132 Finally, it is notable that the AG found it irrelevant that the objective pursued was not attained and therefore did not produce anticompetitive effects.133 Notably the CJEU confirmed much of the AG’s opinion. When making an assessment of object the CJEU held that: “...account must be taken not only of the terms of the agreement, but also of other factors, such as the aims pursued by the agreement legal context in the light of which it was concluded by the economic and legal contextparties”.37 The Court does not thereby imply that certain agreements are presumed to automatically distort competition by object.38 Nonetheless, the judgment is somewhat incongruous with the sentiments set out in order to determine whether an agreement has a restrictive object.”134 The CJEU affirmed that such an objective can be achieved through direct and indirect means.135 The CJEU therefore held STM. What is more pertinent is that the agreement had the object of restricting competition even though it was not explicitly obvious CJEU found that the agreement had that object.136 In making its assessment, the CJEU looked at the conduct of the parties legal and considered what the competitive situation economic context plays a role in the market would have been if, as in this case, export sales had not been excluded from the bonus policy. Proof of intention was not seen as a necessary factor in determining the object of the agreement.137 Such intention, however, may be taken into account when assessing the object of the agreement. 238/99 & others P Limburgse Vinyl Maatschappij v Commission [2002] ECR I-8375 on the relevance of the economic context. 131 Supra n125, General Motors, para 78. 132 Ibid, para 81. 133 Ibid, footnote 52. See also C-235/92 P Montecatini v Commission [1999] ECR I-4539, para 125. 134 Ibid, General Motors, paras 64-66. 135 Ibid, para 68. 136 This can be contrasted with the case law of the General Court in ENS (supra n4). See section 4. 137 Supra n125, General Motors, para 77. The CJEU cited Xxxxxx (supra n88) and CRAM (supra n108) in support of this point. This finding upheld the opinion, paras 77-78. Intent could also be attributed to the conduct of the parties. The need to ascertain the true objective of an agreement and the significance determination of an agreement’s context object. The CJEU thus 33 Though subsequent chapters will show how the emphasis on different elements of the STM Test has shifted over the years, which is why the object concept is seen to be so confusing. 34 Supra n27, Consten & Grundig, p342. 35 Ibid, p342. 36 Ibid, p342. 37 Ibid, p343: “since the agreement thus aims at isolating the French market for Grundig products and maintaining, artificially, for products of a very well-known brand, separate national markets within the Community”. Emphasis added. The goal of preserving the single market was again reinforced an important aspect of the case and considered as part of the agreement’s legal and economic context. 38 It is possible that the ‘no concrete effects’ rule led to the proposition that object restrictions have ‘necessary effect’, ie: certain restrictions are presumed to have a restrictive effect on competition due to their known anticompetitive effects and thus, by their nature, restrict competition. builds upon the judgment in Asnef Equifax.138 HereSTM by referring, not just to the economic, but also to the legal context. Again, the issue concerned a horizontal credit information exchange agreement. Information exchange systems raise intriguing questions under Article 101(1) TFEU as they involve a form of collusion. Therefore, the assessment of whether such an arrangement is a restriction by object is an important and revealing one. Horizontal agreements to exchange information have been held to constitute restrictions by object when they concern future pricing intentions or where the commercial independence of an undertaking is compromised.139 The CJEU focused on the positive attributes of the information exchange system when dismissing the suggestion notion that the object of the agreement was anticompetitive.140 Instead it found that the “essential object of credit information exchange systems concept is to make available to credit providers relevant information about existing or potential borrowers”.141 The CJEU considered the positive benefits of such credit information systems, such as the lender being able to foresee the likelihood of repayment, and decided that they are in principle capable of improving the functioning of the supply of credit.142 Therefore, the register did not “by its very nature” have the object of restricting competition.143 The impact that the positive benefits of the agreement had based on the outcome classification of particular agreements is absent, though the judgment is significant. The CJEU weighed, albeit briefly, the positive benefits (arguably the positive effects and aims) precise delineation of the agreement against the negative aspects. As a result of this exercise, it found that the “essential object” of the agreement was not anticompetitive.144 This supports the view that how the object criterion is concerned with identifying applied to agreements is admittedly somewhat vague. What the precise purpose judgments in STM and Consten & Grundig attest to, is that the approach of the agreement by determining what European Courts is far more nuanced than the rationale behind Article 81(3) Guidelines suggest. A further series of cases illustrate how the CJEU expands upon and refines aspects of the STM Test. This can be seen in particular when assessing how it is, and specifically whether the agreement 138 Supra n72 Asnef Equifax. Judgment of 23 November 2006. 139 See for example Case C-204/00 P etc Aalborg Portland v Commission [2004] ECR I-123 and more generally see (Whish, 2009), p120. 140 Supra n72 Asnef Equifax, paras 46-48. 141 Ibid, para 46. 142 Ibid, para 47. 143 Ibid, para 48. 144 Ibid, para 46. is designed to restrict competition. More interestinglyproceeds when confronted with agreements that, the judgment leads to the conclusion orthodox approach would automatically depict as restrictions by object.39 However it is also evident, as aptly highlighted in STM and Consten & Xxxxxxx, that the object criterion can accommodate CJEU has a somewhat haphazard approach.40 For instance, the consideration of the positive attributes of an agreement. Hence, if an agreement’s purpose is pro- competitive then it Court does not have always differentiate between object and effect despite the clear reference to this requirement in STM.41 Nonetheless, the cases demonstrate how the Court applies an economics-based approach as opposed to automatically condemning agreements as restrictive by object of restricting competition.145 This conclusion was certainly evidenced in Louis Erauw. However, this position is controversial. Having a legitimate aim or objective, indeed an objective justification as a reason for entering into a potentially restrictive agreement did not convince the CJEU in a number of cases.146 Therefore, where the distinction lies between these concepts requires further reflection.per se.42

TFEU. Therefore this aspect of the opinion is questionable in its accuracy. The AG should have cited STM. See also Joined cases C- that the object of an agreement is deduced from the content of its clauses, the intention of the parties “as it arises from the ‘genesis’ of the agreement or manifests itself in the circumstances in which it was implemented” and the conduct of the undertakings concerned.131 Thus, the characteristics of the measure, as well as the objectives pursued by the manufacturer inferred from its general strategy, were relevant.132 Finally, it is notable that the AG found it irrelevant that the objective pursued was not attained and therefore did not produce anticompetitive effects.133 Notably the CJEU confirmed much of the AG’s opinion. When making an assessment of object the CJEU held that: “...account must be taken not only of the terms of the agreement, but also of other factors, such as the aims pursued by the agreement in the light of the economic and legal context, in order to determine whether an agreement has a restrictive object.”134 The CJEU affirmed that such an objective can be achieved through direct and indirect means.135 The CJEU therefore held that the agreement had the object of restricting competition even though it was not explicitly obvious that the agreement had that object.136 In making its assessmentHere, the CJEU looked at was clearly balancing the conduct pro-competitive aim of the parties and considered what the competitive situation in the market would have been if, as in this case, export sales had not been excluded from the bonus policy. Proof of intention was not seen as a necessary factor in determining the object of the agreement.137 Such intention, however, may be taken into account when assessing the object of the agreement. 238/99 & others P Limburgse Vinyl Maatschappij v Commission [2002] ECR I-8375 on the relevance of the economic context. 131 Supra n125, General Motors, para 78. 132 Ibid, para 81. 133 Ibid, footnote 52. See also C-235/92 P Montecatini v Commission [1999] ECR I-4539, para 125. 134 Ibid, General Motors, paras 64-66. 135 Ibid, para 68. 136 This can be contrasted with the case law of the General Court in ENS (supra n4). See section 4. 137 Supra n125, General Motors, para 77. The CJEU cited Xxxxxx (supra n88) and CRAM (supra n108) in support of this point. This finding upheld the opinion, paras 77-78. Intent could also be attributed to the conduct of the parties. The need to ascertain the true objective of an agreement and the significance of an agreement’s context was again reinforced by the judgment in Asnef Equifax.138 Here, the issue concerned a horizontal credit information exchange agreement. Information exchange systems raise intriguing questions under Article 101(1) TFEU as they involve a form of collusion. Therefore, the assessment of whether such an arrangement is a restriction by object is an important and revealing one. Horizontal agreements to exchange information have been held to constitute restrictions by object when they concern future pricing intentions or where the commercial independence of an undertaking is compromised.139 The CJEU focused on the positive attributes of the information exchange system when dismissing the suggestion that the object of the agreement was anticompetitive.140 Instead it found that the “essential object of credit information exchange systems is to make available to credit providers relevant information about existing or potential borrowers”.141 The CJEU considered the positive benefits of such credit information systems, such as the lender being able to foresee the likelihood of repayment, and decided that they are in principle capable of improving the functioning of the supply of credit.142 Therefore, the register did not “by its very nature” have the object of restricting competition.143 The impact that the positive benefits of the agreement had on the outcome of the judgment is significant. The CJEU weighed, albeit briefly, the positive benefits (arguably the positive effects and aims) of the agreement against the negative aspects. As a result of this exercise, it found that the “essential object” aspects.71 This apparent tolerance of the agreement was not anticompetitive.144 This supports the view that the object criterion is concerned with identifying the precise purpose of the agreement by determining what the rationale behind it is, and specifically whether the agreement 138 Supra n72 Asnef Equifax. Judgment of 23 November 2006. 139 See for example Case C-204/00 P etc Aalborg Portland v Commission [2004] ECR I-123 and more generally see (Whish, 2009), p120. 140 Supra n72 Asnef Equifax, paras 46-48. 141 Ibid, para 46. 142 Ibid, para 47. 143 Ibid, para 48. 144 Ibid, para 46. is designed to restrict competition. More interestingly, the judgment leads to the conclusion that the object criterion can accommodate the consideration balancing of the positive attributes of an agreementagreement under Article 101(1) TFEU is notable. HenceAs will be seen throughout this thesis, if however, such balancing is fairly commonplace.72 Yet again, the Court’s approach highlights the individual nature of each case that comes before it and underlines the importance of assessing the 70 Ibid, para 10-11 (emphasis added). 71 Balancing the aims of an agreement’s purpose is pro- competitive then it does not have agreement can also be seen in AEG-Telefunken v Commission (supra n6) where the Court considered a selective distribution system. Here the Court looked at the object of restricting competition.145 This conclusion the agreement in a positive light, stating that the “object” of the system was certainly evidenced to “improve competition”. Moreover, it found there are “legitimate requirements which justify a reduction of price competition in Louis Erauwfavour of competition relating to factors other than price”. HoweverThe Court also held that if selective distribution systems did not follow the Metro criteria, they would constitute an infringement of Article 101(1). The Court did not clarify that would constitute a restriction of competition by object or effect. However in para 96 the Court made the point that “effecting parallel imports cannot be regarded as an infringement of the rules of competition, whereas undertaking no longer to effect such imports is manifestly an infringement of community law since it would allow a manufacturer to wall off national markets...” (emphasis added). The interesting issues raised in this position is controversialjudgment are considered in subsequent chapters. Having 72 See for instance the various selective and exclusive distribution cases; also footnote 34 of the opinion in BIDS (supra n3), the judgment in Case C-238/05 Asnef Equifax v Ausbanc [2006] ECR I- 11125 and the Commission’s decision in Visa International – Multilateral Interchange Fee [2002] OJ L318/17. The distinction between positive aims or attributes and a legitimate aim or objectiveobjective is moot: see XX Xxxxx’x Opinion in Case C-439/09 Xxxxxx Xxxxx Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence, indeed an objective justification as a reason for entering into a potentially restrictive agreement did not convince the CJEU [2001] ECR I-9419. These issues are discussed further in a number of cases.146 Thereforechapter 4, where the distinction lies between these concepts requires further reflectionsection 2.