Judgment of 19 January 2023, Unilever Italia Mkt. Operations, C-680/20, EU:C:2023:33 (Unilever) CURIA LINK
Key takeaways
Q. Does the 2017 Intel judgment apply only to rebate schemes, or to (non-pricing) exclusivity dealing as well?
A. Applicable to all exclusive practices.
... 50 It is true that, in providing that second clarification, the Court referred only to rebate schemes. However, since both rebate practices and exclusivity clauses are capable of being objectively justified or of having the disadvantages which they generate counterbalanced, or even outweighed, by advantages in terms of efficiency which also benefit the consumer, such a clarification must be understood as applying to both of those practices.
51 Moreover, in addition to the fact that such an interpretation appears to be consistent with the first clarification provided by the Court in that judgment of 6 September 2017, Intel v Commission (C‑413/14 P, EU:C:2017:632, paragraph 139), it must be held that, although, by reason of their nature, exclusivity clauses give rise to legitimate concerns of competition, their ability to exclude competitors is not automatic, as, moreover, is illustrated by the Communication from the Commission entitled ‘Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings (OJ 2009 C 45, p. 7, paragraph 36).
52 It follows that, first, where a competition authority suspects that an undertaking has infringed Article 102 TFEU by using exclusivity clauses, and where that undertaking disputes, during the procedure, the specific capacity of those clauses to exclude equally efficient competitors from the market, with supporting evidence, that authority must ensure, at the stage of classifying the infringement, that those clauses were, in the circumstances of the case, actually capable of excluding competitors as efficient as that undertaking from the market.
53 Secondly, the competition authority which initiated that procedure is also required to assess, specifically, the ability of those clauses to restrict competition where, during the administrative procedure, the undertaking which is under suspicion, without formally arguing that its conduct was incapable of restricting competition, maintains that there are justifications for its conduct.
54 In any event, the submission, in the course of the procedure, of evidence capable of demonstrating the inability to produce restrictive effects gives rise to an obligation for the competition authority to examine that evidence. Respect for the right to be heard, which, according to settled case-law, is a general principle of EU law, requires competition authorities to hear the undertaking in a dominant position, which means that they must pay due attention to the observations thus submitted by that undertaking, examining carefully and impartially all the relevant aspects of the individual case, and, in particular, the evidence submitted by that undertaking (see, to that effect, judgment of 12 May 2022, Servizio Elettrico Nazionale and Others, C‑377/20, EU:C:2022:379, paragraph 52).
55 It follows that, where the undertaking in a dominant position has produced an economic study in order to demonstrate that the practice of which it is accused was not capable of excluding competitors, the competent competition authority cannot exclude the relevance of that study without setting out the reasons why it considers that the study does not contribute to demonstrating that the practices in question were incapable of undermining effective competition on the relevant market and, consequently, without giving that undertaking the opportunity to determine the evidence which could be substituted for that study.
Q. Is the AEC test always required?
A. Not always. It's just one of the various methods to be used to check the anticompetitive capability.
56 As regards the ‘as efficient competitor’ test, to which the referring court expressly referred in its request, it should be noted that that concept refers to various tests which have in common the aim of assessing the ability of a practice to produce anti-competitive exclusionary effects by reference to the ability of a hypothetical competitor of the undertaking in a dominant position, which is as efficient as the dominant undertaking in terms of cost structure, to offer customers a rate which is sufficiently advantageous to encourage them to switch supplier, despite the disadvantages caused, without that causing that competitor to incur losses. That ability is generally determined in the light of the cost structure of the undertaking in a dominant position itself.
57 A test of that nature may be inappropriate in particular in the case of certain non-pricing practices, such as a refusal to supply, or where the relevant market is protected by significant barriers. Moreover, such a test is only one of a number of methods for assessing whether a practice is capable of producing exclusionary effects; moreover, that method takes into consideration only price competition. In particular, the use by a undertaking in a dominant position of resources other than those governing competition on the merits may be sufficient, in certain circumstances, to establish the existence of such an abuse (see, also to that effect, judgment of 12 May 2022, Servizio Elettrico Nazionale and Others, C‑377/20, EU:C:2022:379, paragraph 78).
58 Consequently, the competition authorities cannot be under a legal obligation to use the ‘as efficient competitor test’ in order to find that a practice is abusive (see, to that effect, judgment of 6 October 2015, Post Danmark, C‑23/14, EU:C:2015:651, paragraph 57).
Q. Then, in non-pricing cases, is the AEC test irrelevant?
A. It may be relevant or maybe not.
59 Nevertheless, even in the case of non-pricing practices, the relevance of such a test cannot be ruled out. A test of that type may prove useful since the consequences of the practice in question can be quantified. In particular, in the case of exclusivity clauses, such a test may theoretically serve to determine whether a hypothetical competitor with a cost structure similar to that of the undertaking in a dominant position would be able to offer its products or services otherwise than at a loss or with an insufficient margin if it had to bear the compensation which the distributors would have to pay in order to switch supplier, or the losses which they would suffer after such a change following the withdrawal of previously agreed discounts (see, by analogy, judgment of 25 March 2021, Slovak Telekom v Commission, C‑165/19 P, EU:C:2021:239, paragraph 110).
60 Consequently, where an undertaking in a dominant position suspected of abuse provides a competition authority with an analysis based on an ‘as efficient competitor test’, that authority cannot disregard that evidence without even examining its probative value.
Q. Can the authority hold a dominant company (with no ownership) solely liable for its retailers' abusive practices?
A. Yes.
29 As the Advocate General observed in point 48 of his Opinion, such an obligation is aimed at preventing not only infringements of competition caused directly by the conduct of the undertaking in a dominant position, but also those caused by conduct the implementation of which has been delegated by that undertaking to independent legal entities, which are required to carry out its instructions. Thus, where the conduct of which the undertaking in a dominant position is accused is actually implemented by an intermediary forming part of a distribution network, that conduct may be imputed to that undertaking if it transpires that it was adopted in accordance with the specific instructions given by that undertaking and therefore as part of the implementation of a policy that was decided unilaterally by that undertaking and with which the relevant distributors were required to comply.
30 In such a scenario, given that the conduct of which the undertaking in a dominant position is accused was decided unilaterally, that undertaking may be regarded as being the perpetrator of that conduct and, therefore, where appropriate, as being solely liable for it, for the purposes of the application of Article 102 TFEU. In such a situation, the distributors and, consequently, the distribution network which they form with that undertaking, must be regarded as merely an instrument of territorial implementation of the commercial policy of that undertaking and, on that basis, as being the instrument by which, as the case may be, the exclusionary practice at issue was implemented.
31 That is the case, in particular, where such conduct takes the form of standard contracts, drawn up entirely by a producer in a dominant position and containing exclusivity clauses for the benefit of its products which the distributors of that producer are required to have signed by the operators of sales outlets without being able to amend them, unless that producer expressly agrees. In such circumstances, that producer cannot reasonably be unaware that, in view of the legal and economic links which it has with those distributors, the latter will implement its instructions and, thereby, its commercial policy. Such a producer must therefore be regarded as being prepared to bear the risks of such conduct.
32 In such a situation, the imputability to the undertaking in a dominant position of the conduct implemented by the distributors forming part of the distribution network for its goods or services is not conditional either on the demonstration that the relevant distributors are also part of that undertaking, for the purposes of Article 102 TFEU, or even on the existence of a ‘hierarchical’ link resulting from a systemic and consistent range of guidelines given to those distributors likely to influence the management decisions which they adopt as regards their respective activities.