CJEU in Visa Mastercard: can an agreement be both an object and an effect restriction of competition?

The European Court of Justice’s judgment of 2 April 2020 in Case C-228/18 Gazdasági Versenyhivatal (the Hungarian Competition Authority) v Visa, Mastercard and Ors.

Hungarian Supreme Court reference re Art 101(1)

The CJEU delivered its judgment yesterday in a preliminary reference from the Hungarian Supreme Court on the interpretation of Article 101(1) in the context of an infringement finding by the Hungarian Competition Authority against Visa, Mastercard and a number of Hungarian banks in relation to interchange fees. The Hungarian authority’s decision concerned similar conduct to that at issue in the European Commission’s 2007 infringement finding against Mastercard in relation to intra-EEA multilateral interchange fees. The Hungarian authority framed the infringement as both an “object” and an “effect” restriction of competition and the Hungarian Supreme Court made a reference to the CJEU concerning, inter alia, whether the same conduct can be deemed to be both an object and an effect restriction of competition or whether they were alternative conditions under Article 101(1) TFEU.

The CJEU decision

The CJEU made reference to the well-established principle of European law that, if it is established that an agreement (or decision or concerted practice) has an anti-competitive object, there is no need to examine the effects of that agreement on competition for there to be an infringement of Article 101(1). The Court cited its previous jurisprudence that there are certain types of conduct (for example, horizontal price fixing agreements) which pose such harm to competition that they are deemed to be restrictions of competition by object and do not require an assessment of their effect on the market.

The Court stated that if a national competition authority considers that there is an object restriction, it does not need to consider the effects of the same conduct; but it is not prohibited from doing so and can characterise conduct as both an object and an effect restriction. However, this possibility does not relieve the competition authority from its obligation to support its findings with sufficient evidence and to specify whether that evidence supports either a finding of an object or an effect restriction.

The Hungarian Supreme Court also asked the CJEU whether an agreement of the type in question could be deemed to be an object restriction. The CJEU stated that it didn’t have the jurisdiction to rule on specific facts, but it can give guidance on the interpretation of Article 101(1) to enable the national court to make a decision.

The CJEU repeated its previous jurisprudence that the concept of a restriction by object must be interpreted restrictively and can only apply to certain types of conduct which, in and of themselves, are so harmful to competition that an examination of the effects of the conduct is not necessary. If an anti-competitive object is not established, then the national competition authority must consider the counterfactual of the market absent such conduct in order to assess whether there were, in fact, effects on that market. The CJEU stated that both the assessment of whether the conduct itself was an object restriction and the assessment of the effects of the conduct on the market were assessments for the national court to make (and not the CJEU), having regard to the facts of the case.

Conclusion

This is an unsurprising judgment in a well-established line of cases concerning the distinction between object and effect restrictions under Article 101(1). Nevertheless, it provides useful clarity on the precise construct of an object restriction and the importance of conducting a counterfactual analysis to determine whether conduct had anti-competitive effects on the market in question.

*From the French. Judgment not yet available in English.