Case T‑208/13
Portugal Telecom SGPS, SA
v
European Commission
(Competition — Agreements, decisions and concerted practices — Portuguese and Spanish telecommunications markets — Non-competition clause with respect to the Iberian market inserted in the contract for the acquisition by Telefónica of Portugal Telecom’s share in the Brazilian mobile telephone operator Vivo — Legal safeguard ‘to the extent permitted by law’ — Obligation to state reasons — Infringement by subject-matter — Ancillary restriction — Potential competition — Infringement by effects — Calculation of the amount of the fine — Request for examination of witnesses)
Summary — Judgment of the General Court (Second Chamber), 28 June 2016
1. Judicial proceedings — Application initiating proceedings — Formal requirements — Brief summary of the pleas in law on which the application is based — Pleas in law not set out in the application — Imprecise statement of considerations requiring the defendant institution and the EU judicature to rely on guesswork and deductions — Inadmissibility
(Statute of the Court of Justice, Art. 21, first para.; Rules of Procedure of the General Court, Art. 44(1))
2. Actions for annulment — Pleas in law — Concept — Elements of an application for annulment appearing in a summary of the decision — Inclusion — Condition — Validity of findings in the contested decision to be clearly and unambiguously challenged
(Statute of the Court of Justice, Art. 21, first para.; Rules of Procedure of the General Court, Art. 44(1))
3. Judicial proceedings — Statement of reasons for judgments — Scope — Reliance by the General Court on implied reasoning — Lawfulness — Conditions
4. Actions for annulment — Grounds — Lack of or inadequate statement of reasons — Separate ground from the one concerning substantive legality
(Arts 263 TFEU and 296 TFEU)
5. Acts of the institutions — Statement of reasons — Obligation — Scope
(Arts 263 TFEU and 296 TFEU)
6. Agreements, decisions and concerted practices — Adverse effect on competition — Criteria for assessment — Content and objective of a cartel and economic and legal context of its development — Distinction between infringements by subject-matter and infringements by effect — Intention of the parties to an agreement to restrict competition — Not a necessary criterion — Infringement by subject-matter — Whether sufficiently damaging — Criteria for assessment
(Art. 101(1) TFEU)
7. Agreements, decisions and concerted practices — Prohibition — Exemption — Clause described as an ancillary restriction — Concept of ancillary restriction — Scope — Restriction directly related and necessary to the implementation of a main operation — Objective and proportionate nature — Complex evaluation of economic matters — Judicial review — Limits — Consequences of the classification
(Art. 101(1) and (3) TFEU)
8. Agreements, decisions and concerted practices — Agreements between undertakings — Evidence of the infringement — Assessment of the probative value of various items of evidence — Criteria — Statements of undertakings which participated in the cartel
(Art. 101 TFEU)
9. Competition — Administrative procedure — Decision of the Commission finding an infringement of Article 101 TFEU — Obligation to define the market — None where an arrangement has the object of market-sharing
(Art. 101 TFEU)
10. Agreements, decisions and concerted practices — Adverse effect on competition — Criteria for assessment — Description of an undertaking as a potential competitor — Criteria
(Art. 101(1) TFEU)
11. Competition — Fines — Amount — Determination — Criteria — Gravity of the infringement — No binding or exhaustive list of criteria — Commission’s margin of discretion
(Council Regulation No 1/2003, Art. 23(2))
12. Acts of the institutions — Guidelines on the method of setting fines for infringements of the competition rules — Legal nature — Indicative rule of conduct implying a self-limitation on the discretion of the Commission — Obligation to comply with the principles of equal treatment and protection of legitimate expectations
(Council Regulation No 1/2003, Art. 23(2); Commission Notice 2006/C 210/02)
13. Competition — Fines — Amount — Determination — Discretion of the Commission — Judicial review — Unlimited jurisdiction of the EU judicature — Scope
(Art. 261 TFEU; Council Regulations No 17, Art. 17 and No 1/2003, Art. 31)
14. Acts of the institutions — Statement of reasons — Obligation — Scope — Decision imposing fines — Indication of the factors which led the Commission to assess the gravity and the duration of the infringement — Sufficient indication
(Council Regulation No 1/2003, Art. 23(3); Commission Notices 2006/C 210/02 and 2006/C 298/11)
15. Competition — Fines — Amount — Determination — Criteria — Overall turnover of the undertaking concerned — Turnover corresponding to the goods covered by the infringement — To be taken into consideration — Limits — Determination of the value of sales directly or indirectly related to the infringement — Criteria
(Arts 101 TFEU and 102 TFEU; Council Regulation No 1/2003, Art. 23(2) and (3); Commission Notice 2006/C 210/02, points 6 and 13)
16. EU law — Principles — Right to effective judicial protection — Judicial review of decisions adopted by the Commission in competition matters — Review of legality and unlimited jurisdiction, in law and in fact — No infringement
(Art. 263 TFEU; Charter of Fundamental Rights of the European Union, Art. 47; Council Regulation No 1/2003, Art. 31)
17. Judicial proceedings — Measures of inquiry — Hearing of witnesses — Discretion of the General Court — Relevance of the principle of the right to a fair process
(Rules of Procedure of the General Court, Art. 91)
1. See the text of the decision.
(see paras 68-70, 270)
2. See the text of the decision.
(see para. 71)
3. See the text of the decision.
(see para. 75)
4. See the text of the decision.
(see para. 78)
5. See the text of the decision.
(see paras 78, 220)
6. See the text of the decision.
(see paras 86-91, 173, 174, 178, 190, 191)
7. If a given operation or activity is not covered by the prohibition rule laid down in Article 101(1) TFEU, owing to its neutrality or positive effect in terms of competition, a restriction of the commercial autonomy of one or more of the participants in that operation or activity is not covered by that prohibition rule either, if that restriction is objectively necessary to the implementation of that operation or that activity and proportionate to the objectives of one or the other.
Where it is not possible to dissociate such a restriction from the main operation or activity without jeopardising its existence and aims, it is necessary to examine the compatibility of that restriction with Article 101 TFEU in conjunction with the compatibility of the main operation or activity to which it is ancillary, even though, taken in isolation, such a restriction may appear on the face of it to be covered by the prohibition rule in Article 101(1) TFEU. Accordingly, the concept of ‘ancillary restriction’ covers any restriction which is directly related and necessary to the implementation of a main operation.
A restriction ‘directly related’ to implementation of a main operation must be understood to be any restriction which is subordinate to the implementation of that operation and which has an evident link with it.
The condition that a restriction be necessary implies a two-fold examination. It is necessary to establish, first, whether the restriction is objectively necessary for the implementation of the main operation and, second, whether it is proportionate to it. Examination of the objective necessity of a restriction in relation to the main operation cannot but be relatively abstract. It is not a question of analysing whether, in the light of the competitive situation on the relevant market, the restriction is indispensable to the commercial success of the main operation but of determining whether, in the specific context of the main operation, the restriction is necessary for the implementation of that operation. If, without the restriction, the main operation is difficult, or even impossible, to implement, the restriction may be regarded as objectively necessary for its implementation.
Where a restriction is objectively necessary for the implementation of a main operation, it is still necessary to verify whether its duration and its material and geographic scope do not exceed what is necessary to implement that operation. If the duration or the scope of the restriction exceeds what is necessary in order to implement the operation, it must be assessed separately under Article 101(3) TFEU.
Moreover, inasmuch as the assessment of the ancillary nature of a particular agreement in relation to a main operation entails complex economic assessments by the Commission, judicial review of that assessment is limited to verifying whether the relevant procedural rules have been complied with, whether the statement of the reasons for the decision is adequate, whether the facts have been accurately stated and whether there has been a manifest error of assessment or misuse of powers.
Finally, if it is established that a restriction is directly related and necessary to achieving a main operation, the compatibility of that restriction with the competition rules must be examined with that of the main operation. Thus, if the main operation does not fall within the scope of the prohibition laid down in Article 101(1) TFEU, the same holds for the restrictions directly related to and necessary for that operation. If, on the other hand, the main operation is a restriction within the meaning of Article 101(1) TFEU but benefits from an exemption under Article 101(3) TFEU, that exemption also covers those ancillary restrictions.
(see paras 97-101, 104-107)
8. In EU competition law, even if testimony provided by a direct witness of the circumstances which he has described must in principle be characterised as evidence with a high probative value, it is also necessary to take into account the fact that the declaration has been made by a person who might have a direct interest in the case and who cannot be classified as independent of the applicant. As regards the probative value to be placed on the various evidence, the only relevant criterion for assessing evidence freely produced lies in its credibility. According to the rules generally applicable in relation to evidence, the credibility and, accordingly, the probative value of a document depend on its origin, the circumstances in which it was drawn up, the person to whom it is addressed and the reasonableness of its content.
(see paras 149, 150)
9. When applying EU rules in competition law matters, the Commission is not always required to produce a precise definition of the markets concerned. The definition of the relevant market differs according to whether Article 101 TFEU or Article 102 TFEU is to be applied. Thus, in the context of Article 101(1) TFEU, a prior definition of the relevant market is not required where the agreement at issue has in itself an anti-competitive object, that is to say, where the Commission has been able to conclude correctly, without first defining the market, that the agreement at issue distorted competition and was liable to have an appreciable effect on trade between Member States. If the actual object of an agreement is to restrict competition by market sharing, it is not necessary to define the markets in question precisely, since actual or potential competition is necessarily restricted.
(see paras 175, 176)
10. Entering into a non-competition agreement is a recognition by the parties that they are at least potential competitors regarding some services. In that regard, where the relevant market has been liberalised, as in the telecommunications sector, the Commission is not required to analyse the structure of the market and the question whether entry to that market would correspond to a viable economic strategy for each of the parties, but it is required to examine whether there are insurmountable barriers to entry to the market that would rule out any potential competition.
Whilst the intention of an undertaking to enter a market may be of relevance in order to determine whether it can be considered to be a potential competitor in that market, nonetheless the essential factor on which such a description must be based is whether it has the ability to enter that market.
(see paras 180, 181, 186)
11. See the text of the decision.
(see paras 195, 196)
12. See the text of the decision.
(see paras 197-200)
13. As regards determination of the amount of fines imposed for breach of the competition rules, the unlimited jurisdiction of the EU judicature empowers it, in addition to carrying out a mere review of the lawfulness of the penalty, to substitute its own appraisal for the Commission’s and, consequently, to cancel, reduce or increase the fine or penalty payment imposed.
However, the exercise of unlimited jurisdiction does not amount to a review of the Court’s own motion, and proceedings before the EU judicature are inter partes. With the exception of pleas involving matters of public policy which the Courts are required to raise of their own motion, such as the failure to state reasons for a contested decision, it is for the applicant to raise pleas in law against that decision and to adduce evidence in support of those pleas That requirement, which is procedural in nature, does not conflict with the rule that, in the case of infringements of the competition rules, it is for the Commission to prove the infringements found by it and to adduce evidence capable of demonstrating to the requisite legal standard the existence of the circumstances constituting an infringement. What the applicant is required to do in the context of a legal challenge is to identify the impugned elements of the contested decision, to formulate grounds of challenge in that regard and to adduce evidence to demonstrate that its objections are well founded.
(see paras 205, 206, 272-274)
14. See the text of the decision.
(see paras 220-222)
15. As regards the determination of the amount of fines imposed for breach of the competition rules, point 13 of the Guidelines for the calculation of fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 pursues the objective of adopting as the starting point for the setting of the fine imposed on an undertaking an amount which reflects the economic significance of the infringement and the relative size of the undertaking’s contribution to it. Consequently, the concept of value of sales referred to in point 13 of the Guidelines extends to sales made in the market to which the infringement relates in the EEA, without there being any need to determine whether those sales were actually affected by the infringement, as the proportion of turnover deriving from the sale of products in respect of which the infringement was committed is best able to reflect the economic importance of the infringement.
Nonetheless, whilst it would, admittedly, be contrary to the goal pursued by that provision if the concept of value of sales to which it refers were understood as applying only to turnover achieved by the sales in respect of which it is established that they were actually affected by the impugned cartel, that concept cannot be extended to cover the undertaking’s sales which do not fall, directly or indirectly, within the scope of that cartel.
In that context, the Commission cannot be required, when faced with a restriction by subject-matter, to carry out on its own initiative an examination of potential competition for all the markets and services concerned by the scope of the infringement, lest it introduce, by determining the value of sales to be taken into account when calculating the fine, the obligation to examine potential competition when such an exercise is not required in the case of a restriction of competition by subject-matter.
However, requiring the Commission to determine sales in direct or indirect relation to the infringement does not mean imposing upon it, when determining the amount of the fine, an obligation by which it is not bound for the purposes of applying Article 101 TFEU in the case of an infringement which has an anti-competitive object. Such a solution merely consists in drawing the inferences from the fact that the value of sales must be directly or indirectly related to the infringement within the meaning of point 13 of the Guidelines and cannot cover sales which do not fall, directly or indirectly, within the scope of the infringement. It follows that, from the time when the Commission chooses to rely, in order to determine the amount of the fine, on the value of sales directly or indirectly related to the infringement, it must determine that value precisely.
(see paras 237-241)
16. Failure to review the whole of the contested decision of the Court’s own motion does not contravene the principle of effective judicial protection. Compliance with that principle does not require the General Court to undertake of its own motion a new and comprehensive investigation of the file.
The review of Commission decisions in competition matters provided for by the Treaties involves review by the EU judicature of both the law and the facts, and means that it has the power to assess the evidence, to annul the contested decision and to alter the amount of a fine. The review of legality provided for under Article 263 TFEU, supplemented by the unlimited jurisdiction in respect of the amount of the fine, provided for under Article 31 of Regulation No 1/2003, is not therefore contrary to the requirements of the principle of effective judicial protection in Article 47 of the Charter of Fundamental Rights of the European Union.
Therefore, in the absence of arguments and evidence put forward in support of a plea alleging breach of the principle of proportionality, the Court is not required to examine of its own motion, in the exercise of its unlimited jurisdiction, whether the Commission complied with that principle when setting the amount of the fine.
(see paras 245, 275-277)
17. See the text of the decision.
(see paras 280-286)