Case T‑111/08

MasterCard, Inc. and Others

v

European Commission

(Competition — Decision by an association of undertakings — Market for the provision of debit, charge and credit card transaction acquiring services — Decision finding an infringement of Article 81 EC and Article 53 of the EEA Agreement — Multilateral fallback interchange fees — Article 81(1) and (3) EC — Concept of ancillary restriction — No objective necessity — Restriction of competition by effect — Conditions for the grant of an individual exemption — Rights of the defence — Remedy — Periodic penalty payment — Statement of reasons — Proportionality)

Summary of the Judgment

1.      Procedure — Application initiating proceedings — Defence — Formal requirements — Identification of the subject-matter of the proceedings — Brief summary of the pleas in law on which the application is based — Documents annexed to the application or to the defence — Admissibility — Conditions

(Statute of the Court of Justice, Art. 21; Rules of Procedure of the General Court, Arts 44(1)(c), 46(1)(b), and 47(1))

2.      Competition — 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

(Art. 81(1) and (3) EC)

3.      Competition — Agreements, decisions and concerted practices — Prejudicial to competition — Criteria for assessment — Anti-competitive object — Sufficient finding

(Art. 81(1) EC)

4.      Competition — Agreements, decisions and concerted practices — Definition of the market — Purpose — Assessing the impact of the cartel on competition and trade between Member States — Consequences as regards the objections raised against the definition of the market

(Arts 81 EC and 82 EC)

5.      Competition — Agreements, decisions and concerted practices — Prohibition — Exemption — Conditions — Burden of proof

(Art. 81(3) EC; Council Regulation No 1/2003, Art. 2)

6.      Competition — Agreements, decisions and concerted practices — Prohibition — Exemption — Conditions — Improvement in the production or distribution of goods or promotion of technical or economic progress

(Art. 81(3) EC)

7.      Competition — Agreements, decisions and concerted practices — Prohibition — Exemption — Conditions — Complex evaluation of economic matters — Discretion of the Commission — Judicial review — Limits

(Art. 81(3) EC)

8.      Competition — Agreements, decisions and concerted practices — Decisions of associations of undertakings — Definition

(Art. 81(1) EC)

9.      Competition — Administrative procedure — Statement of objections — Necessary content

(Art. 81(1) EC, Council Regulation No 1/2003, Art. 27(1))

10.    Competition — Administrative procedure — Observance of the rights of the defence — Right of access to the file — Infringement — Denial of access to documents which might be useful for the defence of the undertaking

1.      Under Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure of the General Court, each application is required to state the subject-matter of the proceedings and a summary of the pleas in law on which the application is based. It is necessary, for an action to be admissible, that the basic matters of fact and law relied on be indicated, at least in summary form, coherently and intelligibly in the application itself. Whilst the body of the application may be supported and supplemented on specific points by references to extracts from documents annexed thereto, a general reference to other documents, even those annexed to the application, cannot make up for the absence of the essential arguments in law which, in accordance with the abovementioned provisions, must appear in the application.

Furthermore, it is not for the Courts of the European Union to seek and identify in the annexes the pleas and arguments on which they may consider the action to be based, since the annexes have a purely evidential and instrumental function.

That interpretation of Article 21 of the Statute of the Court of Justice and Article 44(1)(c) of the Rules of Procedure also applies to the conditions for admissibility of a reply, which according to Article 47(1) of the Rules of Procedure is intended to supplement the application.

Even if, having regard to the presumption of legality that exists with regard to acts adopted by the institutions of the European Union, the application and the defence each serve a different purpose and, accordingly, are subject to different requirements, the fact remains that the same approach must be taken with regard to the possibility of referring to documents annexed to the defence as that taken with regard to the application, since Article 46(1)(b) of the Rules of Procedure states that the defence must contain the arguments of law and fact relied on.

The annexes can be taken into consideration only in so far as they support or supplement the pleas or arguments expressly set out by the parties in the body of their pleadings and in so far as it is possible to determine precisely what are the matters they contain that support or supplement those pleas or arguments.

(see paras 68-71)

2.      The concept of an ancillary restriction in European Union competition law 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 twofold examination. It is necessary to establish, first, whether the restriction is objectively necessary for the implementation of the main operation and, secondly, whether it is proportionate to it.

As regards the examination of the objective necessity of a restriction, it must be observed that inasmuch as the existence of a rule of reason cannot be upheld, the requirement for objective necessity cannot be interpreted as implying a need to weigh the pro- and anti-competitive effects of an agreement. Such an analysis can take place only in the specific framework of Article 81(3) EC. Therefore, 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 to implement 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.

As regards the examination of the proportionate nature of the restriction in relation to implementation of the main operation, it is important 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 exceed what is necessary in order to implement the operation, it must be assessed separately under Article 81(3) EC.

Lastly, inasmuch as the assessment of the ancillary nature of a restriction 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 appraisal or misuse of powers.

(see paras 77-82)

3.      The anti-competitive object and effect of an agreement by an association of undertakings are not cumulative but alternative conditions for assessing whether such an agreement comes within the scope of the prohibition laid down in Article 81(1) EC. The alternative nature of that condition, indicated by the conjunction ‘or’, leads first to the need to consider the precise purpose of the agreement, in the economic context in which it is to be applied. Where, however, the analysis of the content of the agreement does not reveal a sufficient degree of harm to competition, the consequences of the agreement should then be considered and for it to be caught by the prohibition it is necessary to find that those factors are present which show that competition has in fact been prevented, restricted or distorted to an appreciable extent. It is not necessary to examine the effects of an agreement once its anti-competitive object has been established.

(see para. 139)

4.      The definition of the relevant market differs according to whether Article 81 EC or Article 82 EC is to be applied. For the purposes of Article 82 EC, the proper definition of the relevant market is a necessary precondition for any judgment as to allegedly anti-competitive behaviour, since, before an abuse of a dominant position is ascertained, it is necessary to establish the existence of a dominant position on a given market, which presupposes that such a market has already been defined. For the purposes of applying Article 81 EC, the reason for defining the relevant market is to determine whether the agreement, the decision by an association of undertakings or the concerted practice at issue is liable to affect trade between Member States and has as its object or effect the prevention, restriction or distortion of competition within the common market. That is why, for the purposes of Article 81(1) EC, the objections to the definition of the market adopted by the Commission cannot be seen in isolation from those concerning the impact on trade between Member States and the impairing of competition. The objection to the definition of the relevant market is of no consequence provided that the Commission has rightly concluded, on the basis of the documents referred to in the contested decision, that the agreement in question distorted competition and was liable to have an appreciable effect on trade between Member States.

(see para. 171)

5.      As stated in Article 2 of Regulation No 1/2003, the undertaking or association of undertakings claiming the benefit of Article 81(3) EC is to bear the burden of proving that the conditions of that paragraph are fulfilled. Consequently, a person who relies on Article 81(3) EC must demonstrate that those conditions are satisfied, by means of convincing arguments and evidence.

The Commission, for its part, must adequately examine those arguments and that evidence, that is to say, it must determine whether they demonstrate that the conditions for the application of Article 81(3) EC are satisfied. In certain cases, those arguments and that evidence may be of such a kind as to require the Commission to provide an explanation or justification, failing which it is permissible to conclude that the burden of proof borne by the person who relies on Article 81(3) EC has been discharged. In such a case the Commission must refute those arguments and that evidence.

(see paras 196, 197)

6.      Any decision by an association of undertakings which restricts competition, whether by its effects or by its object, may in principle benefit from an exemption under Article 81(3) EC.

The application of that provision is subject to certain conditions, satisfaction of which is both necessary and sufficient. First, the decision or the category of decisions by associations of undertakings must contribute to improving the production or distribution of the goods in question, or to promoting technical or economic progress; secondly, consumers must be allowed a fair share of the resulting benefit; thirdly, it must not impose on the participating undertakings any restrictions which are not indispensable; and, fourthly, it must not afford them the possibility of eliminating competition in respect of a substantial part of the products in question.

Under the first condition laid down under Article 81(3) EC, agreements that may be exempted must ‘[contribute] to improving the production or distribution of goods or to promoting technical or economic progress’. The improvement cannot be identified with all the advantages which the parties obtain from the agreement in their production or distribution activities. The improvement must in particular display appreciable objective advantages of such a character as to compensate for the disadvantages which they cause in the field of competition.

The appreciable objective advantages to which the first condition of Article 81(3) EC relates may arise not only for the relevant market but also for every other market on which the agreement in question might have beneficial effects, and even, in a more general sense, for any service the quality or efficiency of which might be improved by the existence of that agreement.

(see paras 199, 200, 206, 228)

7.      The Court dealing with an application for annulment of a decision applying Article 81(3) EC carries out, in so far as it is faced with complex economic assessments, a review confined, as regards the merits, to verifying whether the facts have been accurately stated, whether there has been any manifest error of appraisal and whether the legal consequences deduced from those facts were accurate.

It is nevertheless for the Court to establish not only whether the evidence relied on is factually accurate, reliable and consistent, but also whether it contains all the information which must be taken into account for the purpose of assessing a complex situation and whether it is capable of substantiating the conclusions drawn from it. On the other hand, it is not for the Court to substitute its own economic assessment for that of the institution which adopted the decision the legality of which it is requested to review.

(see paras 201, 202)

8.      Article 81 EC applies to associations in so far as their own activities or those of the undertakings belonging to them tend to produce the results to which that provision refers.

The definitions of ‘agreement’, ‘decisions by associations of undertakings’ and ‘concerted practice’ are intended, from a subjective point of view, to catch forms of collusion having the same nature which are distinguishable from each other only by their intensity and the forms in which they manifest themselves.

With regard, specifically, to the definition of ‘decisions by associations of undertakings’, this seeks to prevent undertakings from being able to evade the rules on competition on account simply of the form in which they coordinate their conduct on the market. To ensure that this principle is effective, Article 81(1) EC covers not only direct methods of coordinating conduct between undertakings (agreements and concerted practices) but also institutionalised forms of cooperation, that is to say, situations in which economic operators act through a collective structure or a common body.

The existence of a commonality of interests or a common interest is a relevant factor for the purposes of assessing whether there is a decision by an association of undertakings within the meaning of Article 81(1) EC.

(see paras 241-243, 251)

9.      Proper observance of the rights of the defence requires that the undertaking concerned be afforded the opportunity, from the stage of the administrative procedure, to make known its views on the truth and relevance of the facts and circumstances alleged and on the documents relied on by the Commission in support of its allegations of an infringement of the Treaty.

Article 27(1) of Regulation No 1/2003 reflects that principle in so far as it provides that the parties are to be sent a statement of objections which must clearly set out all the essential matters on which the Commission relies at that stage of the procedure, to enable the parties concerned properly to identify the conduct complained of by the Commission and to defend themselves properly before the Commission adopts a final decision. That obligation is satisfied if the final decision does not allege that the persons concerned have committed infringements other than those referred to in the statement of objections and takes into consideration only facts on which the persons concerned have had the opportunity of stating their views.

However, that may be done summarily and the final decision is not necessarily required to be a replica of the statement of objections, since the statement is a preparatory document containing assessments of fact and of law which are purely provisional in nature. Thus, it is permissible for the Commission to supplement the statement of objections in the light of the response of the parties, whose arguments show that they have actually been able to exercise their rights of defence. The Commission may also, in the light of the administrative procedure, revise or supplement its arguments of fact or law in support of its objections.

Thus, communication to the parties concerned of further objections is necessary only if the result of the investigations leads the Commission to take new facts into account against the undertakings or to alter materially the evidence for the contested infringements.

(see paras 265-268)

10.    The rights of the defence are infringed where it is possible that the outcome of the administrative procedure conducted by the Commission might have been different as a result of an error committed by it. An applicant undertaking establishes that there has been such an infringement where it adequately demonstrates, not that the Commission’s decision would have been different in content, but rather that it would have been better able to ensure its defence had there been no error, for example because it would have been able to use for its defence documents to which it was denied access during the administrative procedure.

(see para. 269)