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European Court of Justice, competition infringements

By Cătălina Burcă-Andonie

In response to the Hungarian Supreme Court which advanced a request for a preliminary ruling, on 2 April 2020, the European Court of Justice delivered its judgment in case C ‑ 228/18 (Gazdasági Versenyhivatal v Budapest Bank Nyrt. Ea).

The main proceedings concern an old 1996 agreement, which remained in force until 30 July 2008, concluded by the main Hungarian banks. The agreement set up a uniform Multilateral Interchange Fee (MIF) applicable to both Visa Europe Ltd and MasterCard Europe SA’s credit card systems (the MIF Agreement). MIFs have come to be used to refer to the fees charged by the card holder’s bank (the issuing bank) to the merchant’s bank (the acquiring bank) for each card transaction.

Couple years later, the investigation pursued by the Hungarian Competition Authority concluded that the MIF Agreement constituted both a restriction of competition by object and a restriction of competition by effect. Restrictions of competition by object are those that by their very nature have the potential of restricting competition. If an agreement is not restrictive of competition by object it must be examined whether it has restrictive effects on competition. Account must be taken of both actual and potential effects. For an agreement to be restrictive by effect it must affect actual or potential competition to such an extent that on the relevant market negative effects on prices, output, innovation or the variety or quality of goods and services can be expected with a reasonable degree of probability.

On those grounds, the Hungarian Competition Authority issued fines of around 5.2 million Euros on the banks as well as on Visa and Mastercard. In the context of the decision being appealed, the Hungarian Supreme Court referred several questions to the CJEU.

As regards the assessment related to restrictions of competition by object, the decision by the CJEU mentions the following points:

  • The by object assessment does not prevent the competition authorities from assessing effects, even though it relieves the competition authorities from doing so. The same conduct of an undertaking can be held to infringe Article 101(1) TFEU for having both the object and the effect of restricting competition on the internal market.
  • The concept of restriction of competition by object must be interpreted restrictively and can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of limitation to competition in order be qualified as such. In essence, the by object assessment of an agreement/cooperation between one or multiple parties requires to consider several factors: its terms, its objectives and the economic and legal context of which it forms a part (especially with regard to the nature of the services at issue and the real conditions of the functioning and structure of the markets).
  • If the competition authority fails to prove that the agreement/cooperation has an anti-competitive object, the necessary consequence would be to assess its effects (if they are anticompetitive or not). Hence, the real context in which the competition would operate, if that agreement/cooperation had not existed, is fundamental. By doing this, the impact of the latter on the competitive parameters, such as price, quantity and quality of the products or services can be better assessed.
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