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First judgments annulling ECB banking supervision decisions

T-733/16 –
T-745/16, T-751/16,
T-757/16, T-758/16 and

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingLa Banque postale v European Central BankGeneral CourtSecond Chamber
- Extended Composition
M. Prek/Economic and onetary policy
- European Central Bank
KeywordsEconomic and monetary policy - Prudential supervision of credit institutions - Article 4(1)(d) and A(3) of Regulation (EU) No 1024/2013 - Calculation of the leverage ratio - Decisions of the ECB refusing to allow the applicant to exclude exposure which satisfies a number of conditions from the calculation of the leverage ratio - Article 429(14) of Regulation (EU) No 575/2013 - Discretionary power of the ECB - Error of law - Manifest error of assessment.
Significant pointsIn order to bring more clarity in the levels of own funds of the different credit institutions after the 2008 financial crisis, the EU legislator introduced a new instrument into Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms (CRR): the leverage ratio. Its originality lays in the fact that it is not calculated on the basis of the level of investment risk of the credit institutions (exposures) and that it seeks to take into account all their investments in its calculation.

Nonetheless, the competent authorities, including the European Central Bank may authorise credit institutions to exclude exposure which satisfies a number of conditions from the calculation of the leverage ratio, pursuant to a provision introduced by a delegated act of the EU Commission into CRR.

In order to enjoy the exemption, the exposure must: “(a) concern a public sector entity; (b) be dealt with in accordance with the prudential requirements relating to exposure on public sector entities, and (c) be the result of deposits which the institution is legally bound to transfer to the public sector entity referred to in point (a) in order to finance investments in the public interest.”

Six French banks, subject to its direct supervision as significant credit institutions, were not permitted by the ECB to exclude from the calculation of the leverage ratio certain of their exposure connected to savings accounts, such as livret A (savings account A), opened by them and transferred to the Caisse des dépôts et consignations (CDC), a French public investment group.

The ECB considered that although the conditions laid down in the regulation were satisfied, it had the discretionary power to authorise or refuse the exclusion requested. The ECB explained its refusal by the fact that the mechanism for transfer from the CDC is imperfect and raises prudential concerns.

For the first time, the General Court has annulled decisions of the ECB acting as the prudential authority of banks.

The General Court first acknowledged that the ECB did indeed enjoy a discretionary power within the ambit of Article 429(14) of CRR. Provided that three conditions are met, the competent authorities have the possibility of granting a derogation or not.

As a matter of law, a reason for this discretionary power in Article 429(14) is to be able to make choices having regard to the particular features of each case, between both “the objective of following the logic of the leverage ratio which means taking into account the extent of the total exposure of a credit institution, without risk weighting” and “the objective of treating certain exposure with a particularly low risk profile and which does not arise from an investment choice of the credit institution concerned as irrelevant to the calculation of the leverage ratio and able to be excluded from that calculation”.

Next, the General Court ruled that the elements taken into consideration by the ECB were not sufficient to support its conclusions. In this respect, the General Court pointed out that the ECB based its refusal on considerations inherent to the exposure to which the derogation provided for relates, thus depriving that derogation of useful effect. The ECB gave three reasons for its refusal.

First, it considered that the exposure is regarded as an asset in the balance sheet of the institution concerned. For the General Court, the ECB forgot that the exposure related to the derogation is intended by nature to stand as an asset in the balance sheet.

Second, the ECB submitted that those institutions supported the operational risk connected with regulated savings, whereas it is logical that the risk was endured by the credit institution.

Third, the ECB stated that a default of payment by the French State could have as consequence that the sums transferred to the CDC as regulated savings were not returned to the applicants, forcing them in turn to sell their assets urgently. The General Court rejected this argument on the ground that the ECB did not analyze the likelihood of this kind of default of payment.

As a consequence, the General Court considered that the justifications of the ECB were not enough to demonstrate the existence of justified prudential reasons to refuse the exclusion of exposures, and consequently that ECB erred in law in the exercise of its discretionary power.

Finally, the ECB argued that the period of adjustment between the adjustment of the applicant and of the CDC could facilitate the emergence of an excessive leverage and the risk associated which led to an emergency sale of assets. The General Court, however, concluded that, as the ECB did not consider before the period of adjustment as a liquidity risk, and, regarding the lack of detailed analysis of the regulation savings’ characteristics, this argument is manifestly incorrect.
Noteworthy1. In fact, in these cases the Court considered that, even if the ECB has discretionary power, it must justify its decision to grant or not the exemption in light of the peculiarities of the case and that justification must be well-founded.

Therefore, the ECB does not enjoy absolute discretionary power. It has the obligation to properly reason its decision, notably by assessing carefully the circumstances of the case submitted to it (in concreto analysis), in order not to disregard the objectives pursued by a disposition and not to deprive it of its usefulness.

2. These judgments are noteworthy to the extent that for the first time the ECB, acting as the prudential authority of the most important banks within the Eurozone, has had one of its decisions quashed. Up until now, the General Court has shown much deference towards the ECB in this role. This judgment demonstrates that the General Court is prepared to scrutinise ECB decisions more closely.

3. These judgments constitute also a reminder to the ECB that it is not a legislator but a prudential authority which has to apply EU regulations and directives properly. The ECB may not undermine the usefulness of a provision allowing the grant of a derogation, especially when such a provision is recent.

4. These judgments are to be approved, therefore, in respect of those principles. However, it should be added that the very derogation at hand, introduced in the CRR by a delegated act of the EU Commission, raises serious concerns of legality, external and internal.

First, the introduction of this derogation has not been identified at all in the preparatory works leading to the adoption of the delegated act (report of the EBA, draft of delegated act). Nor has this derogation been explained or justified in the preamble of the delegated act, in contrast to the other provisions of the delegated act. Such puzzling silence is problematic, especially since the legal basis for the adoption of the delegated act, Article 456 (1)(j) , CRR expressly requested the statement of failures of the leverage ratio by national supervisory authorities and indirectly by the EBA. Thus, the process having led to the introduction of Article 429(14) into the CRR and the reasoning of such introduction do not comply with EU law requirements.

Second, the derogation goes beyond the powers granted to the EU Commission to adopt delegated acts to the extent that it contradicts the very ratio legis of the setting up of a leverage ratio. As a matter of law, such a derogation is more than an adaptation of the leverage ratio (see paragraph 124 of the preamble of CRR). In addition, the legal basis for the adoption of the delegated acts requires the statement of any shortcomings detected on the basis of reporting by institutions. Is an alleged inappropriateness in the sense of an excessive burden of the leverage ratio a shortcoming?

Thus, in practice, the reluctance of the ECB to apply a provision which is likely illegal was understandable.

5. However, to justify its approach, the ECB should have raised, at least as a subsidiary argument, the illegality of Article 429(14), as it was authorized to do (see Judgment of the Court of justice of the EU of 2003, Commission v ECB, C-11/00). It chose not to do so for reasons which are unknown.

6. Finally, these six judgments shed light on the fact that, even if delegated acts and implementing acts belong both to the so-called category of “level II measures”, because they are adopted by the EU Commission and not by the co-legislators, their legal scope and effects are different. In contrast to implementing acts, delegated acts may complete or even amend level I provisions. Thus, once adopted, they are more comparable in their legal force to level I provisions than to implementing acts.

Facebook Fan page administrators : mind the personal data processing rules

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingUnabhängiges Landeszentrum für Datenschutz Schleswig-Holstein contre Wirtschaftsakademie Schleswig-Holstein GmbHCourt of JusticeGrand ChamberA.TizzanoY.BotApproximation of legislation
KeywordsReference for a preliminary ruling — Directive 95/46/EC — Personal data — Protection of natural persons with respect to the processing of that data — Order to deactivate a Facebook page (fan page) enabling the collection and processing of certain data of visitors to that page — Article 2(d) — Controller responsible for the processing of personal data — Article 4 — Applicable national law — Article 28 — National supervisory authorities — Powers of intervention of those authorities
Significant pointsIn this preliminary ruling, reference was made by Bundesverwaltungsgericht (Federal Administrative Court, Germany) in a case concerning a company operating in the field of education, the Wirtschaftsakademie, which offers educational services, inter alia, by means of a fan page hosted on Facebook.

A "fan page" can be created by any user of the social network Facebook subject to acceptance of the general terms and conditions of use. The creation of such a page not only makes it possible to edit content, collect personal data and interact with users (as is not possible with a website), but also - and automatically - to benefit from the results of an audience analysis tool, "Facebook insights", developed by Facebook.

If for websites the creation of audience statistics requires an action from the site editor (installation of an audience analysis tool), in the case of a Facebook "fan page", the administrator benefits from this function without any intervention on his part. Statistics are thus generated by the social network independently of the fan page administrator's request. This difference with the situation of the publisher of a website could suggest that only Facebook is the controller for the processing carried out by "Facebook insights", the administrator of the "fan page" not directly carrying out any processing and having no control over the processing carried out by the social network.

By decision of 3 November 2011, the Unabhängiges Landeszentrum für Datenschutz (hereafter “ULD”) Schleswig-Holstein (Independent Data Protection Centre for the Land of Schleswig-Holstein, Germany) ordered Wirtschaftsakademie to de-activate its fan page. The ULD made this order in its capacity as supervisory authority within the meaning of Directive 95/46 on data protection, with the task of supervising the application in the Land of Schleswig-Holstein of the provisions adopted by Germany pursuant to that directive.

The ECJ was called upon to rule upon several points of law which conditioned the application of the Member States' national laws on the protection of personal data, namely the concept of controller and the question of determining the applicable law and competent authority in a situation where the social network has several establishments on the territory of the European Union.

1. Recalling the objective of Article 2(d) of the Directive 95/46 to ensure effective and complete protection of the persons concerned, through a broad definition of the concept of ‘controller’ (following thus the Google Spain reasoning), the Court found that an administrator, such as Wirtschaftsakademie, must be regarded as a controller jointly responsible, within the EU, with Facebook Ireland for the processing of data. Indeed, the administrator of a fan page hosted on Facebook, by creating such a page, gives Facebook the opportunity to place cookies on the computer or other device of a person visiting its fan page, whether or not that person has a Facebook account (paragraph 35).

The administrator of a fan page hosted on Facebook defines the personal data to be processed by Facebook for the purposes of drawing up statistics. Consequently, such an administrator takes part in the determination of the purposes and means of processing the personal data of the visitors to its fan page (paragraphs 36 and 39).

The Court also emphasises that in case of joint data processing, it is not necessary that each of the controllers has access to the personal data concerned (paragraph 38).

Moreover, fan pages hosted on Facebook can also be visited by persons who are not Facebook users and so do not have a user account on that social network. In that case, the fan page administrator’s responsibility for the processing of the personal data of those persons appears to be even greater, as the mere consultation of the home page by visitors automatically starts the processing of their personal data (paragraph 41).

However, the existence of joint responsibility does not necessarily imply equal responsibility on the various operators involved in the processing of personal data. On the contrary, those operators may be involved at different stages of that processing of personal data and to different degrees, so that the level of responsibility of each of them must be assessed with regard to all relevant circumstances of the particular case (paragraph 43).

2. The Court found secondly that the ULD is competent to ensure compliance not only of Wirtschaftsakademie with the rules on the protection of personal data in Germany and can use all the powers conferred by it under national law but also the compliance of Facebook Germany, as a secondary establishment of Facebook Ireland which is responsible for the data protection even though Facebook Germany is, only responsible for promoting and selling advertising spaces. Given that a social network such as Facebook generates a substantial part of its income from adverts posted on the web pages set up and accessed by users and given that Facebook’s establishment in Germany is intended to ensure the promotion and sale in Germany of advertising space that makes Facebook’s services profitable, the activities of that establishment must be regarded as inextricably linked to the processing of personal data at issue in the main proceedings, for which Facebook Inc. is jointly responsible with Facebook Ireland. Consequently, such treatment must be regarded as being carried out in the context of the activities of an establishment of the controller within the meaning of Article 4(1)(a) of the Directive 95/46 (paragraph 60), knowing that that provision does not require that such processing be carried out ‘by’ the establishment concerned itself, but only that it be carried out ‘in the context of the activities of’ the establishment (paragraph 57).

3. The Court found, thirdly, that in the case of a data controller located in another Member State, ULD is, independently of the authority of that Member State, competent to (i) assess whether the data controller has acted lawfully in Germany and (ii) exercise its intervention powers.
NoteworthyThe main contribution of this judgment lies in the broad interpretation given to the notion of ‘controller’. It is, thus, not necessary to technically process personal data. The simple parameterization of the data to be processed is sufficient to qualify the person having carried out this action as "responsible for the processing of personal data". In our view, this definition should also be applicable under the GDPR, which uses the same definition of the notion of ‘controller’ as the one employed in Directive 95/46. It should be stressed that, in the presence of two controllers, Article 26 of the GDPR will have to be applied and that the controllers will have to comply with the formalities set out therein, in particular by jointly and transparently defining the responsibilities of each party. An infringement of Article 26 of the GDPR may lead the authority in charge of the protection of personal data to impose significant penalties (e.g. among others: injunction to comply with the RGPD fine up to an amount of EUR 10 million or 2% of the turnover of the last financial year, injunction to cease temporally or definitively the personal data processing).

The interpretation given by the ECJ to the notion of personal data controller is, in our opinion, very broad. Indeed, it will increase the administrative burden and the liability of the administrator of a fan page on Facebook and on other administrators of similar pages on other social media. And this when these administrators do not have any control over the personal data processing by the social media provider and do not have the possibility to negotiate and discuss with the social media provider, given that the general conditions of use of such pages are not negotiable.

On the other hand, it appears that, on the basis of a preliminary analysis, the two last points developed by the Court are not relevant anymore in the context of the introduction of the new GDPR, as it created a new concept, the lead supervisory authority competent to rule on matters regarding cross-border processing carried out by controllers (Article 56 of the Regulation 2016/679 GDPR).

Financial advice concerning an investment linked to a capital life insurance policy is an activity of insurance mediation falling within the ambit of Directive 2002/92/EC on insurance mediation and is not subject to MiFID rules relating to investment advice

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingLänsförsäkringar Sak Försäkringsaktiebolag
Dödsboet efter Ingvar Mattsson
Court of JusticeFourth ChamberC. VajdaM. Campos Sánchez-BordonaEU Banking & Financial Law - insurance mediation
KeywordsPreliminary ruling — Directive 2002/92/EC — Scope — Concept of insurance mediation — Directive 2004/39/EC — Scope — Concept of ‘investment advice’ — Advice given in insurance mediation concerning the placement of capital in the context of capital life assurance — Classification of the activity of an insurance agent in the absence of his intention to conclude a genuine insurance contract
Significant points1. The concept of “insurance mediation” within the meaning of Directive 2002/92/EC of the European Parliament and of the Council of 9 December 2002 on insurance mediation includes preparatory work for the conclusion of an insurance contract, even in the absence of any intention on the part of the insurance intermediary concerned to conclude a genuine insurance contract.

As a matter of law, firstly, the concept of “insurance mediation” is defined therein by reference only to the steps objectively taken by the insurance intermediary (see the terms “activity”, “introducing”, “proposing”, “carrying out” and “assisting”). No specific intention on the part of that intermediary need accompany those activities.

Next, as regards the context of that provision, Article 4(4) of Directive 2002/92 requires Member States to take all necessary measures to protect customers against the inability of the insurance intermediary to transfer the premium to the insurance undertaking. In the absence of any stipulation to the contrary, it must be held that that provision is intended to protect customers against any failure of the intermediary to carry out such a transfer, whatever the reason. Consequently, that protection must also cover the failure to transfer the premium to the insurance undertaking where an employee of the insurance intermediary company has appropriated the premium during the work preparatory to the conclusion of an insurance contract.

Finally, that directive is intended in particular to enhance consumer protection in the area of insurance mediation. To this end, any person or any institution distributing insurance products must be covered by that directive. To make the inclusion of an activity within the scope of this directive subject to the subjective intention of the insurance intermediary who pursues it would run counter to the principle of legal certainty, to the detriment of the intermediary’s clients. In addition, such a legal position would mean that the insurance intermediary could invoke his own fraudulent behaviour to escape his liability with regard to his customers by virtue of Directive 2002/92.

2. In order to fall within the concept of ‘insurance contract’ referred to in Article 2(3) of Directive 2002/92, a capital life assurance contract, such as that at issue in the main proceedings, must stipulate the payment of a premium by the insured party and, in return for that payment, the supply of a service by the insurer in the event of the death of the insured party or the occurrence of another event specified in that contract. In the present case, it appears, subject to verification by the referring court, that the contract at issue in the main proceedings constitutes an insurance contract within the meaning of that provision.

3. Financial advice, such as one concerning the investment in the financial instrument linked to a capital life insurance, falls within the ambit of Directive 2002/92/EC and is not subject to MiFID rules (see paragraph 4 below).

First, the activities of insurance mediation listed in Article 2(3) of Directive 2002/92 are described in broad terms. In particular, they consist not only in the introduction and proposing of insurance contracts but also in carrying out other work preparatory to the conclusion thereof, without the type of preparatory work referred to being limited in any way.

Second, a placement in a financial instrument linked to a capital life insurance forms an integral part of the insurance contract, so that, the investment advice relating to that placement constitutes work preparatory to the conclusion of that insurance contract.

Such an interpretation is, moreover, consistent with the objective pursued by Directive 2002/92 seeking the enhancement of consumer protection in the field of insurance mediation. It follows therefrom that the advice in question is subject, in particular, to the requirements set out in Article 12(2) and (3) of that directive, under which, when the insurance intermediary informs the customer that he gives his advice on the basis of a fair analysis, he is obliged, on the one hand, to give that advice on the basis of an analysis of a sufficiently large number of insurance contracts available on the market, to enable him to make a recommendation regarding which insurance contract would be adequate to meet the customer’s needs and, on the other, he must at least specify, prior to the conclusion of any specific contract, the demands and the needs of that customer as well as the underlying reasons for any advice given to the customer on a given insurance product, and those details must be modulated according to the complexity of the contract being proposed.

4. Even though such financial advice could in itself be capable of falling within the concept of “investment advice” within the meaning of MiFID rules, Article 2(c) of Directive 2004/39 excludes from its scope persons providing an investment service where that service is provided incidentally in the course of a professional activity and that activity is regulated by legal or regulatory provisions or a code of ethics governing the profession which do not exclude the provision of that service, such as the professional activity of insurance intermediation.

MiFID rules indeed do not apply to investment services or activities which are offered in the context of another regulated activity.

In addition, Directive 2014/65, which repeals and recasts Directive 2004/39, as is apparent from recital 87 thereof, has introduced into Directive 2002/92 new requirements enhancing investor protection in relation to insurance-based investment products in order to ensure in EU law regulating the activities of insurance intermediaries and insurance undertakings a consistent regulatory approach concerning the distribution of different financial products.
Noteworthy1. Once again, the CJEU has opted for an objective and broad definition of the scope of the activities covered by banking, financial and insurance EU regulations and directives in accordance with the wording of the provisions concerned, the general scheme of the directive in which they are enshrined and the pursued objectives. On the last point, the aim of protecting the consumers fully justifies that activities of insurance intermediation are defined on a purely objective basis, no matter the intent of the intermediary.

2. Regarding financial advice on the investment to which an insurance life agreement was linked, the CJEU gives prevalence to the Insurance Intermediary Directive over MiFID legislation on the basis of the principles of specialis generalibus derogant (according to which special, adapted rules should appy), the so-called effet utile (giving practical effect to the law) and of non-duplication (according to which an economic operator may not be subject to two separate sets of rules pursuing similar objectives). In the case at hand, the status of an insurance intermediary is subject to enough rules able to guarantee its competence and fairness that there is no need to impose additional, comparable duties stemming from the MiFID rules.

As a result, this judgment of the CJEU, which in addition confirms the well-foundedness of the interpretation of several provisions defining the scope of directives and regulations of EU banking and Financial law (Larcier 2009 and 2016) proposed in my books on EU banking and financial law, has to be approved.

How to assess whether a practice of differential pricing by a dominant undertaking is capable of distorting competition on a downstream market and amounts to an abuse of dominance: some further guidance from the CJEU but not the end of the road of the effects-based approach under Article 102 TFEU

PartiesJurisdictionFormationJudge RapporteurAdvocate GeneralSubject-matter
Preliminary rulingMEO – Serviços de Comunicações e Multimédia / Autoridade da ConcorrênciaCourt of Justice Second ChamberA. PrechalN. WahlCompetition law – Abuse of dominance – Discriminatory prices
KeywordsReference for a preliminary ruling — Competition — Abuse of dominant position — Article 102, second paragraph, point (c), TFEU — Concept of ‘competitive disadvantage’ — Discriminatory prices on a downstream market — Cooperative for the management of rights relating to copyright — Royalty payable by domestic entities which provide a paid television signal transmission service and television content
Significant pointsFacts

This preliminary ruling arose following a complaint lodged with the Portuguese Competition Authority by Serviços de Comunicações e Multimédia SA (“MEO”) alleging that GDA, a non-profit-making collecting cooperative which manages the rights of artists and performers, had abused its dominant position on the market. The alleged abuse concerned, notably, discriminating in the amount of royalty which GDA charged MEO for its television broadcasting services compared to another customer.

Legal issue

The CJ was asked whether or not the concept of discriminatory pricing placing a trading partner at a ‘competitive disadvantage’, for the purposes of subparagraph (c) of the second paragraph of Article 102 TFEU, must be interpreted as requiring an analysis of the specific effects of the differentiated prices on the competitive situation of the undertaking affected and, as the case may be, whether or not the seriousness of those effects should be taken into account.

Court’s position

- First, the Court stated the mere presence of an immediate disadvantage affecting operators who were charged more, compared with the tariffs applied to their competitors for an equivalent service, does not mean that competition is distorted or is capable of being distorted within the meaning of Article 102 TFEU (paragraph 26). It is only if the behavior of the undertaking in a dominant position tends to lead to a distortion of competition between those business partners, having regard to all the circumstances of the case, that the discrimination between partners which are in a competitive relationship may be regarded as abusive (paragraph 27).

- Secondly, the CJ noted that fixing an appreciability (de minimis) threshold for the purpose of determining whether or not there is an abuse of a dominant position is however not justified (paragraph 29).

- Thirdly, the Court judged that, in order for the differential pricing to be capable of creating a competitive disadvantage, the price discrimination must affect or be capable of affecting the interests of the operator which was charged higher tariffs compared with its competitors (paragraph 30).

This potential or actual effect must be analysed by looking at all the relevant circumstances of the case (such as the negotiating power of the customers, the duration and amount of the discrimination and whether there is a strategy to exclude as-efficient trading partners from the downstream market) to decide whether or not that behaviour has an effect on the costs, profits or any other relevant interests of one or more of the trading partners. In this case, the CJ noted that MEO had a certain amount of negotiating power vis-à-vis GDA, that the prices offered had been set following arbitration proceedings, that the prices represented a “relatively low” percentage of MEO’s costs and that GDA had no interest in trying to exclude MEO from the downstream market.
NoteworthyArt 102, paragraph 2 c), TFEU states that discriminatory pricing by a dominant undertaking constitutes an abuse of dominance. Its wording implies that as soon as a dominant company applies “dissimilar conditions to equivalent transactions with other trading parties”, there is an abuse as that conduct places the trading party(ies) at a competitive disadvantage.

However, previous case law has in effect extended the wording of that provision in Article 102 by establishing that differential pricing does not automatically constitute an abuse: it must be shown also that trading parties are in fact placed at a competitive disadvantage (C-95/04 British Airways and T-301/04 Clearstream).

This judgment repeats this principle but in our opinion tries to push the analysis of a “competitive disadvantage” further by imposing a comprehensive effects-based analysis looking at all the relevant circumstances of the practice in order to determine whether there is substantial disadvantage created. This approach follows the CJ’s recent case law in abuse of dominance cases where it has strived to move away from “per se” abuses and placed the focus on the potential or actual effects that the conduct may have, as recently exemplified by the Intel judgment last September (C-413/14).

In this case, which concerned the prices charged by a supplier to downstream service providers, the Court stated that an effect on the competitive situation of one or more undertakings (a so-called competitive disadvantage) must be proven by looking at the effect on costs, profits or any other relevant interest of the trading partner. This is of course confusing since charging different prices to customers is bound by nature to impact the costs of undertakings placing the undertaking(s) paying higher prices against those paying lower prices thereby putting them in a competitive disadvantage. However, what the CJ tried to allude to (in less than clear reasoning) is the need, in order for differential pricing to be abusive, for a significant effect on a trading partner’s competitive position. This statement was made by the CJ despite recalling its previous case law according to which there is no quantitative threshold for determining what amounts to a (potential or actual) anticompetitive effect. In applying the principles to the case at hand, it observed that the costs involved for the complainant were not significant in proportion to its total costs, thus implying that the differential pricing involved did not amount to an abuse.

In addition, the CJ stated that establishing the anticompetitive effect involves looking at all of the relevant circumstances of the case. This is a principle taken from the recent Intel judgment, which concerned rebates. Although in line with the CJ’s previous case law and the practice of competition authorities focusing more and more on the effects of unilateral conduct, this creates very vague guidance on assessing when differential pricing is in fact discriminatory and therefore abusive. The judgment will trigger problems, therefore, for dominant undertakings offering different pricing to its customers to know what price differences may be considered as significant such that they cause a competitive disadvantage within the meaning of Article 102, second paragraph c), and are thereby abusive.

The CJ did correctly reaffirm that the restriction of competition only needs to be potential in order to amount to an abuse and no actual anticompetitive effect needs to be proven.