The Court of Justice of the EU Gives a Preliminary Ruling Clarifying and Reinstating Certain Aspects of the “by Object” Assessment

At the beginning of April 2020, the Court of Justice of the EU (CJEU) handed down a preliminary ruling in Case C-228/18, Gazdasági Versenyhivatal v Budapest Bank Nyrt. and others and thus clarifying and reinstating certain aspects of the “by object” assessment. As a reminder, it is a well-established EU competition law principle that if a restriction is considered to be anticompetitive by object, the competition authorities are not required to examine its effects. For example, price fixing, input restrictions, bid-rigging, collective agreements to boycott, resale price maintenance are considered to have negative effects, in particular, on the price, quantity, or quality of goods or services, that they can be regarded as falling within Article 101(1) of the Treaty on Functioning of the EU (TFEU)  without the need to demonstrate any actual or likely anti-competitive effects on the market. The case in question relates to the Hungarian Competition Authority’s decision to fine Visa, MasterCard and seven banks for colluding when setting payment-card fees paid by an acquiring bank to an issuing bank when a credit card transaction takes place (i.e. multilateral interchange fee (MIF)). The Hungarian Competition Authority concluded that the agreement constituted a restriction of competition by object, as well as a restriction of competition by effect. The decision was appealed and, ultimately, the Hungarian Supreme Court referred several questions to the CJEU. The decision by the CJEU notes the following in respect of the assessment related to restrictions of competition by object:

• While the “by object” assessment relieves the competition authorities from assessing effects, it does not preclude the competition authorities to do 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 in 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 harm to competition to qualify as such. As such, the “by object” assessment of an agreement/cooperation requires to consider its terms, its objectives and the economic and legal context of which it forms a part (including the nature of the services at issue and the real conditions of the functioning and structure of the markets).
• In the event that the agreement/cooperation cannot be considered to have an anti-competitive object, it would then be necessary to assess whether its effects are anticompetitive. To that end, it is necessary to examine the competition in the real context in which it would operate if that agreement/cooperation had not existed in order to assess the impact of the latter on the competitive parameters, such as price, quantity and quality of the products or services.

While the above principles set out by the CJEU are not necessarily new, they provide useful guidance to the competent authorities and courts. It is now for the Hungarian Supreme Court to consider whether the purpose of the MIF agreement was to restrict competition based on the guidance provided by the CJEU.