20 European Competition Law Review
B. The burden and standard of proof
Presumptions in EU
competition law
David Bailey
King’s College, London
Abstract
The purpose of this article is to analyse the nature and
effect of presumptions in EU competition law. It focuses
in particular on the possible roles of conclusive and
rebuttable presumptions under arts 101 and 102. This
article argues that should be no conclusive substantive
or evidential presumptions in EU competition law. This
article also discusses the reasons for creating
presumptions and suggests six principles that should
inform the application and use of presumptions in EU
competition law.
A. Introduction
Presumptions operate in virtually every legal discipline.
Commercial parties are presumed to intend that their
agreements should result in legal obligations which can
be enforced in the courts. There is a presumption of
negligence in English tort cases where the “facts speak
for themselves” (also commonly referred to as res ipsa
loquitur). These and other presumptions describe a
common sense approach derived from experience to the
assessment of the effect of evidence in certain
circumstances. The Courts of the European Union have
clearly come to recognise the utility, in EU competition
law contained in arts 101 and 102 of the Treaty on the
Functioning of the European Union (“TFEU”), of various
presumptions. For instance, a dominant firm charging
prices below average variable costs is presumed to be
guilty of an abuse of its dominant position.1
The purpose of this article is to analyse the nature and
effect of presumptions in EU competition law. Part B
deals with the burden and standard of proof under arts
101 and 102 TFEU. Part C of this article contains a
description of different presumptions: evidential,
substantive and procedural. It focuses in particular on the
possible roles of conclusive and rebuttable presumptions
under arts 101 and 102. This article argues that should
be no conclusive substantive or evidential presumptions
in EU competition law. Part D discusses the reasons for
creating presumptions. Part E concludes by offering six
principles that should inform the application and use of
presumptions in EU competition law.
I. The burden of proof
The burden of proof is almost universally understood as
the burden of persuading a decision maker that an
infringement has occurred.2 The incidence of the burden
is essentially a policy matter.3 The legal burden of proof
on each separate issue is on the party who has by law to
establish it in order to succeed. Article 2 of Regulation
1/20034 places the burden of proof on the party alleging
an infringement of arts 101 and 102 TFEU. Article 2
further provides that, to the extent that an undertaking
claims the benefit of art.101(3) TFEU, the legal burden
of proof is on it.5Recital 5 of Regulation 1/2003 explains
that this incidence was chosen to ensure an effective
enforcement of the competition rules and at the same time
to respect the parties’ rights of defence.
As a competition case proceeds the evidence may first
weigh in favour of finding an infringement and then
against it. For example, the defendant may adduce
evidence which casts doubt on the case against it. A
competition authority or claimant may then seek to prove
some other fact which supports the alleged infringement.
As explained below, the “evidential burden” of proving
the facts in issue may shift to and fro. The overall legal
burden, however, remains on the competition authority
or claimant to prove the infringement that it is asserting.
II. The evidential burden
The preceding paragraph was concerned with the legal
burden of proving an infringement of the competition
rules or a defence for agreements or conduct that infringe
those rules. It often happens that the evidential burden of
demonstrating that a particular fact is true shifts from one
party to the other. The basic rule is that he or she who
asserts a fact must prove it. In Plasterboard, the General
Court (formerly the Court of First Instance) upheld the
Commission's decision that Lafarge had participated in
a set of anti-competitive information exchanges from
1992.6 In the court's view, Lafarge had failed to adduce
any evidence in support of its claim that it took part in
the cartel at a later date. The burden of producing
evidence fell on Lafarge in this instance: it failed to
adduce any evidence that it took part in the cartel only
from a later date than 1992.
1
AKZO v Commission of the European Communities (C-62/86) [1991] E.C.R. I-3359 at [71] and Tetra Pak v Commission of the European Communities (C-333/94 P)
[1996] E.C.R. I-5951 at [41].
2
This naturally includes the findings of fact that constitute the elements of the infringement.
3
See J. Stone, “Burden of Proof and the Judicial Process” (1944) 60 L.Q.R. 262.
4
Regulation 1/2003 of December 16, 2002 on the implementation of the rules on competition laid down in articles 81 and 82 of the Treaty [2003] OJ L1/1.
5
See similarly in the context of objective justification under art.102: Microsoft v Commission of the European Communities (T-201/04) [2007] E.C.R. II-3601 at [688].
6
Lafarge SA v Commission of the European Communities (T-54/03) [2008] E.C.R. II-120 at [494]–[515], on appeal in (C-413/08 P), not yet decided.
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Presumptions in EU competition law 21
III. The standard of proof
The standard of proof refers to the amount and quality of
evidence that the law requires for a party to prove an
allegation, fact or defence. For instance, a court must be
satisfied “beyond reasonable doubt” that a person is guilty
of a criminal offence.
National courts must apply their domestic rules on the
standard of proof in proceedings under arts 101 and 102
TFEU, provided that such rules are non-discriminatory
and do not make the exercise of rights under EU law
unduly difficult.7 None of the parties should be subject
to a probatio diabolica, that is to say, compelled to prove
something which cannot be proved or can only be proved
with the utmost difficulty.
In the United Kingdom, the Competition Appeal
Tribunal and in England and Wales, the High Court has
confirmed that the standard of proof in competition law
cases is the civil standard of balance of probabilities.8 The
seriousness of alleging an infringement of the competition
rules is taken into account in considering the probabilities
of an infringement having occurred. The Tribunal has
stated that it had no reason to suppose that this standard
of proof is any different from that followed in practice
by the Courts of the European Union.9
C. Presumptions
Legal reasoning creates presumptions in order to assist a
decision-maker. A fact or conclusion may (provisionally)
be presumed because experience shows it is self-evident,
or for reasons of public policy or procedural convenience.
Putting the matter very broadly, presumptions can be
evidential, substantive or procedural.
Presumptions can be further divided into those which
are conclusive, which cannot be rebutted, and those which
are rebuttable, which allow the other side to prove the
contrary. Procedural presumptions can be either type. In
the author’s view, evidential and substantive presumptions
in EU competition law should be rebuttable. As the UK
Competition Appeal Tribunal has said, “competition law
is not an area of law in which there is much scope for
absolute concepts or hard edges”.10 While evidential and
substantive presumptions are provisional only, the ease
with which a presumption may be rebutted is controversial
and frequently contested. As we shall see, what may
suffice as convincing evidence for these purposes will
vary depending on the presumption in question.
I. Evidential presumptions
1. Definition
In discharging the legal burden of proof, a party may rely
on an evidential presumption. To do so a party typically
needs to prove a set of facts from which another fact may
be inferred. Such rules of law are sometimes referred to
as inferences. Their effect is to shift the evidential burden
on to the other party to prove the contrary is true. They
do not normally shift to such party the legal burden of
proof, which remains upon the person on whom it was
originally imposed.11 Evidential presumptions require the
other party to adduce evidence which, if believed, could
ultimately be taken by a court to support its defence.12
2. Example
An example of an evidential presumption can be found
in the judgment of the Court of Justice in Akzo Nobel v
Commission of the European Communities ,13 an appeal
in the Choline Chloride case. There the court held that it
is sufficient for the Commission to prove that the
subsidiary is wholly owned by a parent company in order
to presume that the parent exercises a decisive influence
over the commercial policy of the subsidiary.14 The parent
company then bears the evidential burden of rebutting
that presumption by adducing sufficient evidence to show
that its subsidiary acts independently on the market.15 The
decision maker must then decide whether there is
sufficient evidence to rebut the presumption and/or to
show that there was in fact the exercise of actual
influence.
What is of particular interest is that there has yet to be
a case in which this presumption has been rebutted. There
are a large number appeals pending before the General
Court in which firms are claiming that they have done
precisely this.16 A case of interest is MCAA, in which
Arkema has appealed to the Court of Justice arguing that
the General Court effectively applied a non-rebuttable
presumption that a parent company has decisive influence
over its subsidiaries and that it is legally impossible for
7
See Stone, “Burden of Proof and the Judicial Process” (1944) 60 L.Q.R. 262.
See, e.g. JJB Sports Plc v Office of Fair Trading [2004] CAT 17; [2005] Comp. A.R. 29 at [195] and Bookmakers Afternoon Greyhound Services Ltd v Amalgamated
Racing Ltd [2008] EWHC 1978 (Ch) at [392].
9
Napp Pharmaceuticals Holdings Ltd v Director General of Fair Trading [2002] CAT 1 at [112].
10
Cases 1035/1/1/04 and 1041/2/1/04; Racecourse Association & British Horseracing Board v Office of Fair Trading [2005] CAT 29 at [167].
11
See F. Castillo de la Toree, “Evidence, Proof and Judicial Review in Cartel Cases” (2009) 32(4) World Competition 505, 516–519.
12
G. Williams, “The Logic of ‘Exceptions” [1988] C.L.J. 261, 265
13
Akzo Nobel NV v Commission of the European Communities (C-97/08 P) [2009] 5 C.M.L.R. 23; see Hurley and Scott, “The Concept of an Undertaking and the Responsibility
of Parent Companies for the Actions of Subsidiaries in the EU and UK” [2008] 7 Comp Law 301.
14
See Hurley and Scott, “The Concept of an Undertaking and the Responsibility of Parent Companies for the Actions of Subsidiaries in the EU and UK” [2008] 7 Comp
Law 301, para.60.
15
See Hurley and Scott, “The Concept of an Undertaking and the Responsibility of Parent Companies for the Actions of Subsidiaries in the EU and UK” [2008] 7 Comp
Law 301, para.61.
16
See, e.g. pending appeals in Standard Commercial v Commission of the European Communities (“Spanish raw tobacco”)(T-24/05); Alliance One International v
Commission of the European Communities (“Italian raw tobacco”)(T-25/06); Aalberts Industries v Commission of the European Communities (“Copper fittings”)(T-385/06)
; General Technic-Otis v Commission of the European Communities (“Lifts and escalators”)(T-141/07); ENI v Commission of the European Communities (“Synthetic
rubber”)(T-39/07) ; Compagnie de Saint-Gobain v Commission of the European Communities (“Car glass”)(T-73/09); SKW Stahl-Metallurgie v Commission of the
European Communities (“Calcium carbide and magnesium based reagents”)(T-384/09) .
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22 European Competition Law Review
a subsidiary to prove that its conduct on the market is
independent.17 Similarly, in Rubber Chemicals General
Química is arguing that the General Court unlawfully
placed no limits on the Commission’s discretion in
relation to the assessment and appraisal of the evidence
produced in an attempt to rebut the presumption of parent
company liability.18
A separate issue is whether a parent company should
be liable for the activities of a partially-owned subsidiary
and, if so, whether there should be a presumption in
relation to such cases. In Spanish raw tobacco, Standard
Commercial Corporation, a US company, was held liable
for the cartel activities of World Wide Tobacco España
(“WWTE”), its Spanish subsidiary. At the material time
Standard Commercial indirectly held two-thirds, rising
to 90 per cent, of the capital of WWTE. The Commission
did not adopt a presumption of any kind as to what the
answer should be.19 Rather, the Commission had regard
to the facts and circumstances of the present case in
considering the question of decisive influence. Having
considered the extent to which Standard influenced
WWTE’s policy, the Commission held that it controlled
the company’s affairs.20 Standard has appealed to the
General Court claiming that the Commission has failed
to prove that it was able to exercise decisive influence
over WWTE, or actually did so, during the whole period
of the infringement.21
II. Substantive presumptions
1. Definition
Competition laws often feature substantive presumptions.
These presumptions are invariably an expression of
mainstream economic theory. They may also be grounded
in administrative or judicial experience in applying the
law. Substantive presumptions may be rebuttable or
conclusive; the latter are called “per se” rules in some
jurisdictions, notably the United States. It is the
inappropriateness or irrelevance of effects and
justifications under per se rules that principally
distinguishes them from rebuttable presumptions. It will
be argued that substantive presumptions in EU
competition law should be rebuttable.
2. Per se rules under Article 101?
It is often tempting to draw an analogy between EU law
and the position under Sherman Act 1890 in the United
States. Section 1 of the Sherman Act 1890 characterises
some agreements as per se infringements of that Act,
whereas others are subject to the “rule of reason” which
requires a much more detailed analysis. It is possible to
draw an analogy between the restriction of competition
“by object” and “by effect” classification under art.101(1)
and the position under s.1. Tempting though it is and
however useful the substantive economic experience in
other jurisdictions may be, great care should be exercised
before importing their conceptual structures into EU law.22
Where there is a per se infringement in the United
States, it is not open to the parties to the agreement to
argue that it does not restrict competition: it belongs to a
category of agreement that has, by law, been conclusively
found to be restrictive of competition.23
“Cases that do not fit the generalisation may arise,
but a per se rule reflects the judgment that such cases
are not sufficiently common or important to justify
the time and expense to identify them”.24
The per se rule of prohibition has been applied to
horizontal price fixing agreements, market sharing and
group boycotts. The per se rule means that the government
or plaintiff need only prove that the practice occurred;
market power and pro-competitive justifications are
irrelevant. They are irrelevant for three reasons. First, it
is highly probable that each of these practices will restrict
output and increase prices. There is no need to prove what
is very likely to happen. Secondly, a firm rule of illegality
facilitates enforcement. The third is that the cost of false
positives (that is to say, the prohibition of innocuous
conduct) must outweigh the cost of false negatives (that
is to say, the non-prosecution of harmful conduct). As
Robert Bork has written:
“[T]o make market power always an essential
element of illegality would introduce the
complexities of market definition into every
government prosecution and effectively destroy the
advantages of the per se rule in making rapid and
widespread enforcement of the law possible.”25
The speciously parallel concept to per se illegality in EU
law is an infringement by object. Significant differences
make those parallels deceptive. Of particular importance
is that, even if an agreement has as its object the
restriction of competition, the parties can still argue
(contrary to the position under US law) that:
•
•
it has no appreciable impact on competition
or no appreciable effect on trade between
Member States of the European Union; and
the agreement satisfies the conditions set
out in art.101(3).
17
Arkema France v Commission of the European Communities(C-520/09 P), not yet decided.
General Química, SA, Repsol Química, SA and Repsol YPF, SA v Commission of the European Communities(C-90/09 P), not yet decided.
19
cf. Decision of the UK Office of Fair Trading, Construction Recruitment Forum(CE/7510-06), September 29, 2009, para.2.7, available at http://www.oft.gov.uk [Accessed
May 22, 2010].
20
Decision 2007/236 relating to a proceeding under Article 81(1) of the EC Treaty (COMP/C.38.238/B.2-Raw tobacco-Spain) [2007] OJ L102/14, paras 387–400; a
non-confidential version of the decision is available at http://ec.europa.eu/competition/cartels/cases/cases.html [Accessed May 22, 2010].
21
Standard Commercial v Commission of the European Communities(T-24/05), not yet decided.
22
See R. Whish, Competition Law, 6th edn (Oxford: Oxford University Press, 2008), p.118.
23
See, e.g. Northern Pac. R. Co. v United States356 U.S. (1958) 1, 5 and Broadcast Music Inc. v Columbia Broadcasting System Inc.441 U.S. (1979) 1, 9.
24
Continental T.V. v GTE Sylvania Inc.433 U.S. (1977) 36, 50 n.16.
25
R. Bork, “The Rule of Reason and the Per Se Concept: Price Fixing and Market Division” (1966) 75 Yale L.J. 373, 387.
18
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Presumptions in EU competition law 23
Although price-fixing or market-sharing agreements are
highly unlikely to satisfy those conditions, it is not wholly
impossible.26 Aside from those differences, the
competition authorities in the United States and the
European Union naturally perceive particular types of
agreements differently: systems of competition law have
different preoccupations, and this is reflected in the way
that the law develops. The category of agreements
considered per se illegal under the Sherman Act 1890 is
therefore different from the class of agreements the object
of which is held to be the restriction of competition under
art.101(1).27
3. Per se rules under article 102?
a. The controversy In recent years the language of
per se rules of prohibition has more frequently been
invoked as a clarion call to reform the law and policy
under art.102. Certain practices—selling below cost;
exclusive supply agreements and pricing practices having
the same effect being the three foremost examples28—are
deemed abusive; the law is not concerned with the impact
of conduct upon consumer welfare. The General Court's
judgment in Michelin v Commission of the European
Communities encapsulates that view:
“If it is shown that the object pursued by the conduct
of an undertaking in a dominant position is to limit
competition, that conduct will also be liable to have
such an effect.”29
This degree of formalism may be out of kilter with the
modern focus of EU competition law upon conduct that
has a demonstrable or likely effect upon consumer
welfare.30
b. The Greek GlaxoSmithKline case In Sot. Lélos,31
the Court of Justice considered whether GlaxoSmithKline
is entitled, under art.102, to withhold or restrict supplies
of pharmaceuticals to wholesalers to the extent that such
supplies are intended for export to another Member State.
Advocate General Ruiz-Jarabo Colomer recommended
that the Court of Justice unequivocally declare that art.102
does not provide a basis for attributing abusive conduct
per se to undertakings in a dominant position.32
The court began by confirming that a firm will abuse
its dominant position when it restricts supplies in order
to limit parallel trade.33 That position is consistent with
an array of cases in which the Courts of the European
Union have applied arts 101 and 102 TFEU to condemn
conduct that is intended to impede the creation of the
single market.
Then again the court stated that art.102 cannot be
interpreted in such a way that, in order to defend its own
interests, the only choice left for a dominant firm is not
to sell medicines at all in a low-priced Member State.34
There is therefore no conclusive presumption of abuse,
or abuse per se, in these circumstances. This is because
a dominant firm is entitled to withhold supplies from a
part of the single market where that is a reasonable and
proportionate measure in defence of that firm's
commercial interests.
c. The Commission’s Guidance The Guidance on
the Commission’s enforcement priorities in applying
Article 102 to abusive exclusionary conduct by dominant
undertakings35 (“Enforcement Priorities Guidance”) is a
welcome development in this respect. In that document,
the Commission specifically indicates that it will assess
the likelihood of anti-competitive foreclosure. In the
Commission’s view this does not require proof of actual
foreclosure: what matters is a proper understanding of
how markets function to assess whether the impugned
conduct is likely to have an exclusionary effect. This is
what the Commission says it did in the Intel v Commission
of the European Communities(T-286/09) case,36 in which
it specifically disavowed the term per se abuse.37 Instead,
the Commission reached the conclusion that Intel had
abused its dominant position by offering loyalty rebates
to various PC manufacturers and a PC retailer, which had
the effect of excluding AMD, Intel’s principal competitor.
Intel has appealed to the General Court and specifically
asked it to (re-)examine the issue of per se abuses.38
4. Rebuttable presumptions under article
101
The recent judgment of the Court of Justice in T-Mobile
provides an example of a presumption under art.101(1).39
There the Dutch competition authority found that five
mobile phone operators had infringed domestic
26
See Matra Hachette SA v Commission of the European Communities (T-17/93) [1994] E.C.R. II-595 at [85].
Compare the treatment of minimum resale price maintenance Leegin Creative Leather Products Inc. v PSKS Inc.551 U.S. (2007) 877, which is no longer per se illegal
in the US, but continues to be treated as a restriction of competition by object in the EU, see GlaxoSmithKline Unlimited v Commission of the European Communities(C
501, 513, 515 and 519/06 P) [2010] 4 C.M.L.R. 50, para.91 of the AG’s Opinion; and Commission Notice—Guidelines on Vertical Restraints, C(2010) 2365, para.223.
28
See, e.g. AKZO [1991] E.C.R. I-3359 at [71]; Hoffmann-La Roche v Commission of the European Communities (85/76) [1979] E.C.R. 461 at [89].
29
Michelin v Commission of the European Communities (T-203/01) [2003] E.C.R. II-4071 at [241].
30
See Whish, Competition Law, 6th edn, 2008, pp.189–198.
31
Sot. Lélos kai Sia v GlaxoSmithKline AEVE (C-468/06 to C-478/06) [2008] E.C.R. I-7139.
32
Sot. Lélos kai Sia [2008] E.C.R. I-7139 at [76].
33
Sot. Lélos kai Sia [2008] E.C.R. I-7139 at [65]–[66].
34
Sot. Lélos kai Sia [2008] E.C.R. I-7139 at [68].
35
Guidance on the Commission's enforcement priorities in applying Article 102 to abusive exclusionary conduct by dominant undertakings [2009] OJ C45/7.
36
Summary of Commission Decision of 13 May 2009 relating to a proceeding under Article 82 of the EC Treaty and Article 54 of the EEA Agreement (COMP/C-3/37.990-Intel)
[2009] OJ C227/13, para.916; a non-confidential version of the decision is available at http://ec.europa.eu/competition/sectors/ICT/intel_provisional_decision.pdf [Accessed
May 22, 2010].
37
COMP/C-3/37.990-Intel, para.1672.
38
Intel v Commission of the European Communities (T-286/09) , not yet decided; see similarly Tomra Systems v Commission(T-155/06), not yet decided.
39
T-Mobile Netherlands BV v Raad van bestuur van de Nederlandse Mededingingsautoriteit (C-8/08) [2009] 5 C.M.L.R. 1701.
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24 European Competition Law Review
competition law by exchanging information in relation
to commissions to be paid to dealers. In Polypropylene,
the Court of Justice had previously held that there is a
rebuttable presumption that where firms remain active
on the market they are presumed to take account of the
information exchanged with their competitors.40 This is
an inference drawn on the basis of experience, subject to
proof to the contrary, which it is for the firms concerned
to adduce.
On appeal the matter was referred to the Court of
Justice pursuant to art.267 TFEU. The court was asked
in particular what evidence of a causal link must be
adduced and whether this could be appraised by a national
court under the rules of national law. The issue was
material because, under Dutch rules of evidence, the
presumption would be insufficient to sustain a finding of
an infringement and the imposition of a financial penalty.
The Advocate General advised that this issue related
to the standard of proof and is governed by national law.
The Court of Justice disagreed that this was an issue for
national law. The court held that, since art.101 TFEU
produces direct effects, any interpretation that is provided
by the court is binding on all the national courts and
competition authorities.41 The court concluded that the
presumption of causation stems from the interpretation
of art.101(1) by the EU courts.42 It depends on the rules
of substantive EU law.
The Court of Justice went on to say that the
presumption could even arise where there has been an
exchange of information on a single occasion.43 The
presumption is likely to be stronger where the exchanges
occurred on a regular basis over a long time.44 The
corollary to this is that it will be more difficult to rebut
in those circumstances. In any event, mere assertions will
never suffice for a rebuttal. The law requires that the
defendant show that it has departed from every element
of the agreement and/or concerted practice.
5. Rebuttable presumptions under article
102
In the case of Hoffmann-La Roche,45 the Court of Justice
established a rebuttable presumption under art.102. The
Commission had relied on Roche’s market share and other
matters supporting a finding of dominance. Roche denied
that it held a dominant position. The Court of Justice held
that, save in exceptional circumstances, very large shares
proves that a firm has a dominant position.46 The Court
of Justice subsequently held in AKZO v Commission that
this was so in the case of a market share of 50 per cent.47
In such cases, the presumption clearly facilitates the task
of the party alleging an infringement of art.102.
The Commission has responded to the criticism that it
has relied too heavily on market shares to conclude that
a dominant position exists. Commissioner Kroes said in
her remarks in New York in 2005:
“I consider that high market shares are not—on their
own—sufficient to conclude that a dominant position
exists. Substantive presumptions that rely on market
shares can result in an excessive focus on
establishing the exact market shares of the various
market participants.”48
This view now finds expression in para.13 of the
Enforcement Priorities Guidance,49 in which the
Commission states that “market shares provide a useful
first indication for the Commission of the market structure
and of the relative importance of the various undertakings
active on the market”. In the Commission's experience,
single-firm dominance is not likely if a firm's market
share is less than 40 per cent.50
The AKZO presumption is, and has always been,
rebuttable.51 Modern economic thinking suggests that
rebutting the presumption is more easily rebutted than
had formerly been realised. The Enforcement Priorities
Guidance reflects this thinking: market shares are an
important indicator of market power but it is also
important to consider other factors that may cast a
different light on the competitive conditions.
III. Procedural presumptions
1. Definition
Finally, presumptions may sometimes be used for
procedural reasons. As often as not, such presumptions
are created for convenience. As with other presumptions,
they may be conclusive or rebuttable.
2. A conclusive procedural presumption
Article 10(6) of the EU Merger Regulation contains a
conclusive procedural presumption.52Article 10(6) states
that a merger having a Community dimension is deemed,
i.e. conclusively presumed, to be compatible with the
40
Commission of the European Communities v Anic Partecipazioni SpA (C-49/92 P) [1999] E.C.R. I-4125 at [121].
Sot. Lélos kai Sia [2008] E.C.R. I-7139 at [49].
42
Sot. Lélos kai Sia [2008] E.C.R. I-7139 at [51]–[52].
43
Sot. Lélos kai Sia [2008] E.C.R. I-7139 at [58]–[62].
44
COMP/C-3/37.990-Intel, para.1672.
45
Hoffmann-La Roche [1979] E.C.R. 461.
46
Hoffmann-La Roche[1979] E.C.R. 461 at [41].
47
AKZO [1991] E.C.R. I-3359 at [60].
48
N. Kroes, “Preliminary Thoughts on Policy Review of Article 82”, speech at the Fordham Corporate Law Institute, September 23, 2005, available at http://ec.europa.eu
/competition/speeches/ [Accessed May 22, 2010].
49
Enforcement Priorities Guidance [2009] OJ C45/7.
50
See similarly Regulation 139/2004 [2004] OJ L24/1, Recital 32 (a merger may be presumed to be compatible with the internal market where the market share of the
merging parties does not exceed 25 per cent).
51
See, e.g. Atlantic Container Line v Commission of the European Communities (T-191/98) [2003] E.C.R. II-3275 at [919] (a high market share held over a very short
period may not, in certain circumstances, suffice to give rise to a presumption of a dominant position).
52
Atlantic Container Line[2003] E.C.R. II-3275.
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Presumptions in EU competition law 25
internal market where the Commission has not taken a
decision on the compatibility of that merger within the
prescribed time limits. That provision was described by
the Court of Justice in Sony/BMG as a specific expression
of the need for speedy decision-making under the Merger
Regulation. The court also confirmed, however that
art.10(6) does not have any implications for the
substantive assessment of a merger. There is no
presumption that a merger is compatible with, or
incompatible with, the internal market. Each case
ultimately depends upon its own facts.
3. A rebuttable procedural presumption
In the United Kingdom, there is a rebuttable presumption
against permitting a competition authority to submit new
evidence during an appeal in respect of a decision already
taken.53 The reason for the presumption is that the
authority should normally be prepared to defend the
decision on the basis of the material before it when it took
the decision. As a matter of fairness, however, that
presumption may be rebutted where the authority wishes
to adduce evidence in rebuttal of a case made on appeal.54
D. The reasons for presumptions
Presumptions exist in EU and UK competition law for
several reasons. The reasons correspond to a large extent
with the reasons for using presumptions in other spheres
of law. Most presumptions are supported by two or more
of the following reasons.
I. An evidential presumption reflects the
likelihood that a fact is true
The principal reason for creating an evidential
presumption of “X” is the high probability that “X” is
true in all or almost all cases. This means that it would
needlessly incur cost for a party to prove what is already
expected: that “X” is true in the particular circumstances
of its case. Instead, the law conserves time and resources
by simplifying the process: the other party is required to
show that “X” is in fact not true. This “labour-saving”
aspect of presumptions is arguably their most important
function. In T-Mobile, Advocate General Kokott pointed
out how, regardless of their effects, a restriction of
competition by object is prohibited by art.101(1) and so
“conserves resources of competition authorities and the
justice system”.55 Similarly, it is for this reason that market
shares are used as a first screen in determining whether
market power exists.56
II. Substantive presumptions reflect
economic theory and practical experience
As a general proposition, harm to competition and
consumers should be proved rather than presumed and
presumptions should be reserved for cases where the risk
of false positives (that is to say, the prohibition of
innocuous conduct) is fanciful. As Philip Lowe, the
former Director General of DG COMP, has said:
“safe harbours and presumptions, both for legality
and illegality, are necessary to ensure practicality of
the effects based approach—but of course they have
to be based on sound economic principles.”57
Presumptions in competition law are created to
incorporate insights from mainstream economic theory
and lessons of practical experience.
For instance, it is not necessary to examine the effects
of an agreement once its anti-competitive object has been
established. The Court of Justice has said in Irish Beef,
“certain forms of collusion between undertakings
can be regarded, by their very nature, as being
injurious to the proper functioning of normal
competition.”58
The European Commission’s Guidelines on the
application of [art.101(3)] explain that:
“This presumption is based on the serious nature of
the restriction and on experience showing that
restrictions of competition by object are likely to
produce negative effects on the market.”59
For this reason, in GlaxoSmithKline v Commission ,60 a
case involving a dual pricing system, under which drugs
intended for export were priced at a premium to
equivalent products intended for the domestic market,
the Court of Justice confirmed that it is not necessary to
establish detriment to final consumers in determining
whether an agreement has an anti-competitive object61.
A separate point is that, while it is not necessary for
an infringement by object to have an actual impact, should
the Commission wish to consider the actual impact of the
infringement on the market when calculating the fine, the
court held in Prym v Commission that:
“it cannot just put forward a mere presumption but
“must provide specific, credible and adequate
evidence with which to assess what actual influence
the infringement may have had on competition in
that market”.”62
53
See Cases 1014 and 1015/1/1/03 Argos Ltd and Littlewoods Ltd v Office of Fair Trading [2003] CAT 16, para.66 and the case law mentioned therein.
See, e.g. Case No.1121/1/1/09 Durkan Holdings v Office of Fair Trading [2010] CAT 12, para.22.
55
T-Mobile Netherlands BV v Raad van bestuur van de Nederlandse Mededingingsautoriteit (C-8/08) [2009] 5 C.M.L.R. 1701, para.43 of her Opinion.
56
See, e.g. Guidelines on the assessment of horizontal mergers [2004] OJ C31/5, para.14.
57
P. Lowe, “Remarks on Unilateral Conduct”, speech at the Federal Trade Commission and Antitrust Division Hearings on Section 2 of the Sherman Act, September 11,
2006, available at http://ec.europa.eu/competition/speeches/ [Accessed May 22, 2010].
58
Competition Authority v Beef Industry Development Society Ltd (C-209/07) [2009] 4 C.M.L.R. 310 at [17].
59
Guidelines on the application of [art.101(3)] [2004] OJ C101/97, para.21.
60
GlaxoSmithKline [2010] 4 C.M.L.R. 50.
61
GlaxoSmithKline [2010] 4 C.M.L.R. 50 at [64].
62
Case C-534/07 P [2009] 5 C.M.L.R. 2377, para.82 (a case arising under s.1A of the 1998 Fining Guidelines); see Bellamy and Child, European Community Law of
Competition, 6th edn, Rose & Roth (eds) (Oxford: Oxford University Press, 2010), para.13.154.
54
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26 European Competition Law Review
In other words, a presumption may exist for one purpose
(e.g. establishing an infringement), but not another (e.g.
determining the level of the penalty).
III. Presumptions provide operational criteria
for law enforcement
The third way in which presumptions play a role in EU
law is to provide the operational criteria for law
enforcement. With an increased emphasis on economics
in the substantive assessment of agreements, conduct and
mergers, presumptions help create “an economically
sound system with a maximum of predictability”.63 As
the US Supreme Court has explained in the context of a
workable “rule of reason”:
“… courts can, for example, devise rules over time
for offering proof, or even presumptions where
justified, to make the rule of reason a fair and
efficient way to prohibit anticompetitive restraints
and to promote procompetitive ones.”64
Presumptions are one example of the rules that can be
devised: they form part of an analytical framework that
is both economically realistic and administrable.
An example in EU law is the presumption that sales
below average variable costs are presumed to be predatory
in the absence of some explanation such as the
introduction of a new product.65 The Court of Justice’s
concept of predatory pricing is founded upon the
economic theory of a recoupable sacrifice by a dominant
firm to exclude or deter competitors.66 It is not normally
rational to sell below average variable costs since a firm
has no interest in incurring those costs so as to make a
loss. The presumption of an abuse in these circumstances
serves the effective enforcement of competition rules in
order to prevent distortions of competition. This approach
has the merit of simplicity. It also serves the principle of
legal certainty and helps a dominant firm delimit the
spectrum of behaviour along which it may otherwise,
almost imperceptibly, slip into abusive conduct. Finally,
the presumption can be rebutted when there is probative
evidence that the pricing was objectively justified.
However, in France Télécom v Commission ,67 the General
Court upheld the Commission's finding of abuse and
rejected the argument that a subsidiary of France Télécom
did not have a plan of predation.68
IV. Presumptions may elicit rebuttal
evidence
In the Seamless Steel Tubes case, the General Court noted
that:
“the Commission is often obliged to prove the
existence of an infringement under conditions which
are hardly conducive to that task, in that several
years may have elapsed since the time of the events
constituting the infringement and a number of the
undertakings covered by the investigation have not
actively co-operated therein.”69
This is particularly true in cartel cases, in which, as the
Court of Justice has recognised, “it is often necessary to
reconstitute certain details by deduction”.70 A presumption
is sometimes used to reflect the fact that the evidence of
what a firm did or did not do is sometimes exclusively
within the direct knowledge of that firm.
A presumption can elicit rebuttal evidence, if any
exists. It is clear from the Cement case that an
anti-competitive agreement or concerted practice may be
inferred from a number of coincidences and indicia unless
the contrary is proved.71 A firm is presumed to have
participated in a cartel if it participated in meetings at
which anti-competitive agreements were concluded
without opposing them.72 The reason underlying that
principle of law is that, having participated in the meeting
without publicly distancing itself from what was
discussed, the firm gives the other participants to believe
that it subscribed to what was decided there and would
comply with it.73 In those circumstances, if the firm wants
to publicly distance itself from the cartel, it must tell its
competitors that it does not in any way want to be
considered to be a member of the cartel.74
E. Conclusion
It is clear from the foregoing discussion that presumptions
play an important role in EU competition law. Essentially
deciding the appropriate nature and role of presumptions
is a policy judgment regarding the point at which legal
intervention is justified. The optimal goal for competition
law enforcement is to minimise both the risk of false
positives (that is to say, the prohibition of innocuous
conduct) and the risks of false negatives (that is to say,
the non-prosecution of harmful conduct). How close
authorities or courts can get to achieving that goal is
debatable.
63
P. Lowe, “Taking Sound Decisions on the Basis of Available Evidence” in C.D. Ehlermann & M. Marquis (eds), Evaluation of Evidence and its Judicial Review in
Competition Cases (Hart, forthcoming).
64
Leegin Creative Leather Products Inc. v PSKS Inc.551 U.S. (2007) 877, 898–899.
65
AKZO [1991] E.C.R. I-3359 at [71] and Tetra Pak [1996] E.C.R. I-5951 at [41].
66
The seminal article, cited to the Court in AKZO, is Areeda and Turner, “Predatory Pricing and Related Practices under Section 2 of the Sherman Act” (1975) 88 Harv. L.
Rev. 697.
67
France Télécom v Commission of the European Communities (T-340/03) [2007] E.C.R. II-107.
68
France Télécom [2007] E.C.R. II-107 at [215].
69
JFE Engineering v Commission of the European Communities (T-67/00, T-68/00, T-71/00 and T-78/00) [2004] E.C.R. II-2501 at [203].
70
Aalborg Portland v Commission of the European Communities (C-204/00 P to C-219/00 P) [2004] E.C.R. I-23 at [56].
71
Aalborg Portland [2004] E.C.R. I-23 at [57].
72
Aalborg Portland [2004] E.C.R. I-23 at [81].
73
Aalborg Portland [2004] E.C.R. I-23 at [82].
74
Westfalen Gassen Nederland v Commission of the European Communities (T-303/02) [2006] E.C.R. II-4567.
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Presumptions in EU competition law 27
I conclude by offering six principles that should inform
the application and use of presumptions.
1)
2)
3)
A presumption should be recognised only
when something can be taken for granted.
There should be no conclusive substantive
or evidential presumptions in EU
competition law.
Substantive presumptions should be
informed by mainstream economic theory
and practical experience.
4)
5)
6)
A presumption should not be a mechanical
substitute for reasoning.
A presumption should have greater force
when it is grounded on probability or policy
rather than merely procedural convenience.
Presumptions should be kept under review.
Experience and economics may reveal the
imprudence of its effect and may require
its modification or abandonment.
2010 31 E.C.L.R., Issue 9 © THOMSON REUTERS (LEGAL) LIMITED AND CONTRIBUTORS