Case T-219/99. British Airways plc v Commission of the European Communities

Transcription

1 Case T-219/99 British Airways plc v Commission of the European Communities (Competition Abuse of a dominant position Competence of the Commission Discrimination between airlines Relevant product and geographic market Nexus between the product markets allegedly affected Legal basis of the contested decision Existence of a dominant position Abuse of the dominant position Proportionality of the amount of the fine) Judgment of the Court of First Instance (First Chamber), 17 December 2003 II-5925 Summary of the Judgment 1. Commission Simultaneous voluntary individual resignation of all Commissioners Inapplicability of Article 201 EC Application of Article 215 EC Resigned Commissioners remaining in office, with full powers, until their replacement (Arts 201 EC and 215 EC) II-5917

2 SUMMARY CASE T-219/99 2. Competition Administrative procedure Examination of complaints Determination of priorities by the Commission Power to give differing degrees of priority to complaints Principle of non-discrimination Infringement None 3. Competition Dominant position Market in question Determination Criteria Services provided by travel agents to airlines Market distinct from that of air transport 4. Competition Dominant position Definition Position held by the undertaking in its capacity as a buyer Included 5. Competition Dominant position Market in question Geographical definition Criteria 6. Competition Dominant position Conduct on the dominated market having effects on a neighbouring market Application of Article 82 EC Condition Nexus between the two markets 7. Competition Transport Rules on competition Air transport Regulation No 3975/87 Scope Activities directly relating to the provision of air transport services Service provided by travel agents to airlines Excluded (Council Regulations Nos 17, 141 and 3975/87) 8. Competition Dominant position Abuse Meaning Objective concept referring to conduct likely to influence the structure of the market and with the effect of hindering the maintenance or development of competition Obligations on dominant undertakings II

3 BRITISH AIRWAYS v COMMISSION 9. Competition Dominant position Abuse Quantity rebates Whether permissible Conditions System of result bonuses applied by an airline to commissions paid to travel agents Abusive nature of the system Criteria for assessment 10. Competition Dominant position Abuse Meaning Conduct having either the effect or the object of hindering the maintenance or development of competition 11.Competition Fines Amount Determination Criteria Damage caused to consumers Not relevant in relation to abuse of a dominant position (Council Regulation No 17, Art. 15(2)) 1. Commissioners cannot be regarded as having been Obliged to resign as a body', within the meaning of the last sentence of the second paragraph of Article 201 EC, unless the Parliament has first adopted a motion of censure under the conditions defined by the same article. In the absence of such a motion, individual voluntary resignations, even if simultaneous, of all the Commission's Members constitute a scenario outside the provisions of Article 201 EC, falling solely under Article 215 EC, the simultaneous nature of those individual resignations not being capable of calling into question the voluntary character of each of them. It follows that, in such a case, the resigned Members remain in office with full powers until their replacement, since the first paragraph of Article 215 EC defines only the legal causes of the cessation of Commissioners' duties during their mandate, without thereby wishing to prohibit Commissioners who have resigned from exercising their normal powers until their resignation takes effect on the date of their actual replacement. (see paras 50-51, 53, 55-56) 2. For the Commission to be accused of discrimination, it must be shown to have treated like cases differently, thereby subjecting some to disadvan- II-5919

4 SUMMARY CASE T-219/99 tages as opposed to others, without such differentiation being justified by the existence of substantial objective differences. In particular, in the context of procedures for applying the competition rules, the fact that other traders, in a position similar to a trader penalised by the Commission and who have acted in a similar way, have not been subjected to an infringement procedure cannot in any event constitute a ground for setting aside the finding of an infringement by the penalised trader, provided it was properly established. rise to a suspicion of anti-competitive conduct on the part of several large undertakings in the same economic sector, the Commission is even entitled to concentrate its efforts on one of the undertakings concerned, while inviting the economic operators which have allegedly suffered damage as a result of the possibly anti-competitive conduct of the other undertakings to bring the matter before the national authorities. (see paras 65-66, 68-70) Furthermore, the Commission is entitled, in order effectively to ensure the application of the Community competition rules, to give differing degrees of priority to the complaints brought before it, by reference to their Community interest, measured in relation to the circumstances of each case and, in particular, to the elements of fact and law which are presented to it. In that respect, it is required in particular to assess the seriousness of the alleged restrictions on competition and how long ago the complaint was brought before it. Where the Commission is faced with a situation where numerous factors give 3. For the purposes of investigating the possibly dominant position of an undertaking on a given product market, the possibilities of competition must be judged in the context of the market comprising the totality of the products or services which, with respect to their characteristics, are particularly suitable for satisfying constant needs and are only to a limited extent interchangeable with other products or services. Moreover, since the determination of the relevant market is useful in assessing whether the undertaking concerned is in a position to prevent effective competition from being maintained and behave to an appreciable extent independently of its competitors and service providers, an examination to that end cannot be limited to the objective characteristics only of the relevant services, but the II

5 BRITISH AIRWAYS v COMMISSION competitive conditions and the structure of supply and demand on the market must also be taken into consideration. extent independently of its competitors, of its customers and ultimately of its consumers. Therefore, services which airlines buy from travel agents for the purposes of marketing and distributing their airline tickets can constitute a product market distinct from that of air transport. Although travel agents act on behalf of the airlines, which assume all the risks and advantages connected with the transport service itself and which conclude contracts for transport directly with travellers, those agents nevertheless constitute independent intermediaries carrying on an independent business of providing services in a market for services distinct from that of air transport. An undertaking may hold such a position not only in its capacity as a seller but also in its capacity as a buyer, since Article 82 EC applies both to undertakings whose possible dominant position is established in relation to their suppliers and to those which are capable of being in the same position in relation to their customers. (see paras 101, 189) (see paras 91, 93, 100) 4. The dominant position referred to in Article 82 EC relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable 5. The geographic market to be taken into consideration in order to establish the existence of a possible dominant position may be defined as the territory in which all traders operate in the same or sufficiently homogeneous conditions of competition in so far as concerns specifically the relevant products or services, without it being necessary for those conditions to be perfectly homogeneous. (see para. 108) II

6 SUMMARY CASE T-219/99 6. An abuse of a dominant position committed on the dominated product market, but the effects of which are felt in a separate market on which the undertaking concerned does not hold a dominant position may fall within Article 82 EC provided that separate market is sufficiently closely connected to the first. to that airline of those agents' services and, in particular, the distribution of tickets, are not to be regarded as directly related to air transport service proper and therefore do not fall within the scope of Regulation No 3975/87. (see paras ) Such a connection may exist, for example, between, on the one hand, travel agency services supplied to airlines and, on the other, air transport services provided by those airlines in relation to the services sold to travellers through the intermediary of travel agents. (see paras 127, 130, 132) 7. Regulation No 3975/87 laying down the procedure for the application of the rules on competition to undertakings in the air transport sector, being of a specific nature, applies only to activities directly relating to the provision of air transport services and therefore precludes application of Regulation No 17 only in so far as those services are concerned. In that regard, agreements between an airline and travel agents for the supply 8. 'Abuse' is an objective concept referring to the conduct of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is already weakened and which, through recourse to methods different from those governing normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition. Therefore, whilst the finding that a dominant position exists does not in itself imply any reproach to the undertaking concerned, the latter has a special responsibility, irrespective of the causes of that position, not to allow its conduct to impair genuine undistorted competition on the common market. Similarly, whilst the fact that II

7 BRITISH AIRWAYS v COMMISSION an undertaking is in a dominant position cannot deprive it of its entitlement to protect its own commercial interests when they are attacked, and whilst such an undertaking must be allowed the right to take such reasonable steps as it deems appropriate to protect those interests, such behaviour cannot be allowed if its purpose is to strengthen that dominant position and thereby abuse it. (see paras ) 9. Rebate systems which have the effect of preventing customers from obtaining supplies from market competitors are contrary to Article 82 EC if they are applied by an undertaking in a dominant position. system is not based upon an economically justified consideration but tends, like a fidelity and objective rebate, to prevent customers obtaining supplies from rival producers. That will be the case with a system of result bonuses applied by an airline in a dominant position to commissions paid to travel agents for the sale of its tickets where those bonuses are calculated in accordance with a progressive scale capable of rising exponentially by reference to the increase in tickets sold and are applied to commissions relating not only to tickets sold after the attainment of a certain sales objective, but to all those sold during a reference period. Such a rebate system is not based on a justified economic consideration and has the effect of restricting both the freedom of those agents to supply their services to the airlines of their choice and the access of those airlines to the market for those agency services. Therefore, quantitative rebate schemes linked exclusively to the volume of purchases made from a dominant producer, even if they do not generally have the effect of preventing customers from obtaining supplies from competitors, but of lawfully allowing customers to benefit from the reduction in production costs, are contrary to Article 82 EC if the criteria and rules for granting the rebate show that the (see paras , 272, 282) 10. For the purposes of establishing an infringement of Article 82 EC, it is not necessary to demonstrate that abusive II

8 SUMMARY CASE T-219/99 conduct of the undertaking in a dominant position had a concrete anti-competitive effect on the markets concerned. It is sufficient in that respect to demonstrate that it tends to restrict competition, or, in other words, that the conduct is capable of having, or likely to have, such an effect. Therefore, where an undertaking in a dominant position actually puts into operation a practice generating the effect of ousting its competitors, the fact that the hoped-for result is not achieved is not sufficient to prevent a finding of abuse of a dominant position within the meaning of Article 82 EC. 11. Since Article 82 EC is aimed at penalising even an objective detriment to the structure of competition itself, an undertaking cannot challenge the amount of the fine imposed by arguing that there has been no proof of damage caused to consumers. (see paras , 297) (see para. 311) II