EU Competition Law and Policy - compal

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On this point note AG Kokkot opinion which makes reference to Case C-238/05 Asnef-Equifax [2006]
ECR I-11125 and states that ‘Not every exchange of information between competitors necessarily has as
its object the prevention, restriction or distortion of competition.’ (para 37) In that case the Court held
that the credit information exchange systems did not have, by their very nature, the object of restricting
competition.
Van den Bergh Foods Ltd v Commission
Case T-65/98 R
General Court, [2003] ECR II-4653, [2004] 4 CMLR 1
Facts
Vertical Agreements
Single Branding
Cabinet Exclusivity
Van den Bergh Foods (formerly HB Ice Cream), supplied ice-cream retailers with freezer cabinets free of
charge or at a nominal rent, provided that they were used exclusively for HB ice creams. The Commission
found HB's exclusive cabinet distribution agreements incompatible with Articles 101 and 102 TFEU. HB
applied for the annulment of the Commission Decision arguing that freezer-cabinet exclusivity was not to
be regarded as outlet exclusivity since retailers were entitled to terminate the contract with HB or to
install other freezers not belonging to HB. According to HB, the retailers’ freedom of choice contradicted
any conclusion that the agreements foreclosed the market. Additionally HB challenged the Commission's
finding that 40per cent of sales outlets in Ireland were de facto tied to HB by the exclusivity clause. The
Application was dismissed.
Held
The cabinet exclusivity clause was not, in formal terms, an exclusive purchasing obligation whose object
was to restrict competition. The Commission was therefore required to prove that the effect of such a
clause would be to lead to a sufficiently high degree of foreclosure as to constitute an infringement of
Article 101(1) TFEU. (para 80). Such an inquiry would rely on the specific economic context in which the
agreements operated. (para 84)
The nature of the product market, the limited space in outlets and the popularity of HB’s product range
would have led retailers bound by the agreement to stock HB ice cream and to refrain from stocking a
second range of impulse ice cream. The cabinet exclusivity clause would have motivated rational retailers
in small outlets to favour HB’s products over products of other ice-cream manufacturers, regardless of
their popularity on the market. (para 97)
Despite the fact that it was theoretically possible for retailers who only had an HB freezer cabinet to sell
the ice creams of other manufacturers, the practical effect of HB's network of distribution agreements
and exclusivity clause was to restrict the commercial freedom of retailers to choose the products they
wished to sell. (paras 99, 101)
The retailers’ right to terminate their distribution agreements with HB at any time was not often exercised
and did not operate de facto to reduce the degree of foreclosure of the relevant market. (para 105)
Although freezer cabinet exclusivity may be a standard practice in the market and is part of an agreement
concluded in the interests of both the retailers and HB, it constituted in the present market conditions an
abuse when engaged by a dominant undertaking. (paras 159, 160)
Comment
The market in this case displays unique characteristics. The cost of freezer cabinets, cost of maintenance
and cost of space in outlets, would lead a rational retailer to favour the dominant undertaking over
competitors. Optimal allocation of space in small outlets would make it unprofitable to stock additional
brands in a second freezer unless the profit generated is greater than the potential profit generated from
using this space for displaying other goods. These unique characteristics created a strong disincentive for
©Ariel Ezrachi, December 2012