ONE of the most important recent statements of the Court of Justice of the European Union is buried in paragraph [37] of the judgment in Expedia Inc. v Autorité de la concurrence and Others (Case C-226/11, Judgment of 13 December 2012, not yet reported). There, the Court declared that any agreement which has an effect on trade between Member States and which has an anti-competitive object, constitutes automatically an appreciable restriction of competition for the purposes of the application of Article 101 TFEU. Put differently, it held that agreements with the object of restricting competition which affect trade between Member States can no longer make use of the de minimis defence. This represents an important change in the Court's jurisprudence with potentially serious negative implications.

The significance of this judgment cannot be overstated. The Court appears to have changed its settled case-law (see e.g., Case 5/69, Völk v Vervaecke [1969] E.C.R. 295, at [7]; Case C-7/95 P, John Deere v Commission [1998] E.C.R. I-3111, at [77]; Joined Cases C-215/96 and C-216/96, Bagnasco and Others v BNP [1999] E.C.R. I-135, at [34]; Case C-238/05, Asnef-Equifax and Administración del Estado [2006] E.C.R. I-11125, at [50]) which had consistently held that only agreements with an appreciable impact on competition would breach Article 101 TFEU even when they affected trade between Member States. This anti-competitive impact had to be proved case-by-case and regardless of whether the agreement had the “object” or the “effect” of distorting, preventing, or restricting competition. Consequently, it was understood that agreements of minor importance or de minimis (i.e., those with an unappreciable or insignificant impact on competition) are not prohibited by the EU competition rules. The 2001 Commission de minimis Notice (OJ 2001 C 368 p. 13) uses market share thresholds to determine which agreements are de minimis, and hence excluded from the application of Article 101 TFEU. Thus, in the Notice, the Commission has quantified what is not an appreciable restriction of competition within the meaning of Article 101 TFEU and the case-law. The Notice states that agreements between undertakings which affect trade between Member States do not appreciably restrict competition within the meaning of Article 101 TFEU if the aggregate market share held by parties to the agreement does not exceed 10% on any relevant market where the undertakings are actual or potential competitors (at [7]). Where the undertakings to the agreement are not competitors, the relevant market share is 15% to be held by each undertaking. Although the Notice excludes agreements containing some hard-core restrictions such as agreements with the object of fixing prices, limiting output, etc. from its scope (at [11]), the de minimis defence had always applied to all other agreements.

Expedia seems to have changed that position. The case originated in a preliminary reference from the French Cour de cassation. The case arose following the imposition of fines by the French Competition Authority (“FCA”) on Expedia and SNCF (France's state-owned railway company). These undertakings had created a joint subsidiary (“Agence VSC”) to expand the sale of train tickets and travel over the internet, and in February 2009 the FCA found that the partnership between SNCF and Expedia creating “Agence VSC” constituted an agreement contrary to Article 81 EC (now Article 101 TFEU) and to Article L. 420-1 of the French Commercial Code. Under the terms of the agreement, Expedia obtained privileged access to the “voyages-sncf.com” website created by SNCF, and was thus given an advantage over other travel agencies competing in that market. Furthermore, and through the collaboration agreement, the “voyages-sncf.com” website, which initially specialised in information on the reservation and sale of train tickets over the internet, expanded its activities to offer the services of an online travel agency. The object and effect of the collaboration agreement were found to promote Agence VSC in the market for travel agency services provided for leisure travel, to the detriment of competitors. Consequently, the FCA imposed financial penalties on Expedia and SNCF. Expedia argued, on appeal before the Paris Cour d'appel, that the FCA had overestimated the market share of Agence VSC. Without ruling on this point, the Cour d'appel held (Arrêt du 23 Février 2010, Répertoire Général 2009/0544) that it was possible for the FCA to bring proceedings against practices implemented by undertakings whose market share was below the thresholds specified by the relevant article in the French Commercial Code and by the Notice.

Subsequently, the Cour de cassation made a request for a preliminary ruling to the Court of Justice on the interpretation of Article 101(1) TFEU and Article 3(2) of Regulation (EC) No 1/2003 (OJ 2003 L 1 p. 1). The Cour de cassation asked whether these provisions precluded a national competition authority (NCA) from applying Article 101(1) TFEU to an anti-competitive agreement that affects trade between Member States but where the market shares of the parties to the agreement fall below the thresholds specified in the Notice. The Cour de cassation therefore essentially asked whether the thresholds in the Notice were binding on NCAs.

The Court of Justice explained in Expedia that the Notice was not binding on the Member States (at [29]), and that an NCA might take into account the thresholds established therein but was not required to do so (at [31]). This interpretation is unsurprising as it follows not only from the Court's previous case-law (see, e.g., Case C-360/09, Pfleiderer AG v Bundeskartellamt, [2011] E.C.R. I-5161, at [21]) but also from the wording and nature of the Notice (see, e.g., [4] explicitly stating the non-binding effect of the Notice on NCAs and national courts). If the Court had stopped here, Expedia would have been in line with the existing case-law. However, the Court – unnecessarily for the case at hand – went further. Having already answered the Cour de cassation's question at this point, the Court continued to ruminate on the issue, eventually stating: “It must therefore be held that an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition” (at [37]).

The Court's ruling in Expedia conflicts with the more economic approach to EU competition law which was at the core of the modernisation process. To suggest that an agreement where the parties have, for example, a 2% market share, has an appreciable effect on competition, provided that the agreement affects trade between Member States, is a conclusion detached from economic reality. This is all the more so, considering that the “effect on trade between Member States” clause in Article 101(1) TFEU is a jurisdictional criterion that can be easily satisfied because it covers any direct or indirect, actual or potential effect on trade (see Commission Notice, Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty (OJ 2004 C 101 p. 81) at [19] and [23]).

Furthermore, Expedia presents problems for the decentralised application of EU competition law by allowing a discordant application of Article 101 TFEU by the Commission on the one hand and the NCAs and national courts on the other. Thus, while the Commission is bound by the Notice, the NCAs and national courts might find that agreements that would not breach Article 101 TFEU when the Commission enforces this provision nonetheless breach Article 101 TFEU. This is despite the fact that according to Article 3(2) of Regulation No 1/2003, the application of national competition law may not lead to the prohibition of agreements with an effect on trade between Member States if they do not restrict competition within the meaning of Article 101(1) TFEU. The ruling in Expedia leads to a position where the NCAs and national courts can reach a different interpretation from the Commission on what type of agreements restrict competition “within the meaning of Article 101(1) TFEU”. In the UK, the situation is even more interesting since Competition Act 1998, s. 60 obliges the national courts (but not the NCA) to have regard to any relevant decision or statement of the EU Commission when applying national competition law. Thus, there is potential for discrepancy between the approach of the NCA in the UK (which does not have to follow the Commission's approach under the Notice) and the national courts applying competition law to the same agreement (which are obliged by s. 60 to take into account the Commission's approach).

Expedia is also problematic because the Court seems to make significant changes to a long line of case-law by a statement that was effectively obiter dictum. The Cour de cassation did not ask the Court a general question regarding the applicability of the de minimis defence to agreements restrictive of competition by object; it asked specifically whether the NCA was precluded from finding practices anti-competitive where the Notice thresholds were not reached. This fact deprives the statement of any context that might have given it sensible meaning. To do so in a case where the accused undertaking, the French Government and the Commission all questioned the national court's assessment of the agreement as an agreement restrictive by object (at [34]) just aggravates the situation. It can only be hoped that the Court will soon reconsider its approach in Expedia.