Competition Law in the Digital Market – EU Case Law Summaries (IRAC Format)

Competition law in the Digital Market Case Law



Week 1

Metro I – Selective Distribution

- Facts
o Saba was a German electronics manufacturer, and Metro was a self-service wholesaler.
o SABA employed a selective distribution system at a wholesale level, and they chose resellers that complied with a certain criterion in
accordance with their product standards. (i.e. resellers had to keep specialized departments of electronic equipment and had to participate
in SABA’s sales network and service system)
o SABA therefore demanded from their resellers to have specialized departments of electronics, achieve an adequate turnover of the
corresponding stock and display the products in a respectable manner.
o SABA refused to establish Metro as a reseller because it did not meet this criterion. Subsequently, Metro lodged a complaint in the
Commission saying that SABA was in violation of Art. 101 TFEU. The Commission did not find a violation and Metro appealed the decision to
the court.
- Issue
o Was SABA refusal to establish Metro as a reseller in violation of Art. 101 TFEU?
- Rule
o Art. 101 and Art. 101(3) TFEU – Anti- competition clause.
- Analysis
o The court first concluded that Metro had legal standing as it was individually and directly concerned with the Commission’s decision.
o In relation to Saba’s distribution system, it found that the system did not infringe Art. 101 TFEU with some features exempt under Art.
101(3) TFEU.
o The conditions for exemption for Art. 101 (3) TFEU were:
 it must contribute to improving the production or distribution of goods or to promoting technical or economic progress
 consumers must receive a fair share of the resulting benefits
 the restrictions must be essential to achieving these objectives
 the agreement must not give the parties any possibility of eliminating competition in respect of substantial elements of the products
in question
o Secondly, the ECJ established the “Metro Criteria” so that selective distribution system must meet in order to qualify as purely qualitative so
that it falls outside of Art. 101(1) TFEU:

,Competition law in the Digital Market Case Law



 resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential resellers and not
applied in a discriminatory fashion
 the characteristics of the product in question necessitate such a network in order to preserve its quality and ensure its proper use
 the criteria laid down do not go beyond what is necessary.
o The court concluded that SABA distribution agreement did not meet the Metro criteria and that it infringed Art. 101 TFEU, but that the
distribution system did fall under the exemption of Art. 101 (3) TFEU.
o The ECJ’s considerations primarily concerned the obligation for wholesalers to participate in the creation and consolidation of the SABA
sales network, to achieve a turnover which SABA considered adequate, and to conclude supply contracts with SABA at least six months in
advance considering the probable growth of the market.
o The ECJ found that these restrictions met the four (cumulative) criteria for exemption under Article 101(3) TFEU and consequently did not
infringe Article 101 TFEU.

- Conclusion
o There was a violation of Art. 101 TFEU, however it fell under the exemption of Art. 101 (3) TFEU.

GlaxoSmithKline – Parallel Trading

- Facts
o GSK was a pharmaceutical company that sold medicine in Spain. They operated a dual pricing system, where they would sell their medicine
to wholesalers in Spain, but they charge higher prices if those wholesalers would later resell their products to other Member States. In
essence, prohibiting trade between MS.
o GSK justified this conduct by saying that it was meant to reduce parallel trade, and that if wholesalers were allowed to resell their products
if would undermine their R&D.
o The EU Commission rejected GSK justification and considered an anti-competitive measure by object. GSK appealed to the General Court
which reversed the Commission’s decision. The Case later went to the CJEU
- Issue
o Was GSK Price-hike and prohibition against Spanish wholesalers exporting to other EU countries in violation of Art. 101 TFEU?
- Rule
o Art. 101 TFEU
- Analysis

, Competition law in the Digital Market Case Law



o The court established that agreements restricting parallel trade usually have anti-competitive object.
o The General court argued in the appeal that for a conduct to have anti-competitive effects it is necessary to ascertain whether there is a
disadvantage to the final consumer.
o The CJEU disagreed with this by stating that Art. 101 TFEU does not have only the objective to protect consumers but also the structure of
the market (Consten and Grundig) and therefore, it is not necessary for the analysis of anti-competitive agreement to have a
disadvantageous effect on the final consumer to be considered as such.
o The facts that GSK agreement portioned the market was sufficient to establish a restriction of competition by object.
o Lastly, the CJEU found that GSK did not fell under the exemption of Art. 101 (3) TFEU.
- Conclusion
o The agreement was in violation of art. 101 TFEU.

- What did the Court say about the litmus test for establishing a restriction of competition?

The Court affirmed that the litmus test for determining a restriction of competition under Article 101(1) TFEU hinges on whether a practice has an anti-
competitive "object" or "effect". In GlaxoSmithKline, the Court emphasized that practices aimed at restricting parallel trade (e.g., dual pricing systems) are
inherently anti-competitive by object, regardless of their actual effects.
- Does this litmus test make it easier or more difficult to prohibit a certain practice?

The object-based test makes it easier to prohibit practices under EU competition law because:

 No need to prove harm: Authorities (like the Commission) do not need to demonstrate actual anti-competitive effects on the market. If
the purpose of the agreement is anti-competitive, it is sufficient for prohibition.

 Presumption of illegality: Practices such as price-fixing, market partitioning, or restrictions on parallel trade are treated as inherently harmful. This
creates a low burden of proof for enforcers.

 Deterrence: Companies are dissuaded from adopting practices that could be classified as anti-competitive by object, knowing they will face swift
condemnation.

Cartes Bancaries – Payment Systems

- Facts