Judgments nº T-301/04 of Court of First Instance of the European Communities, September 09, 2009

• Resolution Date: September 09, 2009
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-301/04

In Case T-301/04,

Clearstream Banking AG, established in Frankfurt am Main (Germany),

Clearstream International SA, established in Luxembourg (Luxembourg),

represented by H. Satzky and B. Maassen, lawyers,

applicants,

v

Commission of the European Communities, represented initially by T. Christoforou, A. Nijenhuis and M. Schneider, and subsequently by A. Nijenhuis and R. Sauer, acting as Agents,

defendant,

APPLICATION for annulment of Commission Decision C (2004) 1958 final of 2 June 2004, relating to a proceeding under Article 82 EC (Case COMP/38.096 - Clearstream (Clearing and Settlement)),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Fifth Chamber),

composed of M. Vilaras, President, M. Prek (Rapporteur) and V. M. Ciuc-, Judges,

Registrar: C. Kristensen, Administrator,

having regard to the written procedure and further to the hearing on 8 October 2008,

gives the following

Judgment

Facts

1 The second applicant, Clearstream International SA (-CI-), which has its principal office in Luxembourg, is a holding company and the parent company of the first applicant, Clearstream Banking AG (-CBF-), established in Frankfurt am Main (Germany), and of Clearstream Banking Luxembourg SA (-CBL-). The Clearstream Group provides clearing, settlement and custody services in relation to securities. CBL and Euroclear Bank SA, established in Brussels (Belgium) (-EB-), are the only international central securities depositories currently operating in the European Union. CBF is the central securities depository in Germany and currently the only bank having the status of a securities depository bank (Wertpapiersammelbank).

2 On 22 March 2001, the Commission of the European Communities launched an ex officio investigation into the clearing and settlement services by sending a first series of requests for information to a number of bodies, followed by additional requests focused on possible abusive conduct by CI and CBF.

3 On 28 March 2003, the Commission sent a statement of objections to the applicants, to which they responded on 30 May 2003. The hearing took place on 24 July 2003. As an interested third party, EB gave its opinion on the definition of the market at the hearing and in response to a Commission request for information.

4 The applicants were given access to the Commission-s file on 14 April and 3 November 2003. By letter of 17 November 2003, the Commission drew the applicants- attention to the manner in which it intended to use certain items included in the file after access had been given to it on 14 April 2003, and the information concerning the costs provided by the applicants following the July hearing, and invited them to submit their comments. The applicants replied by letter of 1 December 2003.

Contested decision

5 On 2 June 2004, the Commission adopted Decision C (2004) 1958 final relating to a proceeding under Article 82 EC (-the contested decision-). In that decision, it claims that the applicants infringed Article 82 EC, first, by refusing to supply primary clearing and settlement services to EB and by discriminating against it and, second, by applying discriminatory prices to EB.

6 The contested decision contains general information on clearing and settlement of securities transactions, the main elements of which are set out below.

7 The processes involved in the buying and selling of securities necessitate permanent monitoring of the ownership of the securities concerned in order to ensure legal certainty where ownership is transferred upon purchase or sale and to ensure ongoing service of the instrument. For that reason, trading of a security must be followed by a certain number of additional steps.

8 Clearing is the process which occurs between trading and settlement. It ensures that the seller and the buyer have agreed on an identical transaction and that the seller is entitled to sell the securities in question. Settlement is the final transfer of the securities and funds between the buyer and the seller, as well as the inclusion of the corresponding account entries.

9 There are three types of providers of clearing and settlement services:

- the central securities depository (-CSD-) is an entity which holds and administers securities and which enables securities transactions, such as the transfer of securities between two parties, to be processed by book entry; in its home country, the CSD provides clearing and settlement services in relation to transactions in securities in its safekeeping (final custody); it may also offer services as an intermediary in relation to cross-border clearing and settlement transactions where the place of primary deposit of securities is in another country;

- the international central securities depository (ICSD) is an institution whose core business is clearing and settlement in an international environment; it carries out clearing and settlement of international securities or of cross-border transactions in domestic securities;

- banks, as intermediaries, providing their customers with services relating to transactions in securities, those transactions being, in the European Union, mainly domestic.

10 All the securities must be physically or electronically deposited with one institution for safe custody there.

11 In Germany, the Depotgesetz (German law on the custody of securities) provides for two types of final custody of securities: collective custody and individual custody. In the case of collective custody, fungible and technically suitable securities of the same type, deposited by several depositing parties and/or owners, are kept in a single collective holding.

12 For the purposes of the contested decision, and in particular the definition of the market, the Commission makes a distinction between -primary- and -secondary- clearing and settlement.

13 Primary clearing and settlement are, according to the contested decision, carried out by the same entity with which the securities are kept in final custody and whenever a change in the holding occurs on the securities accounts held by it.

14 Secondary clearing and settlement are, according to the contested decision, carried out by intermediaries, that is operators other than the entity in which the securities are held in custody (in the present case the non-German ICSDs and CSDs).

15 Secondary clearing and settlement encompass either internalised transactions, that is where a transaction has taken place between two customers of the same intermediary, making it possible for the transactions to be carried out in the books of that intermediary without any corresponding entries being made at CSD level, or mirror transactions by which the financial intermediaries make the account entries necessary to reflect the result of the clearing and settlement carried out by the CSD in their customers- accounts. In the second case, the intermediaries may provide clearing and settlement services to their customers only if there is a contractual link with the CSD system.

16 Depending on need, access by the intermediary depositories to the central depository can be direct, as a member or a customer, or indirect, through an intermediary. In the present case, the link between CBF and its customers is established by the CBF settlement system, constituted by Cascade and Cascade RS. Cascade is a computerised system which allows for the entry and matching of settlement instructions and is also the settlement platform for such instructions. Cascade RS (Registered Shares) is a sub-system of Cascade which allows CBF-s customers to enter the specific data required by the registration and deregistration process for registered shares. There are two types of access to Cascade and Cascade RS: manual access (also called -on line-) and completely automated access by means of file transfer.

17 According to the contested decision (recitals 196 to 198), the relevant geographic market is Germany as the securities issued under German law are placed in final custody in Germany.

18 The Commission states that, under Article 5 of the Depotgesetz, all the securities held in collective custody in Germany must be held in a recognised bank securities depository and that currently the only depository of this kind in Germany is CBF. Explaining that collective custody is the most common form of custody of securities in Germany, it notes that according to the applicants themselves 90% of existing German securities are deposited with CBF (recitals 23 to 25 of the contested decision).

19 With regard to the definition of the relevant market in this case, the Commission states (recitals 199 to 200 of the contested decision) that for intermediaries which require direct access to CBF, indirect access to CBF is not a substitute solution. The provision by CBF of primary clearing and settlement services to customers who have accepted the general conditions occurs on a market separate from the provision of the same services to CSDs and ICSDs. For intermediaries which require primary clearing and settlement services in order to be able efficiently to provide secondary clearing and settlement services, secondary clearing and settlement are not a valid economic alternative. For those intermediaries, primary clearing and settlement services provided by entities other than CBF are not a valid alternative. It concludes that there is no substitutability either on the demand-side or on the supply-side, since the intermediaries cannot easily opt for another provider or for indirect access to the services in question and no other company would be in a position, in the near future, to provide the same services.

20 Consequently, the Commission defines the relevant market as that of the provision by CBF to intermediaries such as CSDs and ICSDs of primary clearing and settlement services for securities issued under German law (recital 201 of the contested decision).

21 The Commission concludes that CBF has a dominant position on the relevant market, since...