Competition Authority v Beef Industry Development Society Ltd and Barry Brothers (Carrigmore) Meats Ltd.

• Jurisdiction: European Union
• Celex Number: 62007CJ0209
• ECLI: ECLI:EU:C:2008:643
• Docket Number: C-209/07
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Date: 20 November 2008

Case C-209/07

Competition Authority

v

Beef Industry Development Society Ltd

and

Barry Brothers (Carrigmore) Meats Ltd

(Reference for a preliminary ruling from the Supreme Court)

(Competition – Article 81(1) EC – Concept of an ‘agreement having as its object the restriction of competition’ – Agreement to reduce production capacity – Beef and veal)

Summary of the Judgment

1. Competition – Agreements, decisions and concerted practices – Impairment of competition – Criteria for assessment – Anti-competitive purpose – Finding sufficient

(Art. 81(1) EC)

2. Competition – Agreements, decisions and concerted practices – Impairment of competition – Agreement intended to restrict competition – Simultaneously pursuing legitimate objectives – Irrelevant

(Art. 81(1) and (3) EC)

3. Competition – Agreements, decisions and concerted practices – Impairment of competition – Types of agreements covered by Article 81(1)(a) to (e) EC – List not exhaustive

(Art. 81(1)(a) to (e) EC)

4. Competition – Agreements, decisions and concerted practices – Agreements between undertakings – Agreements requiring the reduction of production capacity and the withdrawal from the market of several competing undertakings – Anti-competitive purpose

(Art. 81(1) EC)

1. To come within the prohibition laid down in Article 81(1) EC, an agreement must have ‘as [its] object or effect the prevention, restriction or distortion of competition within the common market’. The alternative nature of that requirement, indicated by the conjunction ‘or’, leads, first, to the need to consider the precise purpose of the agreement, in the economic context in which it is to be applied. In deciding whether an agreement is prohibited by Article 81(1) EC, there is therefore no need to take account of its actual effects once it appears that its object is to prevent, restrict or distort competition within the common market. Where, however, an analysis of the clauses of that agreement does not reveal the effect on competition to be sufficiently deleterious, its consequences should then be considered and for it to be caught by the prohibition it is necessary to find that those factors are present which show that competition has in fact been prevented or restricted or distorted to an appreciable extent. The distinction between ‘infringements by object’ and ‘infringements by effect’ arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition.

(see paras 15-17)

2. To determine whether an agreement comes within the prohibition laid down in Article 81(1) EC, close regard must be paid to the wording of its provisions and to the objectives which it is intended to attain. In that regard, even supposing it to be established that the parties to an agreement acted without any subjective intention of restricting competition, but with the object of remedying the effects of a crisis in their sector, such considerations are irrelevant for the purposes of applying that provision. Indeed, an agreement may be regarded as having a restrictive object even if it does not have the restriction of competition as its sole aim but also pursues other legitimate objectives.

The argument that the purpose of an agreement between competing undertakings is not adversely to affect competition or the welfare of consumers, but to rationalise an industrial sector in order to make it more competitive by reducing, but not eliminating production overcapacity cannot be accepted. It is only in connection with Article 81(3) EC that such considerations may, if appropriate, be examined for the purposes of obtaining an exemption from the prohibition laid down in Article 81(1) EC.

(see paras 19-21)

3. The types of agreements covered by Article 81(1)(a) to (e) EC do not constitute an exhaustive list of prohibited collusion.

(see para. 23)

4. Arrangements intended, essentially, to enable several competing undertakings to implement a common policy which has as its object the changing, appreciably, of the structure of the market through a mechanism intended to encourage some of them to withdraw from the market and the reduction, as a consequence, of the overcapacity which affects their profitability by preventing them from achieving economies of scale, conflict patently with the concept inherent in the Treaty provisions relating to competition, according to which each economic operator must determine independently the policy which it intends to adopt on the common market. Article 81(1) EC is intended to prohibit any form of coordination which deliberately substitutes practical cooperation between undertakings for the risks of competition. In the context of competition, the undertakings which signed such arrangements would have, without such arrangements, no means of improving their profitability other than by intensifying their commercial rivalry or resorting to concentrations. With those arrangements it would be possible for them to avoid such a process and to share a large part of the costs involved in increasing the degree of market concentration.

As regards the implementation of such arrangements, the imposition of a levy paid to the goers by the undertakings staying on the market constitutes an obstacle to the natural development of market shares as regards some of the stayers deterred from exceeding their usual volume of production, or even encouraged to freeze their production, and a restriction whose object is anti-competitive. That is also the case of restrictions imposed on the goers as regards the disposal and use of their processing plants, since such restrictions seek to avoid the possible use of those plants by new operators entering the market in order to compete with the stayers. The fact that those restrictions, as well as the non-competition clause imposed on the goers, are limited in time is not such as to put in doubt the finding as to the anti-competitive nature of their object.

In the beef and veal processing sector, an agreement with such features concluded between a Member State’s 10 principal competing undertakings and requiring, among other things, a reduction of the order of 25% in processing capacity, has as its object the prevention, restriction or distortion of competition within the meaning of Article 81(1) EC.

(see paras 31, 33-40, operative part)

JUDGMENT OF THE COURT (Third Chamber)

20 November 2008 (*)

(Competition – Article 81(1) EC – Concept of an ‘agreement having as its object the restriction of competition’ – Agreement to reduce production capacity – Beef and veal)

In Case C‑209/07,

REFERENCE for a preliminary ruling under Article 234 EC from the Supreme Court (Ireland), made by decision of 8 March 2007, received at the Court on 20 April 2007, in the proceedings

Competition Authority

v

Beef Industry Development Society Ltd,

Barry Brothers (Carrigmore) Meats Ltd,

THE COURT...