De Minimis Standard

Kristina Markovitch

INTRODUCTION

This discussion highlights a portion of European competition law involving the de minimis standard. The sections below are designed to outline the evolutionary process of the de minimis standard from its impact on the Treaty of Rome, to its present day usage, and culminating in a prospective look into its future relevance in the law.

The purpose of the de minimis standard in competition law correlates with its Latin meaning “about minimal things.” If agreements have an a “negligible effect on competition they may therefore not be prohibited by Article 81(1) [101(1)].” See Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the Treaty establishing the European Community (de minimis)

THE GROWTH PROCESS

 BIRTH (The law is born)

  • Meetings, conferences, debates…a faint heart beat echoes across the halls, then a cry is heard. And, the European Union is born at the signing of the Treaty of Rome on March 25, 1957. The purpose of the treaty was to bring to life a common market of goods, workers, service, and capital among the initial six Member States (Belgium, France, Italy, Netherlands, West Germany, and Luxembourg) that signed the treaty. Although the de minimis standard was discussed and debated, the exact wording does not appear in the Treaty.  However, the influence may be seen in Article 85 and 86 when discussing the “effect on the market.” See http://ec.europa.eu/economy_finance/emu_history/documents/treaties/rometreaty2.pdf

 

INFANCY (The law meets the World)

  • The Treaty of Rome: The Treaty of Rome lasted for 50 years. As time passed, barriers to trade were broken down, such as customs, and the Members grew.  The “Community” rose from 6 to now 27 Member States and counting.
  • Treaty Amendments: On February 7, 1992, the Maastricht Treaty was signed. This Treaty, among other things established the European Court of Justice, now the CJEU. Then, the Treaty of Lisbon was signed on December 13, 2007, which amends both the Maastricht Treaty and the Treaty of Rome. The article numbers for competition law changed, but the content remained essentially the same, and the de minimis standard was still not included in the actual language, but the principle remained.

 

CHILDHOOD (The law grows)

  • Treaty in action: The Commission is meant to give guidance to the courts and Member States on how to interpret and apply Art. 101(1) However, case law shows that Member States are not bound by the Treaty and National Courts may impose judgments arguably not aligned with the Treaty’s language. ( See Expedia and Verhuizingen Coppens NV. Agreements had effects on the market which were below the 10% market threshold of the de minimis standard and still found under 101(1) to be anti-competitive.)
  • Deterrence Rationale:Then, what are the consequences of the Member States issuing such large fines to companies found to be restricting competition under 101? Because it would seem that a high Type I error (see Burden Shifting for more on error types) is allowed when enforcing 101(1), as more than the guilty are subjected to judgment. If this is done for deterrence purposes, perhaps another discipline rationale should be chosen that would allow for a lower Type I error and ultimately more confidence in the Courts, both at the National and Commission level.
  • If an agreement fits within the de minimis standard, why are National Courts allowed to fine for anti-competition?

 

ADOLESCENCE (The law turns)

  • Present day scene: Perhaps the National Courts are attempting to define themselves individually apart from the Treaties. Besides the fact that these countries have signed the treaty, they may not want to be told to the letter how to carry out justice. An example is the recent Expedia [link to curia] case. In Expedia, the National Court went beyond the regarded de minimis standard. There, regardless of Expedia and the railway company’s vertical agreement coming below the market threshold 10%, the National court still found the parties guilty of violating 101(1).
  • Confusion arises: A cause for puzzlement arises at now attempting to understand how to interpret 101(1), such as, when questions are brought by parties who have received judgments that are not allegedly aligned with the Treaty’s words/ ideologies. These companies/undertakings operating within the EU have no assurances as to whether or not their businesses will be found to be displaying anti-competitive behavior should they find themselves in either a T-Mobile like scenario or an Expedia.
  • While the Commission enforces the de minimis guidelines, some National Courts do not.  If businesses in the EU do not have assurance in the law, how are they able to confidently conduct business?

 

ADULTHOOD (The law goals become cloudy.)

  • Purpose:  If one of the major aspects of Art. 101 is to provide market integration, how are these judgments serving the market?
  • Results predictable: One may find that regardless of the facts (de minimis threshold present or unilateral activity or vertical/horizontal collusion) the outcome is essentially the same: found guilty and fines imposed.

 

LATE ADULTHOOD (The law brings predictability.)

  • A time for reflection: When you end up with such a low threshold as seen in present day cases, like Expedia and Verhuizingen Coppens NV one would think a time for evaluation and reflection has come. Looking back on the birth of the Treaty and the stated purposes.
  • Lines Blurred: As the lines blur in executing judgments whether by the Commission or Member States, the current status is one that appears to make it quite easy to find a violation of the Treaty for anti-competitive activity.
  • AG Kokott discusses the unneeded effect when finding a violation by object, “whether in an individual case, in fact, particular market participants or the general public suffer harm is irrelevant.” Para 47, TMobile AG Kokott’s opinion·
  • Echoes for eternity: Since the anti-competition cases of the 60’s were decided, we see repetition in the law as the same lines are being echoed to present day. Yet, the application of the law seems to overreach the drafter’s intention.
  • The AG’s opinion in this case (Grundig), was long and a very different tone from the concise judgment released by the Commission” The AG stated, “In order to apply 85(1) [101(1)] the required standard must be a real interference with the conditions of competition. Either this interference must actually exist, or there must be concrete facts indicating that it will take place.” LTM Case 56/65 [1966]
  • Reflexive Antipathy: Anything giving the slightest hint of anti-competition may fall within the realm of 101.
  • With presumptions in place and market effect not a criterion, the law appears to favor the CJEU and the National Courts verses the individual Members.