Friday, May 31, 2013
Posted by D. Daniel Sokol
Patrick Harrison (Sidley Austin) explains The Court of Justice's Judgment in Allianz Hungária is Wrong and Needs Correcting.
ABSTRACT: The Court of Justice's March 2013 judgment in Allianz Hungária may constitute the single most significant development in EU competition law since the 2004 Modernization reforms. It blows apart the age-old distinction between, on the one hand, restrictions of competition "by object" (where effects on competition do not need to be proved) and, on the other hand, restrictions of competition by "effect" (where effects on competition do need to be proved). As a result of the judgment, it will be much easier for the European Commission (and national competition authorities in the EU's Member States) to classify conduct as restrictive of competition for purposes of Article 101(1) TFEU. The judgment also raises particularly serious issues for companies operating in highly regulated sectors, such as life sciences and financial services, since it finds that a breach of a law unrelated to competition can render conduct more likely to constitute a restriction of competition by object.
The key paragraphs of the judgment on the critical objects/effects distinction, and on the relevance of breaches of laws unrelated to competition, contain no-or deeply flawed-references to prior case law. In short, the judgment is wrong and, unless corrected in subsequent cases, will be of serious concern to many companies doing business in the European Union.