ECJ’s ruling in Super Bock confirms existing Swedish effects-based approach to RPM
On 29 June 2023, the ECJ delivered its preliminary ruling in Case C‑211/22, Super Bock Bebidas (“Super Bock”). The ECJ ruled that in order to find that a resale price maintenance agreement constitutes a restriction by object, a competition authority must determine that the agreement is sufficiently harmful to competition. Already in 2014, the Swedish Competition Authority came to the same conclusion when the authority dismissed an RPM case due to the absence of a sufficiently high likelihood of harm to competition.
Super Bock is a Portuguese producer of beverages, including the eponymous beer brand “Super Bock”. In 2019, the Portuguese Competition Authority fined Super Bock for having infringed the competition rules by fixing prices and terms for the resale of its products, i.e. resale price maintenance (“RPM”). Super Bock brought an appeal to the Court of Appeal in Lisbon, which referred the case to the ECJ for a preliminary ruling. One of the questions referred concerned whether the finding that an RPM agreement constitutes a ‘restriction of competition by object’ may be made without first examining whether that agreement raises a sufficient level of harm to competition or whether it may be presumed that such an agreement, of itself, presents such a degree of harm.
The ECJ initially clarified that the concept of ‘restriction of competition by object’ must be interpreted restrictively and that it applies only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects. However, this does not imply that a vertical agreement cannot constitute a restriction by object, even though such agreements are often less anticompetitive than horizontal agreements. Instead, the agreement must in itself present a sufficient degree of harm to competition. Such an analysis must be based on the content of the agreement’s provisions, its objectives and the economic and legal context of which it forms a part.
The ECJ further clarified that the concept of “hardcore restriction” is not interchangeable with “restriction of competition by object”. Thus, the fact that an RPM agreement constitutes a hardcore restriction does not exempt the referring court from examining whether the agreement is sufficiently harmful to competition and that it therefore constitutes a restriction by object.
The ECJ’s ruling in this regard has many similarities with the Swedish Competition Authority’s (the “SCA”)approach in a case from 2014. In a case concerning RPM between 13:e Protein Import AB, a producer of sports nutrition products, and its retailers, the SCA found that there was not a sufficiently high likelihood that the conduct would harm competition and therefore dismissed the case. When the case was dismissed and the reasons made public, many competition lawyers were puzzled why the authority did not pursue the case and take an easy win.
The facts of the case were not disputed, 13:e Protein Import had sent a letter to its online retailers calling on them to not lower their prices below the minimum prices that 13:e Protein Import had set in its price lists for 60 protein power products. The investigation also showed that the retailers had adapted their prices to the minimum prices and that the conduct therefore constituted RPM. However, instead of simply concluding that the conduct constituted a restriction by object, the SCA chose to analyse whether the conduct actually had the potential to sufficiently harm competition and consumers.
According to the SCA, the risk of harm to competition from RPM conducted by a single producer is, among other things, dependent on the level of inter-brand competition. An absence of competition from other brands increases a producer’s ability to raise prices over the competitive level, while strong inter-brand competition will restrain that ability. 13:e Protein Import’s market share only accounted for less than 3% of the market for protein powder in Sweden. Moreover, the SCA found that protein powder appeared to be a homogeneous product with a high level of supply-side substitution. At the time of the SCA’s investigation, the market for protein powder was fragmented with a high number of producers and low barriers to entry. Consequently, the SCA concluded that the RPM practice did not have a sufficiently high probability of harming competition and dismissed the case.
Although the ECJ’s ruling in Super Bock provides a welcome clarification on the assessment of RPM, this earlier case from the SCA shows that this line of thinking has been implemented in practice by national competition authorities for quite some time. Hopefully this ruling will lead to a more effects-based assessment and economic approach in the assessment of RPM cases throughout the EU.
