O2 (Germany) v. Commission

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 This decision of the European Court of First Instance (CFI) strikes down in part a 2003 decision of the European Commission with respect to infrastructure sharing agreements. In 2002, O2 and T-Mobile entered into network sharing agreements in Germany and the UK with a view to rolling out their respective 3G networks in these countries.  Among other things, these agreements included provisions for national roaming arrangements between the two operators' networks. These agreements were notified to the European Commission (EC), which then assessed whether these agreements complied with the requirements of section 81 of the EC Treaty.  In its decision, the EC found that the national roaming provisions contravened section 81(1) of the EC Treaty since these provisions were restrictive of competition.  However, the EC granted a provisional exemption for the national roaming arrangements in order to facilitate rapid roll-out of 3G networks and to make 3G services more widely available.  The duration of this exemption varied, depending on the nature of the geographic market in question. O2 appealed the portion of the EC's decision concerning national roaming arrangements in Germany to the CFI.  O2 argued that the national roaming agreements did not restrict competition within the meaning of section 81(1) of the EC Treaty.  O2 further argued that the EC had erred in law by failing to consider what the conditions of competition would be in the absence of an agreement.  O2 asserted that the EC concluded that national roaming agreements are inherently restrictive of competition without showing that this is the case or without engaging in the economic analysis required by section 81(1). The CFI agreed with O2 and struck down the EC's decision concerning national roaming agreements.  The CFI held that: " In order to assess whether an agreement is compatible with the common market in the light of the prohibition laid down in Article 81(1) EC, it is necessary to examine the economic and legal context in which the agreement was concluded (Case 22/71 Béguelin Import [1971] ECR 949, paragraph 13), its object, its effects, and whether it affects intra-Community trade taking into account in particular the economic context in which the undertakings operate, the products or services covered by the agreement, and the structure of the market concerned and the actual conditions in which it functions (Case C‑399/93 Oude Littikhuis and Others [1995] ECR I‑4515, paragraph 10). "That method of analysis is of general application and is not confined to a category of agreements (see, as regards different types of agreements, Case 56/65 Société minière et technique [1966] ECR 235, at 249-250; Case C‑250/92 DLG [1994] ECR I‑5641, paragraph 31; Case T‑35/92 John Deere v Commission [1994] ECR II‑957, paragraphs 51 and 52; and Joined Cases T‑374/94, T‑375/94, T‑384/94 and T‑388/94 European Night Services and Others v Commission [1998] ECR II‑3141, paragraphs 136 and 137). "...in a case such as this, where it is accepted that the agreement does not have as its object a restriction of competition, the effects of the agreement should 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 competition in question must be understood within the actual context in which it would occur in the absence of the agreement in dispute; the interference with competition may in particular be doubted if the agreement seems really necessary for the penetration of a new area by an undertaking (Société minière et technique at 249-250). "Such a method of analysis, as regards in particular the taking into account of the competition situation that would exist in the absence of the agreement, does not amount to carrying out an assessment of the pro- and anti-competitive effects of the agreement and thus to applying a rule of reason, which the Community judicature has not deemed to have its place under Article 81(1) EC (Case C‑235/92 P Montecatini v Commission [1999] ECR I‑4539, paragraph 133; M6 and Others v Commission, paragraphs 72 to 77; and Case T‑65/98 Van den Bergh Foods v Commission [2002] ECR II‑4653, paragraphs 106 and 107). "In this respect, to submit, as the applicant does, that the Commission failed to carry out a full analysis by not examining what the competitive situation would have been in the absence of the agreement does not mean that an assessment of the positive and negative effects of the agreement from the point of view of competition must be carried out at the stage of Article 81(1) EC. Contrary to the defendant’s interpretation of the applicant’s arguments, the applicant relies only on the method of analysis required by settled case-law. "The examination required in the light of Article 81(1) EC consists essentially in taking account of the impact of the agreement on existing and potential competition (see, to that effect, Case C‑234/89 Delimitis [1991] ECR I‑935, paragraph 21) and the competition situation in the absence of the agreement (Société minière et technique at 249-250), those two factors being intrinsically linked." [at paragraphs 66-71]. Ultimately, the CFI concluded that the EC's decision "suffers from insufficient analysis, first in that it contains no objective discussion of what the competition situation would have been in the absence of the agreement, which distorts the assessment of the actual and p;otential effects of the agreement on competition and, second, in that it does not demonstrate, in concrete terms, in the context of the relevant emerging market, that the provisions of the agreement on roaming have restrictive effects on competition, but is confined, in this respect, to a petitio principii and to broad and general statements." [Paragraph 11.] File No. of decision: Case T‑328/03, O2 (Germany) v. Commission.

By European Court of First Instance. Published January 2010.

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