On July 14, 2022, Advocate General Rantos delivered his opinion in Unilever on two important questions referred to the Court of Justice:[1] (i) whether companies linked by contractual ties could constitute a “single economic unit”; and (ii) whether the Court of Justice’s ruling in Intel, that antitrust agencies must examine evidence put forward by the defendant that conduct is not capable of foreclosing equally efficient competitors, applies to practices beyond the exclusivity rebates considered in Intel.[2]
In October 2017, the Italian Competition Authority (“AGCM”) fined Unilever Italia Mkt. Operations Srl (“Unilever IT”) €60.7 million for an abuse of dominance in the wholesale supply of impulse ice cream in Italy. The strategy involved exclusivity obligations requiring retailers to source all their ice cream requirements from Unilever, as well as a wide range of loyalty rebates, in the form of discounts and sales bonuses for retailers to incentivize exclusivity. The AGCM concluded that the exclusivity obligation and loyalty rebates, which were largely implemented by Unilever IT’s network of 150 independent distributors, could be imputed to Unilever IT as a single economic unit with its distributors. Unilever IT appealed this decision to the Consiglio di Stato, which sought a preliminary ruling on this issue as well as Unilever IT’s complaint that the AGCM had refused to analyze economic studies it had submitted during the investigation.
On the first question, Advocate General Rantos confirmed that companies without capital links could be viewed as a single economic unit for the purpose of attributing liability under Article 102 TFEU. Having found that the concept of “economic unit” has a consistent meaning across competition law, and drawing on past Article 101 TFEU cases, he opined that it is crucial to determine, having regard to the economic, organizational and legal links between the dominant firm and its distributors, whether the former exercised decisive influence over the latter such that the distributors were implementing conduct conceived by the dominant firm and were not acting independently on the market. This may be the case where the distributors did not bear any financial risks in selling the product or had exclusive contracts with the dominant supplier.[3] It is also relevant to consider whether the distributors behaved in accordance with specific instructions given by the dominant firm and whether the dominant firm could reasonably have foreseen these acts and was prepared to accept the risks.[4]
On the second question, Advocate General Rantos clarified that the Intel judgment established that conduct only qualifies as an abuse of dominance if it is capable of excluding competitors that are as efficient as the dominant undertaking in light of all the relevant circumstances.[5] Further, where the dominant firm produces supporting evidence during the investigation that this is not the case, the authority must examine this evidence and provide reasons to explain its assessment of the evidence. These principles apply to all forms of allegedly abusive conduct and are not limited to exclusivity rebates (the conduct considered in Intel) or exclusivity obligations (the conduct at issue in this case).[6] These conclusions were based on a literal interpretation of the Intel judgment and a teleological interpretation of Article 102 TFEU, which distinguishes between competition on the merits and abusive practices based on the anticompetitive effects of the relevant conduct rather than its form.
Conclusion
Advocate General Rantos’ Opinion that the same general principles should apply to distinguish unlawful conduct under Article 102 TFEU is consistent with the guidance he provided in Servizio Elettrico Nazionale to establish a more systematic treatment of non-pricing abuses.[7] If endorsed by the Court of Justice, these conclusions would cement the principle, heralded by Intel, that there are no “per se” abuses under Article 102 TFEU, only presumptively unlawful practices, and it will be open to dominant firms to demonstrate that their conduct is not capable of excluding equally-efficient rivals.
[1] Unilever Italia Mkt. Operations Srl (Case C-680/20), opinion of Advocate General Athanasios Rantos, EU:C:2022:586 (“Advocate General Rantos’ Opinion”).
[2] Intel Corporation Inc v. European Commission (Case C-413/14 P) EU:C:2017:632.
[3] Ibid., para. 55.
[4] Ibid., para. 48.
[5] Ibid., para. 79.
[6] Ibid., para. 86. For a detailed analysis of the Intel judgment, please see our Alert Memo “Modernising Abuse of Dominance – the CJEU’s Intel Judgment,” October 16, 2017.
[7] Servizio Elettrico Nazionale and Others v. Autorità Garante della Concorrenza e del Mercato (Case 37720), Opinion of Advocate General Rantos, EU:C:2021:998 (as reporter in our December-January 2022 EU Competition Law Newsletter). This opinion was endorsed by the Court of Justice in its judgment Servizio Elettrico Nazionale and Others v. Autorità Garante della Concorrenza e del Mercato (Case 377-20), EU:C:2022:379.