Cartes Bancaires and MasterCard judgments: object and effects restrictions revisited

Cartes Bancaires

On 11 September 2014, the Court of Justice issued an important judgment in one of the numerous pending competition law cases around credit card schemes. With its judgment in Cartes Bancaires, the Court of Justice annulled the General Court's ("GC") finding that a series of pricing measures adopted by the French Groupement des cartes bancaires (the "Grouping") had the "object" to restrict competition.

In 2007, the Commission had concluded that the pricing measures had both the object and effect of restricting competition. The GC dismissed the Grouping's appeal against the Commission's decision, inter alia holding that the Commission correctly found the pricing measures to have the "object" to restrict competition. The Cartes Bancaires judgment of the Court of Justice is relevant because of the clarification it provides on the application of the concept of "object restrictions" in the European Union's competition law provisions.

The Court of Justice notes that certain types of conduct reveal such a degree of harm to competition that an examination of the effects is unnecessary for the establishment of a violation of the competition rules. This is because such conduct, e.g. price-fixing between competitors, can be regarded by its very nature to be harmful to the proper functioning of normal competition.

In Cartes Bancaires, the Court of Justice noted that the GC failed to correctly apply its case law on restrictions by object. The GC had concluded that it was sufficient for conduct to have the "potential" to have a negative impact on competition for it to have the object to restrict competition. Referring to Court of Justice case law, the GC held that conduct that is "simply capable" of restricting competition has the object to restrict competition.

According to the Court of Justice, however, the GC erred in law by not taking into account that an object restriction can only be established when the conduct reveals in itself a sufficient degree of harm to competition. The Court of Justice noted that the GC had in no way explained in what respect the alleged restriction to competition revealed a sufficient degree of harm in order for it to be characterised as a restriction of competition by object. Moreover, the Court of Justice concluded that the GC did not properly assess the economic and legal context of the pricing measures at issue. The GC - and the Commission - did consider how the measures could have the effect of restricting competition but that is not the right assessment when establishing whether the relevant measures have the "object" to restrict competition. Moreover, the analysis of the possible negative effects on competition fell short of what has to be done to establish that the measures had the actual effect of restricting competition appreciably.

It should be stressed that the judgment of the Court of Justice was specific to the issues which were central to the Cartes Bancaires case and the way the Commission and the GC dealt with them. Nevertheless, the judgment in Cartes Bancaires does demarcate boundaries to the use of the "object" restriction to establish violations of Article 101 TFEU. The Court of Justice clarified that the Commission cannot establish that conduct has the object to restrict competition only on the basis that the conduct has the "potential" to restrict competition or that it is "simply capable" of restricting competition. The Court of Justice emphasized that the concept of restriction of competition "by object" can only be applied to those types of conduct which by their very nature reveal a sufficient degree of harm to competition. In practice the result is likely to be that European competition authorities will have to limit the "by object" approach to classical forms of collusion, like price fixing and market allocation between competitors and certain territorial restraints in vertical relations.


The Court of Justice also issued its judgment in MasterCard, another case relating to credit card schemes. The central concern in the MasterCard case were the multilateral interchange fees ("MIF") which are applicable within the Mastercard payment system. In this case, however, the Commission and the GC had established that the conduct (the MIF) has the effect of restricting competition.

The Court of Justice judgment provides relevant clarifications on concepts central to the application of Article 101 TFEU. The Court confirmed that the MasterCard MIF could be qualified as a decision of an association of undertakings, even after MasterCard was incorporated and listed on the stock-exchange. The Court also held that the Commission and the GC had correctly applied the "ancillary restraints" test by finding that the MasterCard system could still function without the MIF.

Finally, the Court of Justice explored the application of the "counterfactual" test and concluded that the GC had erred in applying it. The Court of Justice held that both for the application of the "ancillary restraints" test and in the context of establishing anti-competitive effects produced by certain conduct, the Commission and the GC may employ the "counterfactual" test. However, while in relation to the former it is decisive whether a legitimate main operation can function without the restrictive conduct in place, this is not necessarily the case for the latter. To determine whether conduct produces restrictive effects on competition, it is necessary to assess the competition within the actual context in a hypothetical situation without that conduct in place (counterfactual analysis). If a less restrictive situation is available, the GC is obliged to establish whether that hypothetical situation is likely to occur. In the present case, the GC found that a prohibition of ex post pricing would be able to replace the MIF and produce less restrictive effects on competition. However, the Court of Justice found that the GC failed to establish the likelihood of that scenario to materialise in the absence of the MIF. Nevertheless, this has no effect on the validity of the judgment of the GC - and the European Commission decision - since the Court of Justice found that the GC's overall conclusion was well-founded on other grounds. Therefore, the Court of Justice upheld the GC's analysis of the restrictive effects of the MIF, as well as its finding that the MIF did not satisfy the conditions for individual exemption under Article 101(3) TFEU.