A. Introduction
Anticompetitive object is the spearhead of competition enforcement.Footnote 1 A decade ago, in Allianz,Footnote 2 the CJEU delivered a milestone ruling on its interpretation. Although the Court did not portray it as such and it was not without precedent in case law,Footnote 3 the judgment ushered in a new era. The conception—referred to in this Article as the Allianz-doctrine—enables the identification of anticompetitive object through a comprehensive case-by-case examination that extends to inspection aspects integral to the effects analysis. In the pre-Allianz era, anticompetitive object worked through specified categories. Simply put, although at times shadowed by nebulous judgment language, agreements condemned under Article 101(1) TFEU could be classified in one of the established abstract categories of anticompetitive object. The legal question was not whether the agreement met the general and elusive definition of anticompetitive object—whether it had an anticompetitive natureFootnote 4 and was sufficiently harmful to competitionFootnote 5 —but whether it came under one of the specified categories. Of course, this was not a closed enumeration, the judicial practice put and removed categories from the list.Footnote 6 Still, it was not examined on the basis of the totality of the circumstances whether the agreement was anticompetitive by object. Instead, it was examined whether it amounted, for example, to horizontal price-fixing or absolute territorial protection. Allianz changed this paradigm by supplementing the specified pigeonholes with an unspecified one. Although, in the post-Allianz era, anti-competitive object still works predominantly through the specified categories, it may also be inquired on a case-by-case basis if an agreement, considering the totality of the circumstances, comes under the general definition of anti-competitive object—an unspecified category.
This Article gives an account of this development, from its conception, through the trajectory of the case law, to the full-fledged doctrine and offers a critical analysis. It demonstrates that the object inquiry is intended to prevent the very frameless, amorphous, and unpredictable examination mandated by Allianz and argues that the case law should return to the category-building principle.
Allianz has been the subject of extensive criticism.Footnote 7 This Article contributes to that body of scholarship in two key ways. First, through the detailed examination of the post-Allianz case-law, it demonstrates that the Allianz-doctrine adds no practical value to competition enforcement. On the one hand, the doctrine is conceptually inconsistent, undermines the utility of “by object” restrictions as a legal tool, reduces enforcement efficiency, and increases the risk of false positives. On the other hand, it offers no compensating advantages, as all the cases in which it has been applied could have been addressed equally—if not more—effectively under the traditional, category-based framework of object analysis. Second, it argues that the Allianz-doctrine is a flawed response to a genuine problem and that the appropriate solution lies in developing a more nuanced approach to effects analysis. The root cause of the doctrine’s emergence is EU competition law’s failure to adopt a sliding-scale framework that would allow for a simplified mode of effects analysis in cases lacking an anticompetitive object but not warranting a full-blown effects inquiry. This Article contends that this gap should be filled by developing an abbreviated version of effects analysis, rather than by distorting the concept of restriction by object.
The Article’s argument is presented as follows. Section B presents the genesis and novelty of the Allianz-doctrine. Section C presents and synthetizes the post-Allianz case law. It shows that all cases in which the doctrine was substantively applied either fell within the penumbra of one of the specified object categories—and therefore could and should have been assessed under these categories—or involved clear anticompetitive effects, with the CJEU establishing anticompetitive object on that basis. Section D demonstrates that the object inquiry should involve no comprehensive case-by-case analysis and takes stock of the Allianz-doctrine’s negative impact on conceptual consistency, the practicality of anticompetitive object and enforcement efficiency. Section E contains the Article’s closing thoughts.
B. The Genesis of the Unspecified Category of Anticompetitive Object: The CJEU’s Ruling in Allianz
Until Allianz, anti-competitive object had unspokenly been regarded as a category-building principle.Footnote 8 It had not been scrutinized in individual cases whether the given agreement had, by its very nature, “such a high potential of negative effects on competition that it is unnecessary for the purposes of applying Article 101(1) to demonstrate any actual effects on the market.”Footnote 9 This general definition of anti-competitive object had not been applied to individual arrangements, but had been used to create specific categories of automatically condemned agreements.Footnote 10 It was the “definition of definitions” and a principle of “judicial rule-making” used to frame the various pigeonholes of anti-competitive object (such as horizontal price-fixing,Footnote 11 market-division,Footnote 12 restriction of output,Footnote 13 jointly referred to as cartels,Footnote 14 horizontal exchange of commercially sensitive information,Footnote 15 group boycott,Footnote 16 vertical resale price fixing,Footnote 17 vertical absolute territorial protectionFootnote 18 and unjustified restrictions in selective distributionFootnote 19 ). Of course, these categories were not immutable and were subject to change (as noted above a recent addition was the horizontal exchange of commercially sensitive informationFootnote 20 ). The general concept of anti-competitive object was used to put new categories on or remove old ones from the list, rather than to subject actual agreements to a comprehensive assessment. This resulted in a relatively clear list of restrictions that were deemed outright prohibited by Article 101(1) TFEU. The concept operated indirectly: It defined categories of restrictions that were automatically condemned and these categories were the ones actually applied in competition cases. Under this framework, the key question was not whether the arrangement was anti-competitive by object but whether it fell within one of the established categories of anti-competitive object. This modus operandi, however, fundamentally changed with the CJEU’s ruling in Allianz. The Court encountered an agreement that came under none of the specified categories and, instead of creating a new category or identifying the effects analysis meet for the case, it carried out a comprehensive, case-by-case assessment of the totality of the circumstances to classify it as anticompetitive by object.
Allianz arose from a significant regulatory failure in the Hungarian insurance market, with competition law employed to rectify an error outside its comfort zone. This likely contributed to the ruling’s oddity. This was a vertical case that involved an unusual commission payment practice. The insurance companies set sales targets for insurance brokers expressed as a percentage of overall sales. A considerable number of these insurance brokers were repair shops, which had a dual role: They not only sold insurance products but also provided vehicle repair services covered by insurance. To incentivize sales, the insurance companies offered higher hourly repair rates to those repair shops that met their sales targets. Under Hungarian law, brokers differ from insurance agents in that they are considered independent, neutral advisors expected to act in the best interests of clients. While brokers receive commissions from insurance companies, they are not employed by them. The imposed sales targets, however, created financial incentives that compromised the brokers’ neutrality and conflicted with their legal role.
The CJEU found the above vertical practice to be anti-competitive by object. It held that an agreement may be classified as anti-competitive by object if, following an abridged effects analysis,Footnote 21 the individual examination “reveal[s] a sufficient degree of harm to competition”Footnote 22 and confirms that it is “sufficiently injurious to competition.”Footnote 23 The Court reiterated the well-established formula that “infringements by object” stem from the recognition that “certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition.”Footnote 24 However, when listing the pertinent factors, the Court went beyond the usual language of the then-existing case law and introduced a range of considerations—such as nature of the goods, real conditions of the functioning of the market, structure of that market, existence and importance of alternative distribution channels, market power—Footnote 25 that had been absent in the pre-Allianz era and germane to effects analysis:
In order to determine whether an agreement involves a restriction of competition “by object,” regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part …. When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question.Footnote 26
[The] court should in particular take into consideration the structure of that market, the existence of alternative distribution channels and their respective importance and the market power of the companies concerned.Footnote 27
The Court’s reference to the content, objectives and context of the agreement followed the usual mantra of the case law.Footnote 28 Nonetheless, the additional analytical elements identified as part of the context - particularly market structure, market power, alternative distribution channels – went further, introducing factors that function as proxies or indicators of effects. These considerations properly belong to an effects-based analysis and presuppose the definition of the relevant market.
Anticompetitive effects may be proven both directly and indirectly. The most straightforward method to prove anticompetitive effects is to demonstrate an anticompetitive outcome—for example, price increase—and establish a causal link. Nonetheless, proving actual effects is often costly, complex, and sometimes even unfeasible. As a result, circumstantial evidence is frequently used as a substitute for direct proof.Footnote 29 Certain circumstances, based on economic common sense, are generally understood to entail anticompetitive effects. These “causing facts”—or “leads”—serve as proxies for effects. For example, the anticompetitive effect of a non-compete clause may be shown in two ways. Directly, one could demonstrate that competing suppliers are foreclosed from the market—though this may involve high or even prohibitive costs. Alternatively, foreclosure can be established indirectly by showing that the supplier possesses significant market power and has tied up a substantial portion of the market. Thus, the requirement to examine market power and market coverage is essentially equivalent to the requirement to conduct an effects analysis.
This was a novel approach, though not unprecedented. The CJEU had already blurred the line between object and effect in Société Technique Minière v Maschinenbau Ulm Footnote 30 and this is reflected in a number of rulings that feature a “more analytical approach” to object.Footnote 31 Allianz, however, was the first case where the Court used it to condemn an agreement coming under none of the established categories of object. The ruling in Allianz did not cite the above case law but purported to underpin its conception of “context” by referring to paragraph 21 of the ruling in Expedia.Footnote 32 However, that paragraph does not specifically address restrictions by object but rather restrictions of competition at large. Paragraph 21 must be read in conjunction with paragraph 20, which refers to “agreement[s] [that] perceptibly restrict … competition within the common market.” In fact, paragraph 21 refers back to “agreements perceptibly restricting competition” and the ruling provides in this context that “[t]he Court has held that the existence of such a restriction must be assessed by reference to the actual circumstances of such an agreement.”Footnote 33 The subsequent sentences of paragraph 21 must be interpreted in this light, including the final sentence, which states that “[i]t is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and the structure of the market or markets in question.” These factors are therefore relevant for determining whether a restriction of competition is perceptible—that is, whether a restriction exists at all. It is also noteworthy that the last sentence of paragraph 21 of Expedia—as indicated in the ruling—was taken from paragraph 49 of the CJEU’s judgment in Asnef-Equifax, which, however, deals exclusively with “the appraisal of the effects of agreements” and does not concern restrictions by object.Footnote 34
The CJEU’s reference to paragraph 21 of Expedia is irreconcilable not only with the language of that ruling but also with the propositions it sets forth. In Expedia, the Court held that a restriction of competition by object infringes Article 101(1) TFEU even if it is de minimis due to the parties’ low market. This implies that object restrictions are prohibited regardless of market power and effects.Footnote 35 It is logically inconsistent to argue that the existence of an anti-competitive object depends on market power, while at the same time maintaining that object agreements are prohibited regardless of market power.
All in all, Allianz implied that a truncated effects analysis must be carried out to ascertain whether the agreement has an anti-competitive object. This examination possesses nearly all the features of a full effects analysis, albeit in a methodologically simplified and empirically superficial form.
Two important facets of Allianz help explain why the ruling can be regarded as a milestone in the case law. First, it was a first chamber and not a Grand Chamber judgment, which may indicate that the Court did not envisage creating a turning point in the judicial practice. This is likely true, but it may also reflect a misconstruction of its own case law by the Court, leading it to overlook the novelty of its approach. As demonstrated above, the CJEU claimed to rely on an established conception of “context,” yet the case law it referred to—Expedia and Asnef-Equifax—provides no foundation for such a concept. Second, whether the Court consciously departed from its previous practice or not, the resulting case law diverged from it and Allianz has been frequently cited in subsequent rulings. It should be noted that, due to the absence of a formal precedent system, the CJEU’s citation practice is somewhat haphazard. Apart from a few classic milestone cases,Footnote 36 the Court rarely cites older competition cases, instead referencing more recent decisions that reproduce them. Allianz was consistently cited in a long line of judgments,Footnote 37 before gradually fading from direct reference, giving way to more recent decisions that nonetheless cite and incorporate it.Footnote 38
C. The Trajectory of the Post-Allianz Case Law
This section presents the subsequent case law on the unspecified category of anticompetitive object with a view to demonstrating two points. First, it synthetizes the case law to conceptualize the full-fledged doctrine. Second, it demonstrates that the doctrine has no added value: all cases where it has been applied could have been addressed just as effectively, in fact, more efficiently, under the traditional framework of the object inquiry or by an appropriate effects-analysis.
The case law is presented according to the following taxonomy. Section 3.1. discusses those cases where the CJEU engaged with the doctrine in detail, but the test yielded a negative result. What unites these cases—except for Maxima Latvija, which arguably should have never been referred to the CJEU—is that they all fall within the penumbra of an established object category. Nevertheless, the Court refused to conceive them as matters of delimitation. Section 3.2. examines those cases where the test yielded a positive result, but the application of the Allianz-doctrine was redundant, as the restriction clearly fell within one of the established object categories. Section 3.3. presents those cases where, again, the test yielded a positive result, but the application of the doctrine had no added value, as the restriction’s anticompetitive effects were manifest.
I. Applied but Found Inapplicable
The first three cases the CJEU encountered after Allianz—Cartes bancaires,Footnote 39 MasterCard, Footnote 40 and Budapest Bank Footnote 41 —concerned restrictions in bank-card systems. These could be conceived, along the naked-ancillary continuum, as questions of delimitation of different horizontal object categories, particularly price-fixing. Nonetheless, the CJEU assessed them under the Allianz doctrine. These were followed by Maxima Latvija,Footnote 42 which involved a textbook effect restriction and, hence, should have never been referred to the CJEU to ascertain whether it was anticompetitive by object. The final case in this cluster, Visma Enterprise,Footnote 43 likewise raised a question of delimitation of an object category, but was, nonetheless, assessed using the Allianz-doctrine.
In Cartes bancaires, French banks established an economic interest grouping to ensure the interoperability of the members’ card-systems and to maintain the scheme’s balance. The grouping introduced various measures to stimulate engagement in acquiring activities. One of these was a financial contribution paid by those banks that are less active in acquisition activities. The CJEU stressed that anti-competitive object must be conceived narrowly, as it is the exception and not the rule, and it extends only to the most serious anti-competitive practices that are, “by their very nature,” “harmful to the proper functioning of normal competition”Footnote 44 and “reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects.”Footnote 45
In MasterCard, the CJEU found that the multilateral interchange fee (MIF) used in bankcard systems—paid by the acquiring bank, which operates the payment terminal, to the issuing bank, which issued the bankcard—is not anti-competitive by object. It held that in this context “mere suppositions or assertions that the anti-competitive effects … are ‘obvious’ cannot … be relied upon.”Footnote 46 Although the question of object was not a pivotal issue, given that the MIF was assessed according to its effects and found restrictive,Footnote 47 the judgment makes it clear that automatic condemnation should be restricted to arrangements whose restrictive character is unequivocal.
Budapest Bank also dealt with the competition law characterization of the MIF. The HCO condemned Hungarian banks for fixing the domestic MIF and treating the two payment card companies—VISA and MasterCard—alike as anti-competitive both by object and effect.Footnote 48 The CJEU found the MIF not to be anti-competitive by object. While concluding that this is a fact-intensive issue and, hence, the final decision is up to the national court,Footnote 49 the Court also established a presumption against automatic condemnation.Footnote 50 The Court stressed that anti-competitive object is the exception and not the rule and, hence, competition authorities and courts should make use of this only when there is sufficiently solid and reliable experience—“une expérience suffisamment solide et fiable”—that bears out this conclusion.Footnote 51 It may be assumed that such experience may derive from earlier case law or empirical analysis.Footnote 52 The Court concluded that the experience with the MIF did not live up to this expectation.Footnote 53
According to the CJEU, the following raised doubts as to the anti-competitive nature of the MIF. First, while acknowledging that indirect price-fixing is also price-fixing,Footnote 54 the Court pointed out that banks did not fix the price but merely a cost element.Footnote 55 Second, it also underlined that complex two-sided markets are normally not amenable to the automatic condemnation inherent to a finding that an agreement is anti-competitive by object.Footnote 56 Third, the MIF appeared to serve the purpose of creating balance in the system, which may be a legitimate consideration and may make the multilateral cooperation ancillary, and call for an effects analysis.Footnote 57 Fourth, the MIF was not unilaterally determined by the sellers—issuing banks—but was instead based on a bipartite agreement between sellers and buyers—issuing and acquiring banks. Although the bipartite nature of the agreement does not rule out the existence of an anti-competitive object, it nonetheless raises doubts in this regard.Footnote 58
In Maxima Latvija, the CJEU encountered a question that, given the obvious answer, would have raised eyebrows in the pre-Allianz era. The Court was asked whether a vertical non-compete clause is anti-competitive by object. Maxima Latvija rented commercial spaces in large malls and shopping centers and, as “anchor tenant”, it was granted the right to approve “the lessor[’s] letting to third parties commercial premises not let to Maxima Latvija.”Footnote 59 As in the post-Allianz era virtually any agreement may be considered anti-competitive by object, the question was referred to the CJEU. The Court inspected the agreement by means of the Allianz doctrineFootnote 60 and confirmed the obvious: Vertical non-compete agreements are not anti-competitive by object and call for an effects analysis.Footnote 61
Most interestingly, the Court based its ruling on a textbook summary of the pre-Allianz conception of anti-competitive object, which called into question the cogency of the very doctrine established in Allianz. First, it underlined that the characterization of the agreement as anti-competitive by object should be based on its “content”—put it otherwise, the analysis should, in principle, remain within the four corners of the contract.Footnote 62 Second, automatic condemnation is confined to cases where the agreement “reveals in itself a sufficient degree of harm to competition.”Footnote 63 Even if it is demonstrated that the agreement “could potentially have the effect of restricting” competition, this cannot imply that it always has such effects “by [its] very nature,” that is, irrespective of the market context.Footnote 64 This implies that the agreement’s anti-competitiveness does not depend, among others, on the structure of the market and the market shares of the parties. Third, the categories of anti-competitive object—“certain collusive behaviour”—have to be defined on the basis of experience and not theoretical argumentation.Footnote 65
The first and the second points, arguably, imply that market context does not have the relevance Allianz attributes to it. The third point suggests that if neither the judicial practice, nor the literature has accumulated sufficient, empirical, experience about the arrangement at stake, it cannot be pronounced anti-competitive by object, but an effects analysis needs to be carried out. These contradictions make it difficult to reconcile the rulings in Maxima Latvija and Allianz.
In Visma Enterprise, the CJEU was invited to carry out the object-analysis of a soft customer exclusivity clause. The agreements between the software producer and its distributors provided for a six-month priority period for the dealer that the customer approached first. The priority was triggered by the registration of the customer by the dealer and the customer had the right to object to this.Footnote 66 The case involved a textbook example of free-riding. The negotiation and the individualization of the software presumably involved significant investments—sunk costs—on the side of the dealer and the producer envisaged stimulating its dealers’ marketing efforts by protecting their investments. Although it secured no exclusivity, the restriction created a six-month waiting time subject to the customer’s consent and, hence, it was akin to customer exclusivity.
The CJEU’s ruling provided a neat summary of the legal test of anti-competitive object and concluded that the priority clause did not meet this test. The Court reiterated the distinction between object and effect agreements.Footnote 67 Anti-competitive object makes the investigation of the effects unnecessary,Footnote 68 and
[t]he essential legal criterion for ascertaining whether an agreement involves a restriction of competition ‘by object’ is … the finding that such an agreement reveals in itself a sufficient degree of harm to competition for it to be considered that it is not necessary to assess its effects.Footnote 69
The classification of these agreements emerges from “their very nature”Footnote 70 and has to be based on prior experience that “shows that such agreements lead to falls in production and price increases, resulting in poor allocation of resources to the detriment, in particular, of consumers.”Footnote 71 Furthermore, there is a presumption against anti-competitive object in the sense that this concept “must be interpreted restrictively.”Footnote 72 Finally, the Court reiterated that the case-by-case object inquiry has to be comprehensive and extend to the totality of the circumstances, such as “the content of its provisions, its objectives and the economic and legal context of which it forms a part” and, as part of the context, “the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question.”Footnote 73
The ruling combines two weaknesses of the Allianz case law. On the one hand, the case could have been addressed under a traditional object category and offered an opportunity to clarify the boundaries of this. On the other hand, it was relatively straightforward, and the elusive Allianz doctrine overcomplicated it.
The priority clause did not come under any of the vertical categories that the case law considers anticompetitive by object. Although it could have been dwelled upon whether, in effect, it amounted to an exclusivity clause, it provided for customer and not territorial protection, hence, the purpose of market integration had no role in the assessment. As the CJEU noted in the ruling, it is a general principle that if there is workable inter-brand competition, intra-brand restrictions may cause no harm to competitionFootnote 74 —with the exception of the categories that are considered per se anti-competitive, such as resale price-fixing and absolute territorial protection. In this case there were clear free-rider problems, and it was plausible to assume that the priority time-window was created to prevent one dealer from free-riding on the marketing efforts and investments of another. In the absence of this, a dealer may be less inclined to make marketing efforts, and this disinclination may chill competition. The question of the case should have been whether the existing category of vertical exclusivity should be extended to the case. The CJEU’s answer was negative. However, instead of making clear that a vertical customer priority clause—the same as a vertical customer exclusivity clause—is not restrictive by object, the CJEU concluded that the arrangement was presumably not a restriction by object.
II. Applied to Agreements Covered by a Specified Object Category
In Hoffmann-La Roche & Novartis,Footnote 75 HSBC Holdings, Footnote 76 and Royal Antwerp Football Club, Footnote 77 the CJEU condemned restrictions that arguably came under an established object category. However, instead of using these complex cases of price-fixing and market sharing to clarify these object categories, it saved this interpretive work by going back to Adam and Eve and condemning them after an amorphous analysis.
In Hoffmann-La Roche & Novartis, the Court condemned a horizontal conspiracy to divide the market by means of scaremongering. However, instead of calling this cunning market-sharing by its name, it engaged in an obscure and amorphous demonstration about the agreement’s anti-competitive nature. This perfunctory and unstructured analysis significantly impaired the judgment’s doctrinal consistency. Instead of construing market-division in light of the case, the Court provided a trivial reasoning that may even suggest that any agreement to engage in a communication campaign to distort customers’ transactional decisions may be caught in the net of Article 101 TFEU—with the possibility to extend this, by analogy, to the unilateral acts of dominant undertakings.
The facts of the case revealed a complex form of market-sharing. Hoffmann-La Roche and Novartis marketed two competing drugs (Avastin and Lucentis). Even though these had virtually the same ingredients, they received marketing authorization for different purposes: Avastin for oncological purposes, while Lucentis for eye-diseases.Footnote 78 Because Avastin was ten times cheaper than Lucentis, it became widely used off-label, to treat eye-diseases.Footnote 79 In response to this, with a view to artificially differentiating between the two products and reducing their substitutability in the eyes of physicians and patients, the two undertakings launched a communication campaign asserting that Avastin raised safety risks if used to treat eye-diseases.
The CJEU found that the cooperation between Hoffmann-La Roche and Novartis had an anti-competitive object, because “it is likely that the dissemination of such information will encourage doctors to refrain from prescribing that product, thus resulting in the expected reduction in demand for that type of use”Footnote 80 and “an arrangement that pursues the objectives … of [misleading both the regulators and the general public] must be regarded as being sufficiently harmful to competition to render an examination of its effects superfluous.”Footnote 81
Although the ruling could be read as suggesting that the cooperation was a “cartel agreement,”Footnote 82 neither the Court, nor Advocate General Saugmandsgaard Øe tried to subsume it under one of the established object categories. This makes it intensely difficult to ascertain the holding. May any misleading communication carried out by two or more undertakings, under Article 101 TFEU, or a dominant undertaking, under Article 102 TFEU, that is capable of having a substantial effect on the competitive process violate EU competition law? It probably needs no explanation that such a principle would be odd and lead to extremely far-reaching consequences, especially because EU law already has a comprehensive regime addressing such issues: the Unfair Commercial Practices DirectiveFootnote 83 prohibits misleading business communication affecting consumers’ transactional decisions. What role may antitrust law have besides the Directive? While customers’ informed decisions are key to the sound operation of the competitive process, is antitrust law, which has generally been regarded as tackling the repercussions of market power, really supposed to deal with this issue?
It seems that, instead of the far-reaching conclusions, the ruling in Hoffmann-La Roche & Novartis is nothing more than a very poorly reasoned condemnation of a horizontal market-sharing scheme. In fact, the ruling is the object-lesson of how the frivolous Allianz doctrine impairs the traditional categories of anti-competitive object. The CJEU could not see the forest for the trees. What Hoffmann-La Roche and Novartis were doing was a peculiar form of market-division, which is a traditional and settled category of anti-competitive object.Footnote 84 Namely, the notion of market-division also encompasses arrangements that do not reach the level of an absolute ban. Besides explicit promises not to sell outside a territory or to a group of consumers, market-sharing also embraces their functional equivalents, where competitors seek to reduce the substitutability of their products by means of hindering outward sales or making inward orders from outside the allotted territory more difficult, for instance, by making them costlier or increasing customers’ search costs. It amounts to market-division if two competitors, while not banning cross-supplies, agree to compensate each other via a fee for deliveries to the other undertaking’s home country or they inform each other if they get an order from an out-of-state customer and give time to the other undertaking to intervene. In the same vein, the promise not to make out-of-state advertisements—active sales—,though not an absolute ban, may equally amount to market-sharing.
Interestingly, in Hasselblad,Footnote 85 the CJEU had no difficulty in treating the functional equivalent of resale price fixing as resale price fixing. Here, the dealers’ freedom to set the price was not limited; they simply could not communicate their discounted prices to the public. The Court equated the per se treatment of resale price fixing under Article 101(1) and the authorization of the producer to control dealers’ advertisements on selling prices.Footnote 86
A quick look at the case law of U.S antitrust provides an array of examples of market-sharing arrangements that are short of an absolute ban. In United States v. Sealy, Inc. Footnote 87 and United States v. Topco Assocs., Inc.,Footnote 88 the parties were allowed to sell outside the territory allotted to them; the only restriction was that they could not use the Sealy and the Topco trademarks. In United States v. Coop. Theatres of Ohio, Inc.,Footnote 89 the parties agreed to abstain “from actively soliciting each other’s customers.”Footnote 90 The Court of Appeals for the Sixth Circuit held that “the so-called ‘no-solicitation’ agreement alleged in this case is undeniably a type of customer allocation scheme which courts have often condemned in the past as a per se violation of the Sherman Act.”Footnote 91 The Court found “it unnecessary to engage in the ‘incredibly complicated and prolonged economic investigation’ under the rule of reason standard where, as here, the alleged agreement is a ‘naked restraint’ with no possible pro-competitive justification.”Footnote 92 In Blackburn v. Sweeney,Footnote 93 two personal injury law firms agreed not to advertise in the other’s territory, although their right to practice law was not restricted. The Court of Appeals for the Seventh Circuit considered the advertising restriction to be per se illegal market-division and held that “[t]o fit under the per se rule an agreement need not foreclose all possible avenues of competition.”Footnote 94
From an economic perspective, there seems to be no difference between these arrangements and the joint campaign of two competitors to reduce the substitutability of their products. In fact, under the circumstances, this was very likely the only way to isolate the two markets. It is unfortunate that the CJEU, instead of elaborating the definition of market-sharing and its functional equivalents, summarily condemned the communication campaign and, thus, further impaired the consistency and predictability of object-analysis.
In HSBC Holdings, banks manipulated the Euribor, which is an interest rate benchmark. This practice went beyond mere information exchange and amounted to a complex form of price-fixing. Banks could not fix the interest rate, as it was linked to the interest rate benchmark the clients were aware of, but they could fix the interest rate benchmark. Still, instead of linking the practice to the category horizontal price-fixing, the CJEU engaged in a comprehensive case-by-case analysis to demonstrate the arrangement’s anticompetitive object:
[T]he Commission’s characterisation of that manipulation as an infringement by object was essentially based on a restriction of competition created by an informational asymmetry between market participants, since participants in the manipulation, first, were better able to know in advance with a certain accuracy at what level Euribor would be and/or was intended to be set by their colluding competitors and, second, knew whether or not the Euribor on a given day was at artificial levels.Footnote 95
In Royal Antwerp Football Club, the CJEU encountered an input-side market-sharing arrangement. Nonetheless, instead of concluding that the restriction was an atypical form of a traditional object category, market-sharing, it condemned it after an amorphous analysis. The UEFA rules required football clubs to have a minimum number of nationally trained players. This appeared to be a territorial division of the human resources among competitors and, as such, market-sharing. Still, instead of applying this traditional category and explaining why the restriction at issue amounted to a peculiar market sharing, the Court started the analysis from the forbidden fruit. Although it acted as if market sharing were not a traditional object category, it virtually provided a textbook explanation of the anticompetitive repercussions of input-side market-sharing—referred to by the CJEU as the “upstream or supply market.”Footnote 96 The key issue was whether this market-sharing was ancillary to the championships and, hence, called for an effects analysis, or naked and, hence, restrictive by object. However, the Court did not address this facet at all.
III. Applied by Reason of Clear Anticompetitive Effects
The rulings in European Superleague Footnote 97 and International Skating Union Footnote 98 introduced the idea that an agreement may be anticompetitive by object when it is clearly anticompetitive by effect. The two cases concerned constructive non-compete clauses used by dominant sporting organizations. The sporting associations engaged in economic activities related to the organization and marketing of competitionsFootnote 99 and were in a vertical relationship with their members, who used these services. Vertical non-compete clauses typically qualify as effect agreements and, owing to the dominant position, anticompetitive effects could have been easily established—and were, in fact, established. Still, the CJEU held that the restrictions at issue were anticompetitive by object because they were clearly anticompetitive by effect.
In European Superleague the CJEU examined the statutes of Fédération Internationale de Football Association (FIFA) and Union of European Football Association (UEFA) which made participation in other club championships subject to their prior discretionary approval.Footnote 100 European Superleague, an emerging alternative football championship, challenged this provision. The CJEU established an anticompetitive object after an obscure substantive analysis. It pointed out that the prior discretionary approval enabled FIFA and UEFA to control market access and exclude competing undertakings.Footnote 101
The Court portrayed this as an “object” inquiry but in fact it carried out a truncated effects analysis tailored to the case and based on commonly known facts. The only reason why FIFA and UEFA controlled access to the market and were able to exclude competitors was that they had market power, nay, dominance.Footnote 102 In the absence of market power, they would have had little chance to do that. It was blatantly contradictory for the Court to conclude that the requirement of prior discretionary approval was anticompetitive irrespective of market power—which is a characteristic of “object” restrictions—because FIFA and UEFA had market power to put it into effect and, hence, it was anticompetitive irrespective of its effects simply because it produced specific anticompetitive effects.
The restriction at issue was a constructive vertical non-compete obligation, where a championship organizer—FIFA and UEFA—, which provided an idiosyncratic cooperative service, constructively blocked—or reserved the right to block—participation in competing championships, a competing service. Given that this amounted to a non-compete obligation with no time limit imposed by a super-dominant undertaking, the anticompetitive effects could have been established without detailed empirical evidence or quantitative analysis. The near monopoly position of FIFA and UEFA was common knowledge and the negative effects on competition could be reasonably inferred from the combination of the super-dominance and the inherent foreclosure effects of non-compete obligations. The analysis would have been expected to extend to the eventual redeeming virtues of the measures, however, none were demonstrated to justify a discretionary ban. The CJEU noted that, had the prior approval been linked to substantive criteria, that would have given the Court a chance to inspect whether these criteria were legitimate and embodied pro-competitive considerations.Footnote 103
As a corollary, the CJEU’s conclusion that the measures were anticompetitive was correct, but its classification was flawed. Article 101(1) prohibits both object and effect restrictions, hence, as to the conduct’s illegality, it makes little difference whether it breached Article 101(1) on account of its object or effect. Nonetheless, the CJEU’s ruling exacerbated the confusion about “object” and gave rise to perverse implications. It implies, among others, that single-championship requirements are automatically prohibited by Article 101(1) and, given that they are restrictive by object, cannot benefit from the de minimis.Footnote 104 This leads to the inconsistent result that even a championship with small market share and no effect on competition in the market may qualify as anticompetitive. A further inconsistency emerging from the ruling is that it rules out the consideration of the pro-competitive merits of single-championship agreements under Article 101(1). Single-championship requirements might have procompetitive benefits in certain sports or protect investments against free-riding. The object label rules out the consideration of these aspects under Article 101(1).
In International Skating Union, the CJEU encountered essentially the same restriction. The International Skating Union, the dominant organizer of skating competitions, required all skaters affiliated with national member federations to stay away from unauthorized competitions, thus restricting the access of competing organizers to the relevant market. As in European Superleague, the CJEU established anticompetitive object after an obscure substantive analysis, where it pointed out that the prior discretionary approval enabled the International Skating Union to control market access and exclude competing undertakings.Footnote 105
Interestingly, in Ordem dos Técnicos Oficiais de Contas, the CJEU seemed to classify a similar restriction as not restrictive “by object”Footnote 106 and suggested that it was anticompetitive “by effect.”Footnote 107 Here, the Portuguese Chamber of Chartered Accountants introduced a compulsory training system and put in place rules on the approval of service providers, while it also provided such services directly. The CJEU found that the system affected competition in the market for compulsory training for chartered accountants by establishing the conditions of access to this market. It found that the Chamber reserved a part of the market to itself and applied discriminatory conditions to the other part, which vested it with a good deal of uncontrolled discretion. This suggests that the CJEU could have easily treated the non-compete rules in European Superleague and International Skating Union as effect-based restrictions and, given the sporting associations’ immense market power, condemned them as anticompetitive “by effect.” In all these cases, a major—or even dominant—service provider reserved a market for itself. Although it could be argued that in European Superleague and International Skating Union the associations made more intensive use of the prior-approval mechanism to exclude rivals,Footnote 108 there is no indication in the rulings that this was, indeed, the case or the outcome turned on this at all. Furthermore, it could be argued that the restriction in Ordem dos Técnicos Oficiais de Contas was even more effective, as it was mandatory for accountants to join the Portuguese Chamber, while there was no legal obligation to join the sporting associations in European Superleague and in International Skating Union. Be that as it may, it is difficult to see the point in designating restrictions anticompetitive by effect as anticompetitive by object.
IV. The Full-Blown Doctrine
Post-Allianz case law turned the unspecified object category into a full-blown doctrine. In Visma Enterprise, the CJEU provided a set of circumstances relevant to this object inquiry, which was, in essence, based on the key elements set out in Allianz. These are “the nature of the goods or services affected,”Footnote 109 “the nature and quantity, limited or otherwise, of the products covered by the agreement,”Footnote 110 “the real conditions of the functioning and the structure of the market or markets in question”Footnote 111 —presumably including absolute and relative market shares,” and “the position and the importance of the parties on the market for the products concerned, [presumably including market power] and the isolated nature of that agreement or, alternatively, its position in a series of agreements.” Footnote 112
The CJEU’s case law on whether procompetitive benefits may be factored into the object inquiry has been contradictory. In a few cases, the Court has answered the question in the affirmative and held that procompetitive benefits need to be taken into account as part of the object inquiry if they are “demonstrated, relevant and specifically related to the agreement.”Footnote 113 However, in its recent ruling in Commission v. Servier,Footnote 114 in a sudden turn of events and without signaling any intention to depart from its settled case law, the Court held that
any positive or pro-competitive effects of conduct cannot be taken into account in order to determine whether it should be characterized as a restriction of competition by object under Article 101(1) TFEU, including in the context of any examination of whether the conduct at issue reveals the degree of harm required in order to be characterized as such.Footnote 115
Hopefully, the CJEU will soon resolve this contradiction and return to its more balanced approach. Every appreciable self-imposed restriction on an undertaking’s freedom of action may have restrictive aspects, even if outweighed by the procompetitive ones, and, hence, may easily amount to a restriction by object. Research and development (R&D) cooperation, vertical territorial protection, and selective distribution are all regarded as legitimate, but they all have restrictive aspects. If their procompetitive benefits are disregarded as suggested by the CJEU in Commission v. Servier, they could all be regarded as anticompetitive by object.
Apart from the above controversial case law, the only methodological element of effects analysis that clearly did not make its way into the object inquiry is the counterfactual. In the rulings in Lundbeck, Arrow and Xellia Pharmaceuticals, handed down on the very same day, the CJEU established that it is not mandatory to carry out a counterfactual analysis to identify the agreement’s object. The Court reasoned that if a counterfactual analysis were required, there would be absolutely no difference between object and effect.Footnote 116
The ruling in Allianz did not address the relationship between the doctrine and the specified categories. The CJEU’s subsequent rulings, however, confirmed that the specified categories were not swept away by the adumbrated case-by-case analysis. For a while, it could also be argued that the Court took a step towards adding a new item to the list of anti-competitive agreements by sowing the seeds of a new specified category. Later case law confirmed, however, that Allianz cannot be interpreted as merely creating a new category of vertical hardcore restraints but as redefining anti-competitive object at large.Footnote 117 According to this, anti-competitive object is an open box made up of a set of specified categories and an unspecified category. Put another way, the revisable but relatively closed list of object agreements was turned into an illustrative list. An agreement coming under none of the specified categories may still be classified as restrictive by object if, after a superficial effects analysis, it is found sufficiently injurious to competition.
In this spirit, in Toshiba, Advocate General Wathelet distinguished between agreements that “form … part of a category expressly referred to in Article 101(1) TFEU”Footnote 118 and those that “do … not come within one of the situations referred to in Article 101(1) TFEU or … ha[ve] features that render [it] … atypical or complex.”Footnote 119 The former may be condemned quickly, while in case of the latter, since they are unspecified, a “more thorough” contextual analysis is required.Footnote 120
This also finds reflection also in the 2023 Horizontal Guidelines, which identify two major cases of anticompetitive object. The first consists of specified categories. Here, the condemnation is based on “reliable and robust experience,” which evidently cannot pertain to a specific agreement but to a type of agreement. The second consits of the unspecified category of agreements that are considered anticompetitive by object on a case-by-case basis, as a result of their “specific characteristics,” after analyzing the agreement’s objectives and economic and legal context.Footnote 121
V. The Added Value of the Doctrine
The feasibility of the taxonomy used in Sections 3.1-3.3. showcases that, besides confusing the case law, the notion of unspecified object category has been of little use. Allianz was the last case in which the Allianz-doctrine made a difference. The unspecified category of anticompetitive object has no added value and certainly offers nothing to make up for the harm it causes in competition law (these are taken stock of in Section 4). Since Allianz, all the cases where this legal test yielded a positive result have either been covered by a specified object category anyway—horizontal market sharing in Hoffmann-La Roche & Novartis and Royal Antwerp Football Club and horizontal price-fixing in HSBC Holdings, as demonstrated in Section C(II)— or were clearly anticompetitive by effect—European Superleague and International Skating Union, as demonstrated in Section C(III).Those cases where the CJEU engaged with this doctrine in detail but finally identified no anticompetitive object were in the penumbra of a specific object category and could have been analyzed as questions of delimitation—demonstrated inSection C(I). These agreements were not anticompetitive by object because they did not come under the pertinent object category. The only exception is Maxima Latvija, which, however, was clearly not an object case and, hence, should have never been referred to the CJEU in the context of anticompetitive object. All in all, it seems that the Allianz-doctrine has nothing to offer in exchange for the harm it causes to competition law.
One may argue that, though in a conceptually inconsistent way, the Allianz-doctrine offers an abbreviated effects analysis in cases where this is appropriate for the restriction and the ensuing enforcement effectiveness reduces false negatives (under-enforcement) caused by unjustifiably high enforcement costs.
Granted, the effects analysis is costly and risky, while the automatic condemnation entailed by an anticompetitive object is cheap and straightforward. Nonetheless, there is a reason for the difference: the superficial assessment of effect-based agreements may lead to false positives. By way of analogy, the effectiveness of criminal enforcement could certainly be enhanced by discarding the pertinent procedural guarantees and lowering the standard of proof, however, this is still not considered to be a valid justification.
Furthermore, if there is a need for an abbreviated effects analysis, then an abbreviated effects analysis should be carried out instead of putting the stamp of anticompetitive object on agreements that are not anticompetitive by object. The Allianz-doctrine has some of the makings of an abbreviated effects analysis, but it is not an effects analysis and cannot be the surrogate of an abbreviated effects analysis. This is not merely a question of semantics. Consistency does have an important function in the life of law. Furthermore, as demonstrated through the example of the De Minimis Notice in Section 4 below, anticompetitive object is coded into various other constituent elements of competition law, hence, its inconsistent construction also impairs the functionality of other competition law concepts and rules. Finally, the Allianz-doctrine has some but not all the makings of an abbreviated effects analysis. For instance, to ensure that the distinction between object and effect does not vanish completely, the CJEU held that the counterfactual analysis is not part of the object inquiry,Footnote 122 while it is an essential part of any effects analysis.
D. Why Should the Object Inquiry Involve No Comprehensive Case-By-Case Analysis?
Section C demonstrated that the Allianz-doctrine has no conceptual or practical added value whatsoever. This section takes stock of the doctrine’s various drawbacks, which are, in essence, entailed by the ruling’s irreconcilability with two core principles of anti-competitive object. The first principle may be described as the redundancy of effects analysis. This implies that the object inquiry and the effects analysis have different focuses and, hence, there is a qualitative and not a quantitative difference between them. More importantly, it also implies that the redundancy of effects also extends to the proxies of effects—surrogates of proving effects—including market power. The second principle is the methodology of category-building, which implies that anticompetitive object operates through general categories. These two principles are inherent to the concept of anticompetitive object, both in terms of what the law is and what it ought to be. Although Allianz and the ensuing case law contravene these principles, they are nonetheless implied, in conceptual terms, in the defining characteristics of anticompetitive object and have been followed by the pre-Allianz case law. Furthermore, anticompetitive object would lose much of its merits, if these principles were discarded. The two principles are also interlinked. Category-building necessarily follows from the idea that the object inquiry involves no effects analysis. The redundancy of inspecting the “concrete effects”Footnote 123 of the agreement implies that only its abstract consequences may be examined, which are neither specific, nor actual.
The idea that the object inquiry is a comprehensive analysis carried out on a case-by-case basis has caused significant damage to competition law’s coherence and predictability, has reduced the practical benefits of anticompetitive object, and has impaired enforcement efficiency by raising the risk of false positives.
I. Conceptual Consistency
The distinction between object and effect implies that anticompetitive object prohibits a particular conduct, while the prohibition embedded in anticompetitive effect is triggered by the impact on competition. Naturally, the redundancy of proving the effects also precludes the examination of circumstances that may serve as surrogates for effects. Effects analysis often relies on circumstances—such as market power and market structure—that are leads onand thus can prove—effects indirectly. A requirement to examine these market circumstances would go against the irrelevance of effects and suppress its merits. This is described with the metaphor of anti-competitive “nature,”Footnote 124 which signifies that the restriction of competition accrues directly from the agreement itself and not from the joint effects of the agreement and extrinsic circumstances—such as market power, market structure, and entry barriers. Put another way, object agreements are irrebuttably presumed to restrict competition no matter what the market power of the parties and what the market’s structure is,Footnote 125 because it is the agreement itself that is restrictive of competition and not the agreement as it operates in the given circumstances. It is a key element of the treatment of agreements anti-competitive by object that they are prohibited regardless of their impact.Footnote 126 As a corollary, those agreements are anticompetitive by object that can be identified and judged without exploring the market.Footnote 127
The CJEU established as early as Consten & Grundig that object agreements breach Article 101(1) irrespective of their effects and once anticompetition object is established, effects become irrelevant.Footnote 128 This implies both that there is no need to prove the effects and that these agreements violate Article 101(1) even if it is proved that they have no anticompetitive effects whatsoever.Footnote 129 This rule determines both the effects analysis that is redundant in the context of object agreements and the limits of the object inquiry. If an effects analysis is not necessary to condemn anticompetitive object, it cannot be required to identify it in the first place.
Although the irrelevance of effects and the implied redundancy of the effects analysis are universally acknowledged, it is not entirely settled what kind of analysis is excluded by this statement. The first issue to be clarified is whether the redundancy of effects excludes the inspection of circumstances that are used to establish anticompetitive effects altogether or only the identification of the agreement’s actual effects is ruled out? Even though the question may appear to imply a salient conceptual contradiction, as it may be portrayed as essentially asking whether the exclusion of an effects analysis completely excludes an effects analysis, this is not necessarily so. There are circumstances that pertain to the core of effects analysis and there may be inspections that may be useful to prove effects but are not necessarily required. In other words, it is a valid question whether the scope of exclusion from the object inquiry is the same as what is and what may be included in the effects analysis. Does the exclusion cover the circumstances that are used to prove effects, or this is not an “either-or” question, with some considerations being part of both effects analysis and object inquiry? No question that an agreement’s results, that is, the specific and actual impact on the market, particularly prices, quantity, quality, product differentiation and innovation, are part of effects and need not be identified as part of the object inquiry. But what about the investigation of circumstances that require empirical economic analysis and prove effects indirectly, such as market power and entry barriers?
A narrow exclusion would only concern the proof of the specific and actual effects, meaning the anticompetitive outcome— for example, price increase and the causal link between the agreement and this outcome. This position has plausible textual support in the case law. The CJEU has consistently referred to the redundancy of proving the “concrete effects.”Footnote 130 This might be interpreted to mean specific and actual effects. Nonetheless, this notion is inconsistent with the other elements of the legal test and would also undermine the rationale of anti-competitive object. There are several reasons why the scope of the exclusion cannot and should not be conceived so narrowly.
First, potential anticompetitive effects are prohibited just as actual ones. They are relevant where the agreement has not yet been implemented or has not been in place long enough to manifest effects.Footnote 131 Potential effects, by definition, cannot be demonstrated through market outcomes, as there are no actual effects to prove. As a corollary, a narrow exclusion conflates the object inquiry and the analysis of potential effects.
Second, actual effects require circumstantial evidence—based on empirical data and economic analysis. Even if a price increase is shown, it remains a mere correlation unless causation is proven, which involves investigating circumstances that are also used to establish effects.
Third, often, actual effects are demonstrated solely through circumstantial evidence. For example, it is easier and more cost-effective to show that a network of non-compete clauses may potentially foreclose the market when the parties have market power and the network covers a large portion of the market, rather than proving actual foreclosure of competitors.
Fourth, a narrow exclusion is inconsistent with the purpose of object restrictions. Why are not all agreements judged by their effects, and why are some of them subject to summary treatment? The whole point is to avoid a costly effects analysis. There are certain restrictions where an effects analysis is redundant, as they can be condemned without carrying out a costly effects analysis. Anticompetitive object can fulfil its function only if it helps avoid costly market analysis. If proving potential effects or market power is still necessary, then the benefits of categorization by object are lost. What are the benefits of anti-competitive object if it does not require direct proof but requires indirect proof of actual effects? In terms of procedural burden and costs, there is little difference between proving that the agreement was followed by higher prices with a causal link and proving that the agreement has the potential to increase prices because the parties have market power. Market power, which is often demonstrated through market share, requires the definition of the relevant market, which, in turn, requires the inspection of interchangeability and entry barriers. The empirical assessment of these market circumstances requires a complex economic analysis, which, in terms of burden and costs, is comparable to the direct proof of anticompetitive effects.
The above considerations support the conclusion that the redundancy of proving effects extends to circumstances that serve as proxies for effects — like market power or structure. For instance, a non-compete clause’s foreclosure effect may be inferred from the supplier’s market power and the broad network of such agreements, even if actual exclusion is not demonstrated. Requiring these market-level inquiries undermines the concept of object restrictions, which are intended to bypass exactly such analyses. Similarly, anticompetitive object is irreconcilable with any conditionality based on market power. An agreement cannot be anti-competitive “by nature”Footnote 132 if its legality hinges on market power. If the assessment depends on market power, it is essentially effects-based.
As the CJEU held in Expedia, an object agreement breaches Article 101(1) irrespective of market share—it is presumed to have appreciable effects on competition.Footnote 133 This means even agreements with low market share are caught, not because they actually harm competition, but because they lack redeeming value. For example, a cartel without market power is a failed attempt to raise prices and may even be self-defeating—but it is still banned because it lacks pro-competitive merit. Therefore, anti-competitive object is justified not because the agreement always causes harm, but because it never brings benefit. False neutrals may arise, but there are no false positives.
In contrast, the Allianz-doctrine promotes a comprehensive case-by-case analysis that undermines the very essence of anti-competitive object. It requires an effects analysis, even though the purpose of identifying an object restriction is to dispense with the need for both an effects analysis and the definition of the relevant market. The notion that a frameless assessment of the totality of the circumstances must be conducted, where “everything is relevant, nothing is dispositive,”Footnote 134 runs counter to the rationale of anti-competitive objectFootnote 135 and is irreconcilable with the principle of automatic condemnation and the metaphor of anticompetitive “nature.”Footnote 136
The CJEU’s maundering in Visma Enterprise reflects the circularity and inconsistency of the Allianz-doctrine. It lists the same factors for object as for effect, giving the impression that they are interchangeable. There is no indication that the object inquiry should be quicker, more perfunctory, or less detailed. If this inquiry identifies no object restriction, it proceeds to an effects analysis,Footnote 137 where it reconsiders the same factors.Footnote 138 In other words, if an agreement is not restrictive by object, because of an effects analysis, it can still be condemned under an effects analysis. This circular logic makes object and effect indistinguishable.
It is very difficult to extract any meaningful guidance from the CJEU’s circular construction. Probably, the most reasonable conceptualization was offered by Advocate General Rantos in Banco BPN/BIC Português,Footnote 139 where he argued that the object inquiry examines the same aspects but involves a lighter touch, focusing on clear-cut cases. If there is no obvious reason to condemn, the process moves on to full effects analysis. In this construction, it is not the aspects but the depth of the analysis that distinguishes object from effect. However, this approach undermines the fundamental distinction between object and effect.
The Allianz-doctrine also blurred the traditional categories of anticompetitive object. As explicated in Section C(II), in Hoffmann-La Roche & Novartis, HSBC Holdings and Royal Antwerp Football Club the CJEU encountered atypical price-fixing and market-sharing agreements but condemned them under the Allianz-doctrine. These rulings are the poster children of how the doctrine’s unsophisticated approach blocks the development of well-established object categories and impairs competition law analysis. Because of the case-by-case approach of Allianz, there is no need to improve and enhance the definitions of object categories and to develop guiding principles for characterizing borderline cases. They can be condemned after a summary analysis.
In the same vein, as presented in Section 3.3., the rulings in European Superleague and International Skating Union suggest that an agreement can be anticompetitive by object simply because its effects are clearly anti-competitive — a proposition that contradicts the very text of Article 101(1).
One could argue that these conceptual flaws are academic — what matters is catching anti-competitive agreements and anticompetitive object reduces enforcement costs. None of the CJEU rulings analyzed in Section 3 feature a false positive. Although they rested on a questionable conceptual basis and followed a flawed classification, all the condemned restrictions appeared to violate Article 101(1). However, this misses the point. Anti-competitive object is a pervasive concept, woven into various elements of EU competition law.
A prime example is the De Minimis Notice. The pre-Allianz version — the 2001 De Minimis NoticeFootnote 140 — followed a simple pattern made up of market share caps—10% for horizontal and 15% for non-horizontal restraints—Footnote 141 and an exhaustive list of object restrictions excluded from the safe harbor.Footnote 142 This gave legal certainty. In contrast, the post-Allianz version, the 2014 De Minimis Notice,Footnote 143 contains only an illustrative list of excluded restrictions.Footnote 144 Although the Commission annexed a guidance on the interpretation of anti-competitive object to the 2014 De Minimis Notice,Footnote 145 this contains, likewise, only an illustrative list. It seems that the De Minimis Notice no longer offers a safe harbor; merely a “simple” harbor.Footnote 146
The fate of de minimis is an epitome of how the Allianz-doctrine sacrifices clarity and predictability without offering any meaningful benefit in exchange. The idea behind de minimis is that parties with no market power are too small to appreciably affect the market. This conception does not imply that these agreements are pro-competitive; it simply implies that they are innocuous. In fact, restrictions by object are no exception to this. A horizontal price-fixing cartel where the parties have less than 10% market share cannot harm competition in the market. It would harm cartelists more than competition. The reason why these arrangements are still excluded from the de minimis is that an exemption would go counter to and impair the compliance and enforcement benefits of the categorical prohibition. Given this background, there is no pressing need to damage the safe harbor of de minimis to catch some extremely rare and harmless cases, which allegedly slip out of the net of object categories.
II. Anticompetitive Object as a Practical Tool
Most of the virtues of anticompetitive object stem from its formalism, as well as the resulting clarity and predictability in their application. Competition law is known for having a limited number of formal rules. Anticompetitive object is one of these. Requiring a comprehensive, case-by-case assessment that considers all circumstances undermines this formal character. Effects analysis is not only time-consuming and costly but also unpredictable, and this unpredictability comes at a significant cost.Footnote 147 Competition law cannot provide a better yardstick without generating false positives. At the same time, it seeks to save clearly anti-competitive and clearly competition-friendly agreements from the quagmire of effects analysis. The rationale behind these formal rules is that a substantive case-by-case analysis would offer little added value, hence, there is no benefit to offset the compliance and enforcement costs generated by the lack of formal rules. By adopting clear-cut rules, competition law establishes “no-go zones” for arrangements that are always or almost always anti-competitive— such as those with an anti-competitive object‚—and safe harbors for those that are always or almost always innocuous or even pro-competitive, for example, agreements of minor importance or block-exempted agreements. This “regulatory utility” is, however, lost, if the rule’s application relies on a frameless and amorphous examination.Footnote 148
Given the redundancy of effects analysis, anticompetitive object operates through categories, rather than as a rule applied to individual agreements on a case-by-case basis. If neither the effects, nor their proxies are explored, the competitive assessment of the agreement necessarily remains abstract. This analysis cannot identify the effects of a specific agreement but rather those of a certain type (category) of agreement. As noted, the idea behind anti-competitive object is to screen out agreements that are always or almost always anti-competitive. However, this does not mean that courts and competition authorities should scrutinize individual cases to determine whether the agreement “reveal[s] a sufficient degree of harm to competition.”Footnote 149 Anticompetitive object can fulfill its function only if the cryptic definition of what makes an agreement anti-competitive by object is not applied to individual arrangements but, instead, used to create specific categories of agreements subject to automatic condemnation.Footnote 150 Anticompetitive object should serve as a “definition of definitions” or a principle of “judicial rule-making” used to frame the development of the various “pigeonholes” for agreements. This principle of category-building implies that the anti-competitive object of an agreement is not examined on a case-by-case basis; rather, specified categories are elaborated. The function of anti-competitive object is not fulfilled when real agreements are subjected to a comprehensive assessment. Instead, it is fulfilled by creating a relatively clear list of restrictions that are outright prohibited, automatically condemned, and are not afforded any opportunity for justification under Article 101(1) TFEU. This means the concept works indirectly: It defines categories of automatically condemned restrictions, and it is these categories that are actually applied in competition matters. Consequently, the question is not whether a restriction is anticompetitive by object but whether it falls under one of the categories of anticompetitive object.
III. Enforcement Efficiency and False Positives
It should not be overlooked that EU competition law is applied in a decentralized system. A solution that may seem plausible in a unitary system may not yield the same results in a heterogeneous, decentralized one. The EU enforcement system involves national competition authorities and courts with varying levels of competition law expertise, which exacerbates the risk of false positives inherent in the elusive Allianz-doctrine and jeopardizes the consistent application of EU competition law.Footnote 151 Procedure and institutional framework undoubtedly have implications for substantive law. Since the application of competition law is generally fact-intensive, clear-cut rules are invaluable not only for enterprises—and their counsels—but also for national authorities and courts. To ensure the decentralized system’s effectiveness, it is essential to preserve the EU institutions’ primacy in interpreting EU competition law—which is, in case of the CJEU, a monopoly. Therefore, it would be advisable to give, as far as possible, a uniform definition of legal concepts. Otherwise, the consistent and uniform application of EU competition law would be unnecessarily endangered. Since it is inevitable to grant national authorities and courts a considerable leeway in effects analysis, this further underscores the value of a uniform and clear-cut concept of anti-competitive object.
The risk the Allianz-doctrine poses to the decentralized enforcement systems is illustrated by the national follow-up judgment in the very case. The CJEU’s preliminary ruling required the national court to thoroughly examine whether the arrangement under scrutiny had an anti-competitive object in light of all circumstances and its market consequences. In reality, however, the Hungarian Supreme Court’s follow-up judgment did not provide such a thorough examination but quickly concluded that the arrangement was restrictive by object.Footnote 152
Maxima Latvija also provides a good illustration of this problem. Here, the CJEU’s role was not to develop EU competition law but simply to reiterate it. The national court sought to determine if a vertical non-compete obligation, which is block-exempted for five years,Footnote 153 is anticompetitive by object. In the pre-Allianz era this would have been an acte claire, but in the post-Allianz era, virtually any agreement could be considered anti-competitive by object. In the end, the CJEU confirmed the obvious: Vertical non-compete agreements are not anticompetitive by object and require an effects analysis.Footnote 154
E. Comparative Perspectives: Allianz and American Antitrust Law’s Intermediate Modes of Analysis
The Allianz doctrine may be juxtaposed with U.S. antitrust law’s intermediate modes of analysis. This parallel may suggest that the unspecified category of anticompetitive-object is a historical necessity rather than a doctrinal dead end. Indeed, the notion that Allianz represents a European analogue of the U.S. “quick look” approach is relatively well accepted in the literature.Footnote 155 A closer analysis, however, reveals significant conceptual differences. These distinctions underscore the idiosyncratic nature of Allianz and demonstrate that the problems it seeks to address would be better resolved by introducing a structured, sliding-scale approach to effects analysis rather than by remolding the concept of restriction by object.
To provide a comparative assessment of Allianz, it is helpful to distinguish between two strands of intermediate analysis in U.S. antitrust law.Footnote 156 The first strand—referred to here for simplicity as the “quick look” approach—applies solely to per se unlawful agreements and their penumbra and it allows limited consideration of proffered justifications.Footnote 157 This is not a prohibitive test but rather a saving mechanism. It does not aim at swift condemnation but rather permits the exoneration of certain agreements otherwise falling within per se categories. For example, in NCAA v. Board of Regents,Footnote 158 the Supreme Court used the per se label but nonetheless considered the justifications of the defendants. Similarly, in National Society of Professional Engineers,Footnote 159 the Court reclassified an arguably per se agreement under the rule of reason in order to consider justifications, though it swiftly determined anticompetitive effects and gave only a “quick look” to the affirmative defense. The second strand—referred to here as the “abbreviated” or “truncated” rule of reason—applies to agreements that are likely anticompetitive but do not fall under any per se category. These are rule-of-reason cases in which anticompetitive effects can be established without engaging in a full-blown analysis. This test contributes to enforcement through a prohibitive element, not a saving one, since rule-of-reason agreements can be justified.Footnote 160 A relevant example is FTC v. Indiana Federation of Dentists, Footnote 161 where the Supreme Court explicitly held that the agreement was not per se unlawful.Footnote 162 However, given its potential to disrupt the market’s price-setting mechanismFootnote 163 and the lack of credible procompetitive justifications, the Court found that a detailed showing of anticompetitive effects was unnecessary.Footnote 164
The key distinction between the “quick look” doctrine and the Allianz doctrine lies in how and which agreements are captured. The prohibitive side of “quick look” is identical to that of the per se rule; it is not an extension but rather an exception to per se illegality. It softens per se condemnation by creating a narrow escape route. In NCAA v. Board of Regents, where the “quick look” originated, the Court identified the conduct as horizontal price fixing and output limitation but declined to apply a strict per se rule.Footnote 165 Thus, “quick look” is confined to specified agreements falling within per se categories and employs the same classification method. In contrast, the Allianz doctrine applies to unspecified agreements that fall outside the per se pigeonholes and requires a truncated effects analysis.
Both doctrines permit procompetitive benefits to rescue the agreement, but the Allianz doctrine imposes more stringent requirements. Under “quick look,” procompetitive justifications can exempt the agreement, provided they are plausible and merit further consideration. By contrast, the Allianz doctrine may consider such justifications under Article 101(3), which, however, involves a high evidentiary burden. Although the Court held in a number of cases that procompetitive benefits should be considered when classifying the agreement under Article 101(1), provided they are “demonstrated, relevant and specifically related to the agreement,”Footnote 166 in its recent ruling in Commission v Servier, the Court held that “any positive or pro-competitive effects of conduct cannot be taken into account in order to determine whether it should be characterised as a restriction of competition by object under Article 101(1) TFEU.”Footnote 167
The abbreviated rule of reason bears a closer resemblance to the Allianz doctrine. Both are driven by the same enforcement logic and enable more efficient scrutiny of inherently suspect agreements that do not merit the full rigors of a rule-of-reason analysis. Additionally, their scopes overlap—each applies to non-per-se agreements that demand closer, but not exhaustive, scrutiny.
Nevertheless, a key conceptual difference remains. The abbreviated rule of reason is still part of the rule-of-reason framework, albeit in simplified form. It does not always require market definition or detailed evidence of market power, but it does demand some corroboration of anticompetitive effects and affords the defendant a full opportunity to rebut and justify the restriction. By contrast, the Allianz doctrine identifies agreements as anticompetitive by object, which implies they are prohibited irrespective of effects. This theoretical framing limits the defendant’s ability to argue lack of market power or absence of effects. The “object” label excludes the application of de minimis and inherently raises skepticism toward countervailing efficiencies. Although object restrictions may, in theory, be justified under Article 101(3), it is a general principle that object agreements are unlikely to meet the conditions of this provision.
Despite these conceptual divergences, the Allianz doctrine and the abbreviated rule of reason are both responses to the same practical need to avoid the inefficiency of full-blown effects analysis in cases where it is unnecessarily elaborate. U.S. antitrust law accommodates this through an intermediate tier within effects analysis, while EU competition law has embedded this tier within the object inquiry. The following section argues that this placement is misguided. Rather than distorting the concept of anticompetitive object, the EU should—like U.S. antitrust—develop a structured, sliding-scale approach within effects analysis itself.
F. Closing Thoughts
There is a legitimate need for formalism in competition law. The question is not whether formalism is needed, but to what extent.Footnote 168 The Allianz-doctrine upsets the balance between formalism and substance.Footnote 169 Paradoxically, although the idea of an unspecified object category appears to allow more room to economic analysis, it actually leads to less. The doctrine is meant to apply to agreements that fall outside the established object categories and, in the pre-Allianz era, would have required an effects analysis.
The belief that the formal rule of anticompetitive object can be reasonably transformed into a substantive legal test is a misconception. Based on this misconception, the CJEU discarded the principle of category-building and embraced the notion that anticompetitive object can be established through a comprehensive case-by-case analysis. This conflates object and effects inquiries, rendering anticompetitive object elusive and unpredictable, whereas clarity is supposed to be its core feature. This conceptual inconsistency generates unnecessary uncertainty, undermines the effectiveness of competition law, and erodes the practical value of anticompetitive object. The concept is embedded in various formal rules and legal doctrines; its doctrinal distortion therefore causes significant harm. The new approach increases the risk of false positives by enabling courts to condemn complex market practices without conducting a proper effects analysis. While defendants can always challenge the finding of a restriction by object, they are denied the opportunities available under an effects analysis. Once the court is persuaded that an agreement is anticompetitive by object, the defendant cannot avoid condemnation under Article 101(1)—even by proving the absence of anticompetitive effects—because such agreements are prohibited regardless of their actual outcomes. This inherent unpredictability may have a chilling effect on legitimate business conduct.
The CJEU’s recent judgment in Commission v. Servier, holding that the object inquiry should ignore the agreement’s “positive or pro-competitive” benefitsFootnote 170 and focus solely on the restrictive aspects, epitomizes the Court’s fragmented and inconsistent reasoning. Taken at face value, this position would result in an all-encompassing notion of object and lead to absurd outcomes. Almost any appreciable, self-imposed restriction on an undertaking’s commercial freedom may have restrictive elements—even when abundantly outweighed by procompetitive benefits—and could thus be wrongly categorized as a restriction by object. R&D collaborations, vertical territorial protections, and selective distribution systems all contain restrictive aspects but are widely accepted as legitimate. If procompetitive benefits are disregarded, as the Court suggests in Servier, these would also qualify as restrictions by object. Moreover, while it is reasonable to ignore procompetitive benefits in relation to well-established object categories—such as cartels, which are inherently harmful—it is odd to do so when the very issue is whether an agreement constitutes a restriction by object at all.
It is hoped that this sudden doctrinal shift remains a limited intermezzo in the case law, especially since the Court has not indicated any intent to deviate from its established jurisprudence, which did take procompetitive benefits into account during object assessments.
It must be noted that anticompetitive object does not exclude all substantive analysis—only effects analysis. Contextual analysis remains an integral part of the object inquiry. However, unlike the effects analysis, it does not rely on empirical economic evidence and can be conducted using traditional legal methods. Contextual analysis should not require more than a rudimentary understanding of economics. It should be limited to interpreting the agreement, understanding its economic function, and classifying it accordingly.Footnote 171 For example, determining whether an agreement is horizontal or vertical necessitates consideration of its economic context. An agreement to exchange commercial data is not anticompetitive by object if the data is historical.Footnote 172 Likewise, the exchange of current data is not anticompetitive by object if the data is aggregated statistical information.Footnote 173 An inquiry into the legal and economic context helps clarify whether the data is historical and aggregated, rather than current and individualized. Similarly, genuine agency agreements are exempt from most prohibitions on vertical restraints; since this depends on the risks borne by the agent,Footnote 174 examining the economic and legal context is essential. Contextual analysis is also relevant in cases that hinge on the question of ancillarity.
The Allianz-doctrine offers no added value to offset the harms it generates. All cases where the doctrine was applied could have been more effectively assessed under the traditional category-based approach to anticompetitive object, or through the general principles of effects analysis. The restrictions condemned under the doctrine could have been addressed either within established object categories or, where appropriate, as clearly anticompetitive by effect following an abbreviated analysis. Likewise, cases where the doctrine was applied but yielded a negative result could have been handled as questions of category delimitation: These agreements were not restrictions by object simply because they did not fall within a recognized object category.
Some may argue that by prescribing an abridged effects analysis, competition enforcement can avoid false positives, particularly in cases where an agreement fits an object category but causes no actual harm to competition— for example, in the absence of market power. However, this argument misses the mark. Allianz did not soften or qualify existing object categories; instead, it added an unspecified category to the list, thereby extending the scope of prohibition rather than limiting it. Moreover, even if Allianz implicitly introduced a market power qualification, which it did not, the benefit of such a qualification is questionable, as it could result in excusing failed cartels.
The Allianz-doctrine may be viewed as the redirection of the desire for a simplified effects analysis. It bears some resemblance to U.S. antitrust’s intermediate modes of analysis. However, there is a subtle but important difference between the two. The intermediate modes of analysis, referred to as “quick look” or abbreviated rule of reason, come in two forms.Footnote 175 The first creates a narrow exception allowing courts to consider justifications for agreements that would otherwise be deemed per se illegal.Footnote 176 This roughly parallels the principle that even object restrictions may benefit from Article 101(3), but does not parallel the Allianz-doctrine. The second form establishes an abbreviated rule of reason for agreements with high anticompetitive potential that do not fall within any per se category. These agreements remain in the purview of the rule of reason, but their anticompetitive effects are established by an alleviated standard of proof.Footnote 177 Anticompetitive effects are not conclusively presumed but can be established without full-scale economic analysis. While this approach may resemble Allianz, it differs in a key respect: the abbreviated rule of reason is still a form of effects analysis, whereas Allianz results in per se condemnation under Article 101(1).
EU competition law has not yet developed an analogous intermediate mode of analysis for cases that lack an anticompetitive object but do not merit a full effects analysis. This is a genuine gap in the EU’s analytical toolkit. However, it should be addressed by designing an abbreviated version of the effects analysis—not by distorting the concept of restriction by object.
Acknowledgments
The author declares none.
Funding Statement
The research was supported by the ICT and Societal Challenges Competence Centre of the Humanities and Social Sciences Cluster of the Centre of Excellence for Interdisciplinary Research, Development and Innovation of the University of Szeged. The author is a member of the Law and Competitiveness research group.
Competing Interests
The author declares none.
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