The Slovenská sporitel’ňa case: Can an unfair competitor be protected by competition rules?

Pursuant to the Article 267 TFEU preliminary ruling procedure in Slovenská sporitel’ňa the Court of Justice (CJ) dealt with the question whether a number of undertakings infringed Article 101 TFEU by agreeing to stop supplying a competitor of them that was alleged to carry out illegal activities.

Akcenta was a Czech based financial house that in order provide cashless foreign exchange services to its clients in Slovakia needed to have access to current banks accounts in Slovakia. Considering Akcenta as a dangerous competitor, three Slovakian banks agreed to collectively terminate all the contracts they have concluded with Akcenta to the effect that the latter would have no more access to the bank accounts of the parties. The Slovakian competition authorities (SCA) found such agreement to be anticompetitive and fined the parties for infringing Article 101 TFEU (for a comment on this case see here.

The banks appealed the SCA decision, pleading that by the contested agreement they reacted to the Akcenta unfair conducts. They argued that as Akcenta did not have the requisite authorization from the Slovakian Central Bank to provide cashless foreign exchange services. Therefore, so the argument of the parties run, Akcenta was not entitled to legal protection and, accordingly, the parties’ collective refusal to supply did not breach competition.

The Court of Bratislava annulled the challenged decision (for a comment on the judgment, see here and here) and the SCA appealed to the Slovakian Supreme Court. The Supreme Court made a preliminary referral to the CJ (see here). It sought clarification on whether the contested agreement aimed at foreclosing a non-compliant firm from the market was caught by the prohibition in Article 101(1) TFEU and, if it is the case, may for qualify for the individual exemption in Article 101(3).

To begin with, the CJ said that the purpose of Article 101 is to protect not only competitors or consumers but also the competition structure of the market. Then, it pointed out that the agreement at hand was anticompetitive by object. It also noted that they parties did not challenge the legality of it before the SCA started the investigations. Therefore, in order to assess the competition compliance of the agreement, the issue of the alleged illegality of the Akcenta conducts was not relevant. Public authorities rather than private undertakings have the responsibility to monitor compliance with statutory requirements. In the case of Akcenta this task implies complex assessments.

The CJ then focused on the granting of the exemption in Article 101(3) TFEU to the contested agreement. Apparently, the GC was ready to admit that the agreement might fulfil one condition for the application of Article 101(3), the promotion of economic progress. However, it ruled out that the agreement met the other three conditions, especially the proportionality requirement. Whether the goal pursued by the parties was to force Akcenta to comply with Slovakian law, it could be attained by lodging a complaint with the competent authorities, instead of driving the non-compliant firm off the market.

To sum it up, the Slovenská sporitel’ňa case is about a horizontal foreclosure arrangement conceived by the parties as a disciplining measure aimed at a competitor that was unfairly competing with them, given that it did not possess the statutory licence to carry out its economic activity. The questions addressed by the CJ were whether the aim pursued by the parties to the arrangement to punish a non-compliant competitor was of any relevance either to rule out the anticompetitive nature of the arrangement under Article 101(1) or for the granting of an individual exemption under Article 101(3). The CJ replied in the negative to both the questions, holding that the objectives of the parties to punish the defiant competitor was not relevant under competition law.

It may be interesting to compare the strict approach of the CJ in Slovenská sporitel’ňa with that it took in the United Brand case decided in the context of Article 102 TFEU. As is known, in United Brand the ECJ ruled that the refusal to supply a long-standing customer that abides by normal commercial practice constituted a competition infringement. Arguably, Akcenta was not playing by the rules and its conduct fall outside the normal commercial practice given that it was carrying out an activity for which it did not have the requisite licences. Nevertheless, the CJ hold that the contested arrangement infringed competition law. It can be said that the gist of the judgment was the circumstance that the parties collectively agreed how to react to the competition threat posed by Akcenta jointly deciding to stop dealing with it. In this way they weakened the competition structure of the market by reducing the capability of market players to autonomously deciding their commercial policy. Had the parties individually decided to deny Akcenta access to bank accounts, would they have escaped any competition liabilities? Probably.

It must be said, however, that the in BBI Boosey & Hawkes: Interim Measures (OJ 1987 L286/36) the European Commission taken a stricter approach closer to the CJ rulings in Slovenská sporitel’ňa. The Commission ruled that the steps taken by a dominant firm to protect its commercial interest from a potential competitor intending to enter the market dominated by it must be fair and proportional to the threat. And the immediate withdrawn of all supplies to the potential competitor does not meet such conditions.