Pompes Funèbres: the Luxembourg Competition Authority closes with a commitment decision an investigation into abusive practices of a local authority

By a commitment decision made on 16 January 2015 the Conseil de Concurrence de Luxembourg or Luxembourg Competition Authority (LCA) has recently closed an investigation into abusive conducts carried by the Municipality of Luxembourg (Case n. 2015-E-01, Pompes Funèbres) By a regulation enacted in June 2014 the Municipality of Luxembourg (the Municipality) reserved to itself the provision of transport services of corpses within the municipal territory and towards the graveyards managed by the Municipality, with the exception of transport services having the origin in a different municipality. In other words, the June 2014 Regulation gave the Municipality a monopoly on transport services within its territory.
The LCA started the investigation against the Municipality, following the receipt of a complaint filed by a trade association. The LCA applied the functional approach developed under EU law to establish whether the Municipality qualified as an undertaking, thereby being subject to competition law. The key factor was whether the Municipality carried out an economic activity, regardless of its legal status. The LCA found that the Municipality in the provision of the services for the transport of corpses carried out an economic activity, considering that such activities were partly carried out also by private undertakings with which the Municipality was then competing. For this reason, consistently with Höfner (Case C-41/90), the LCA ruled out that the transport activities had to be carried out by a public authorities and had a public nature. As a result, the LCA held that the Municipality when running these transport activities fell within the scope of application of competition law.
Crucially, Pompes Funèbres confirms that the Luxembourg Competition Act applies to public entities, as it is the case with the competition provisions in the EU Treaties and in the national legal systems of the other EU Member States. Therefore, when acting as market operators, Luxembourg public entities have to make sure that their conducts comply with competition provisions.
That said, the LCA identified the relevant market affected by the conducts of the Municipality in the market for the provision of services for the transport of corpses within Luxembourg City. Then the LCA found that the Municipality, by reserving to itself the transport services for corpses, foreclosed all competitors from the market. In addition, the LCA noted that the Municipality failed to submit any objective justification for the creation of the monopoly. Therefore, the LCA believed the Municipality had infringed Article 5 of the Competition Act of Luxembourg of 23 October 2011, corresponding to Article 102 TFEU.
To address the competition concerns of the LCA, relying on Article 13 of the Competition Act of Luxembourg, the Municipality submitted the commitment to amend the June 2014 Regulation. More specifically, the Municipality committed to open up the relevant market to private undertakings. The new text of the Regulation should lay down that 'Le transport des corps vers les cimitières de la ville se fait par auto-corbillard'.
The LCA found this behavioural commitment suitable to resolve the competition problems caused by the conducts of the Municipality. Accordingly, it closed the investigation with a commitment decision, without making a decision on whether the investigated conducts of the Municipality amounted to a competition infringement. Before concluding, it may be worth noting that the LCA accepted the commitments tabled by the Municipality without subjecting them to a market test. This is inconsistent with the practice followed by the European Commission and the national competition authorities of the other EU Member States. Indeed, they generally decide whether to approve or reject the set of commitments offered by the parties on the basis of the outcome of the market test on which the commitments have been previously subjected.

Comments

Pearl Smith said…
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April 23, 2020 at 5:33 AM
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