While not completely overturning the Alrosa case law, the Court of Justice’s judgment in Canal+ (Case 132/19 P) crushed the “sky is the limit” reasoning that it introduced when it comes to commitments. Despite this, the weak application of the proportionality principle featured in Alrosa is still alive.
In Alrosa, the Court of Justice ruled that proportionality means something different in commitments cases (Article 9 of Regulation 1/2003), as compared to remedies imposed by the Commission in the context of infringement decisions (Article 7 of Regulation 1/2003). Accordingly, applying the principle of proportionality “is confined to verifying that the commitments in question address the concerns it expressed to the undertakings concerned and that they have not offered less onerous commitments that also address those concerns adequately” (Court of Justice, Alrosa, para. 41). When it comes to Article 7, however, proportionality has a stricter meaning, which is that the Commission’s remedies must “not exceed the limits of what is appropriate and [must be] necessary” (General Court, Case T-111/08, para. 323).
It is fair to say that for a long time, Alrosa was seen as a free pass for the Commission, as it allowed it to accept commitments that went beyond what was considered as proportionate under Article 7. In other words, the sky was the limit. However, there was always a caveat: “when carrying out [the] assessment [of commitments], the Commission must (…) take into consideration the interests of third parties” (Court of Justice, Alrosa, para. 41).
The Canal+ judgment was the first time the Court was overturning a commitments decision — and it did so on the basis on the interest of third parties. In other words, the last sentence of the 41th paragraph of the Court’s judgment in Alrosa had remained dead letter until Canal+ — and it came back to bite the Commission. In that sense, Canal+ put the Alrosa genie — which could grant the Commission almost any wish when it came to commitments cases — back in the bottle, with a clarification. In Canal+, Paramount’s commitments involved not enforcing certain territoriality clauses, resulting in Canal+’s contract with Paramount (which was based on this clauses) becoming effectively void. While the General Court claimed that disputes based on this contract could be solved before national courts, the Court of Justice dismissed this possibility, invoking Article 16 of Regulation 1/2003, which clearly states that national courts cannot issue decisions that conflict with a Commission decision. This meant the Commission adopted a decision that eliminated contractual rights of third-party Canal+ without giving it real legal recourse.
In Canal+, the Court distinguished (i) the proportionality of the commitment to solve identified competition issues from (ii) the proportionality of the commitment with regards to third parties.
While Canal+ goes a step towards a better consideration of third parties, the weak definition of proportionality for commitments themselves (i.e. with regards to their objective) remains well and alive. This poses several issues:
- Alrosa effectively shielded the Commission from substantive judicial control of the content of its commitment decisions, thereby becoming a preferred tool for DG COMP.
- Without a substantive proportionality review, the Commission can use commitments in a “regulatory” fashion, i.e. in order to influence the structure of markets (beyond what is necessary). It must be noted that although it is the parties who formally propose commitments, the Commission often has a significant influence on their content.
- Several key procedural rights apply with an Article 7 decision, and not an Article 9 decision — for example, the right to be heard and have access to the file kick in when a statement of objection is addressed to the undertaking(s), which is not the case for commitments.
While Canal+ was a step in the right direction to protect the rights of third parties, the principle of proportionality (enshrined in Article 5(4) of the TEU) has been durably weakened — even after Canal+ — by Alrosa.
Co(E)mpetition Procedure 