It seems that with its June decision in T-Mobile Netherlands BV v. Raad van bestuur van der Nederlands Mededingingsautoriteit, the European Court of Justice is sending a message: Don’t even talk about it. The court ruled that a “concerted” anti-competitive practice can result from the exchange of a single piece of information at a single meeting between competitors.

The decision has broad implications for any contact between competitors and for the exchange of information in trade associations; moreover, in arriving at its conclusion the ECJ enunciated several corollary rules that lower the threshold for proving an antitrust violation under European Union law.

“The case confirms that concerted actions can have an anti-competitive object even if there is no impact on the market in the sense of a direct link with retail prices,” says Anthony Woolich, a competition partner at Holman Fenwick Willan in London.

That’s very different from American law, where the prosecution of antitrust offenses often hinges on proving the anti-competitive practices impacted the relevant markets.

“Unlike U.S. prosecutors, EU prosecutors will have no obligation to prove a causal link between the exchange of information and the restrictive effect on the market,” Woolich says. “The burden is on the company to prove both that the impugned conduct was not capable of affecting competitive conduct and that it did not actually do so.”

Object Scrutiny

T-Mobile turns on Article 81(1) of the Treaty of Rome, which prohibits “concerted practices” that have an “object or effect” of restricting competition.

The case arose when five Dutch telecommunications companies met to discuss reducing the commissions they paid their mobile telephone dealers. During the meeting, they exchanged confidential information about their own payment practices.

The Netherlands Competition Authority ruled that the companies had entered into a concerted practice and imposed a EUR88 million (almost $129 million) fine.

The companies appealed to the Dutch Appellate Court, which asked the ECJ to address various points of law, including the criteria involved in deciding whether a concerted practice had an anti-competitive object; the scope of the presumption of causal connection between a concerted practice and market conduct; whether the presumption applied in the case of a single meeting between competitors; and whether prosecutors had to establish harm to consumers.

The court confirmed that a concerted practice has an anti-competitive object if it has the mere potential to affect competition adversely–it is not necessary to prove that competition was affected. In the context of information exchanges, Article 81 prohibits any contact between competitors that might influence their individual market conduct. Information that removes uncertainty in the market affects competition and therefore is offensive, the court said.

Here, the fact that the information the telecoms exchanged dealt with dealer commissions rather than retail prices was irrelevant. If the exchange was competitively relevant in any way, the court would deem it offensive.

The ECJ also dismissed the companies’ argument that a causal connection between a concerted practice and the involved parties’ market conduct applies only when companies met with some regularity and knew confidential information had been exchanged. Instead, the court concluded that a single meeting can suffice to align market conduct. It is sufficient, the court stated, that “practical cooperation” between competitors “is substituted for the risks of competition.”

Finally, the court put the onus on the competing parties to rebut the presumption that the impugned practices affected their market behavior or that the anticipated market effects did not occur. And even if parties meet this burden, it does not obviate liability but could only influence the amount of the fine or damages.

Colluding Competitors

Sven Voelcker, a competition partner at WilmerHale’s Brussels office, says the business community initially was aghast at T-Mobile.

“The reaction to the news that courts would regard an information exchange at a single meeting as sustained enough to merit the assumption that the information was somehow used in market behavior was shock and horror,” he says.

But closer analysis of the case, Voelcker says, reveals a unique situation.

“We’re talking about a very small and transparent market with only five operators where everyone knew exactly what their competitors were charging in terms of monthly fees, minutes and equipment subsidies,” he says. “The only invisible competitive parameter was the commission paid to distributors and that’s what the operators discussed at the meeting.”

To be sure, the decision does not state that a single meeting will always give rise to a concerted anti-competitive practice.

“What T-Mobile says is that one meeting might be sufficient depending on the specific facts, the information exchanged and the market structure,” Woolich says.

But the court added that if “the objective of the exercise is only to concert action on a selective basis with reference simply to one parameter of competition,” a single meeting between competitors may suffice to show the anti-competitive object.

Ultimately, the court concluded, the key issue was not the number of meetings or information exchanges but whether the information exchanged had influenced, or had the potential to influence, participants’ market conduct.

Proceed With Caution

Still, there’s little doubt that T-Mobile leaves behind a legacy of practical difficulties and uncertainty regarding the risk of contact between competitors, in particular their participation in trade associations whose members share information.

Legal commentators agree that it has now become critical for trade associations to adopt and enforce rules and practices to preclude direct or indirect contact between competitors that could influence market conduct or reduce uncertainties about the future conduct of competitors.

“But it’s virtually impossible to draft rules that are sufficiently clear and practical and at the same time eliminate all conduct that could somehow be construed as ‘capable’ of distorting markets by reducing or removing competitive uncertainties,” says Andreas Weitbrecht, co-chair of Latham & Watkins’ global antitrust and competition practice.

Aggravating the situation, of course, is the court’s ruling that competitors who wish to mitigate fines or damages bear the burden of proving that the impugned practices did not affect their market behavior or that the anticipated market effects did not occur.

“Business will have to be extremely careful when participating in any activity that involves competitors,” Woolich says.