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2016   |   Book 3

Case

E-3/16

Ski Taxi SA and othersVThe Norwegian Government, represented by the Competition Authority

(Article 53 EEA – Restriction of competition by object – Public procurement – Submission of joint bids through a joint management company)

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Table of contents


SummaryPage
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of the Judgment

1 Domestic legislation regulating purely internal situations can be examined by the Court when the legislation in question corresponds to provisions or concepts taken from EEA law. The jurisdiction of the Court is however limited to interpreting the rules of EEA law.

2 In order to determine whether an agreement reveals a sufficient degree of harm to competition that it may be considered a restriction “by object” within the meaning of Article 53 EEA, regard must be had to the content of its provisions, its objectives and the economic and legal context. When determining that context, it is also necessary 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.

3 The consideration of the economic and legal context of an agreement in order to identify an anticompetitive object within the meaning of Article 53 EEA must be clearly distinguished from the demonstration of anticompetitive effects under that provision.

4 An agreement which has the restriction of competition as its object must be capable of having at least some impact on the market. The assessment of this impact cannot go as far as a full examination of its actual or potential effects; nor does it amount to carrying out an assessment of the pro- and anticompetitive effects of the agreement and thus to applying a rule of reason.

5 OnlyPage
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conduct whose harmful nature is easily identifiable, in the light of experience and economics, should be regarded as a restriction of competition by object.

6 Since the submission of joint bids involves price-fixing, which is expressly prohibited by Article 53(1) EEA, consideration of the economic and legal context may be limited to what is strictly necessary in order to establish the existence of a restriction of competition by object. However, it still needs to be assessed, albeit in an abridged manner, whether the parties to the agreement are actual or potential competitors, and whether the submission of joint bids may be regarded as an ancillary restraint.

7 Disclosure of the joint character of the bids to the contracting authority may be an indication that the parties did not intend to infringe the prohibition on agreements between undertakings. However, although the parties’ intention may be taken into account in order to determine whether an agreement may be considered a restriction of competition by object, it is not a necessary factor. It is for the referring court to assess whether the fact that the parties disclosed the joint character of their bids to the contracting authority may support a finding that their conduct cannot be considered a restriction of competition by object.

JudgmentPage
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of the Court

22 December 20161

1 Language of the request: Norwegian.

(Article 53 EEA – Restriction of competition by object – Public procurement – Submission of joint bids through a joint management company)

In Case E-3/16,

REQUEST to the Court under Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice by the Supreme Court of Norway (Norges Høyesterett), in the case between

Ski Taxi SA, Follo Taxi SA and Ski Follo Taxidrift AS

and

The Norwegian Government, represented by the Competition Authority,

concerning the interpretation of the Agreement on the European Economic Area, and in particular Article 53 thereof,

ThePage
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Court

composed of: Carl Baudenbacher, President and Judge Rapporteur, Per Christiansen and Páll Hreinsson, Judges,

Registrar: Gunnar Selvik,

having considered the written observations submitted on behalf of:

Ski Taxi SA (“Ski Taxi”), Follo Taxi SA (“Follo Taxi”) and Ski Follo Taxidrift AS (“SFD”), (collectively “the Appellants”) represented by Stephan L. Jervell, Advokat;

the Norwegian Government, represented by the Norwegian Competition Authority (den norske stat v/Konkurransetilsynet) (“the Norwegian Government”), represented by Pål Wennerås, Advokat, Office of the Attorney General (Civil Affairs);

the EFTA Surveillance Authority (“ESA”), represented by Carsten Zatschler, Clémence Perrin and Øyvind Bø, Members of its Department of Legal & Executive Affairs, acting as Agents; and

the European Commission (“the Commission”), represented by Henning Leupold, Hubert van Vliet and Teresa Vecchi, members of its Legal Service, acting as Agents;

having regard to the Report for the Hearing,

having heard oral argument of Ski Taxi, Follo Taxi and SFD, represented by Stephan L. Jervell; the Norwegian Government, represented by Pål Wennerås; ESA, represented by Clémence Perrin and Øyvind Bø; the Commission, represented by Henning Leupold, Hubert van Vliet and Teresa Vecchi, at the hearing on 22 September 2016,

gives the following

JudgmentPage
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I Legal background

EEA law

1 Article 53 of the Agreement on the European Economic Area (“the EEA Agreement” or “EEA”) reads as follows:

1. The following shall be prohibited as incompatible with the functioning of this Agreement: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Contracting Parties and which have as their object or effect the prevention, restriction or distortion of competition within the territory covered by this Agreement, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. AnyPage
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agreements or decisions prohibited pursuant to this Article shall be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

any agreement or category of agreements between undertakings;

any decision or category of decisions by associations of undertakings;

any concerted practice or category of concerted practices;

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

National law

The Competition Act

2 Section 10 of the Norwegian Act of 5 March 2004 No 12 on competition between undertakings and control of concentrations (“the Competition Act”) corresponds to Article 53 EEA. It prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices, which have as their object or effect the prevention, the restriction or distortion of competition.

3 PursuantPage
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to Section 12 of the Competition Act, undertakings that infringe Section 10 of that Act may be ordered to bring the infringement to an end.

4 According to Section 29(1)(a) of the Competition Act, administrative fines may be imposed on undertakings that infringe Section 10 of the same Act.

II Facts and procedure

5 Ski Taxi and Follo Taxi provide taxi services using small passenger cars. They are active in the Follo region outside of Oslo, more precisely in the seven municipalities of Nesodden, Frogn, Vestby, Ås, Enebakk, Ski and Oppegård. In autumn 2010, approximately 24 taxi licence holders were affiliated to Ski Taxi. Ski Taxi is active mostly in the municipalities of Ski, Ås and Oppegård. In autumn 2010, 46 taxi licence holders were affiliated to Follo Taxi. Follo Taxi is active mainly in the municipalities of Nesodden, Frogn, Vestby, Ås and Enebakk.

6 In 2001, Ski Taxi and Follo Taxi established a joint management company, SFD, to carry out administrative activities common to its shareholders’ respective dispatch centres. This was done because neither Ski Taxi’s nor Follo Taxi’s dispatch centre have any employees. In particular, SFD is responsible for the booking system, the switchboard operation, the communication and IT infrastructure, the invoicing and accounting, as well as the organisation of courses for new drivers. Ski Taxi and Follo Taxi each own 50 per cent of the shares in SFD.

7 SFD’sPage
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other activities consist in the submission of bids in tender procedures. While the tender is submitted by and the contract awarded to SFD, for the purposes of fulfilling the contract, the taxi licence holders affiliated to Ski Taxi and Follo Taxi are SFD’s subcontractors.

8 An SFD document headed “Strategy Document – 2009-2010” (“SFD Strategy Document”) describes the activity of SFD as follows: “to secure and win major contracts” and “to take measures to meet competition in the form of joint projects or marketing efforts”. A shareholders’ agreement entered into by Ski Taxi and Follo Taxi on 3 May 2007 (“SFD Shareholders’ Agreement”) provides as follows: “the position of the parties in relation to the functions assigned to the company indicates that there will be less competition between them in the market than previously. This applies to both pric[ing] policy in tenders and other strategic measures in relation to the market. Should this changed situation require permits from public authorities, such permits must be obtained”.

9 The SFD Shareholders’ Agreement provides that SFD’s board shall consist of five members. Of those five members, Ski Taxi selects two, Follo Taxi selects two, and one is independent of the shareholders.

10 In 2010, Oslo University Hospital launched two tender procedures for the award of framework agreements for the provision of patient transport services for the South-Eastern Norway Regional Health Authority (Helse Sør-Øst RHF).

11 The first procedure launched by Oslo University Hospital was for the award of framework agreements for the provision of patient transport services from and to nine different areas in the Counties of Oslo and Akershus (“Tender Procedure 1”). One of those nine areas, Southern Follo, covered the municipalities of Nesodden, Ås, Frogn and Vestby. Another of the nine areas, Northern Follo, covered the municipalities of Ski, Enebakk and Oppegård. The contract documentsPage
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stated, according to the referring court, that in 2009, transport assignments in Southern and Northern Follo had accounted for approximately 40 100 journeys, spread over the 24 hours of the day. The award criteria were price and quality, each weighing 50 per cent. Quality was itself based on four parameters, each weighing 12.5 per cent: training and competence of personnel, capacity (number of dedicated cars), condition of vehicles and equipment for use in the assignments, and system for dealing with enquiries. The deadline for submission of tenders was 30 August 2010.

12 SFD submitted a joint tender on behalf of Ski Taxi and Follo Taxi for Southern and Northern Follo. The rate per kilometre in SFD’s tender was NOK 19.60, and the number of dedicated cars was 42 (21 cars for the Southern Follo area, and 21 cars for the Northern Follo area). The tender stated that the bid was submitted on behalf of Ski Taxi and Follo Taxi.

13 Since SFD was the sole tenderer for Southern and Northern Follo, Oslo University Hospital cancelled the procedure for those two areas. The procedure was completed for the remaining seven areas.

14 On 31 August 2010, Oslo University Hospital sent a letter to the municipal authority in charge of taxi licences and to the Norwegian Competition Authority (“the Competition Authority”), in which it voiced frustration concerning the lack of competition in the Follo region. The hospital stated, in particular, that “as one of the largest purchasers of taxi services we experience that lacking competition in the taxi market in the Follo region is exploited through a disproportionately high kilometre price”.

15 On 21 September 2010, Oslo University Hospital launched another tender procedure (“Tender Procedure 2”). That procedure concerned the award of framework agreements for the provision of the same servicesPage
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as in Tender Procedure 1, in Southern Follo and Northern Follo. However, Southern and Northern Follo was this time divided into five, instead of two, areas: Oppegård, Ås, Nesodden, Frogn and Vestby. The referring court states that, according to the contract documents, transport assignments in those five areas accounted for approximately 33 900 journeys in 2009 spread over the 24 hours of the day. The deadline for submission of tenders was 5 November 2010.

16 SFD submitted a joint tender on behalf of Ski Taxi and Follo Taxi for all five areas. The rate per kilometre in SFD’s tender was NOK 18 for the Oppegård area and NOK 19.60 for the areas of Ås, Nesodden, Frogn and Vestby. The tender provided for 30 dedicated cars (10 cars for the Oppegård area, and 5 cars each for the other areas). The tender stated that the bid was submitted on behalf of Ski Taxi and Follo Taxi. Tenders for all five areas were also submitted by two other companies, Oslo Taxi and Konsentra. Konsentra offered the lowest price, and quality varied among the offers. Therefore, Oslo University Hospital entered into framework agreements with all three companies, namely SFD, Oslo Taxi and Konsentra, for all five areas. It assigned second priority to SFD in all areas, while Oslo Taxi and Konsentra were assigned first and third priority alternatively in different areas.

17 Based on the letter of 31 August 2010 from Oslo University Hospital, the Competition Authority opened an investigation into the joint tenders and requested information from Ski Taxi, Follo Taxi and SFD. A letter sent by SFD to the Competition Authority on 17 November 2010 describes the submission of joint bids by SFD in the following way:

“b) Tenders that may be of interest to SFD are prepared and presented to the board of [.…] SFD by the general manager. All aspects of the tender are then considered, such as capacity, profit and risk and so forth. It is thereafter decided whether a bid shallPage
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be submitted or not. This tender [the tenders submitted in Tender Procedures 1 and 2] is one of the most important tenders and sources of income for SFD and it has been agreed the whole time that SFD should submit a bid on behalf of the taxi centrals.

c) As of the start in the middle of June 2001, there has been agreement that SFD shall submit bids in tender competitions on behalf of both of the taxi centrals.

d) The content of the tender is examined and assessed by the general manager in SFD. The necessary information and statistics have been examined and assessed. Calculations made to ensure an acceptable economy and risk in the tender is presented to the board, which has approved the price setting.

e) The general manager in SFD calculated the prices based on the economy and risks in the tender”.

18 By a decision of 4 July 2011, the Competition Authority found that the Appellants had infringed Section 10 of the Competition Act and imposed fines on them (“the Decision of the Competition Authority”).

19 According to the Competition Authority, Ski Taxi and Follo Taxi would have been able to submit separate tenders in both tender procedures. They were thus to be regarded as competitors. Therefore, the submission of joint bids through SFD constituted cooperation between Ski Taxi and Follo Taxi. Such cooperation had as its object the restriction of competition and was prohibited by Section 10 of the Competition Act.

20 The Decision of the Competition Authority reads as follows: “SFD’s submission of a joint tender on behalf of Ski Taxi and Follo Taxi was [.…] a tender cooperation between de facto and potential competitors. The two dispatch centres cooperated with respect to price, quality and capacity. As a result of the cooperation, Ski Taxi andPage
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Follo Taxi did not compete by submitting separate tenders in Tender [Procedure] 1 and Tender [Procedure] 2. The Competition Authority therefore finds that the tender cooperation in question must be deemed to have had a competition-restricting object in contravention of Section 10, first paragraph, of the Competition Act. It is not necessary, therefore, to provide evidence of any competition-restricting effect.”

21 By judgment of 8 February 2013, Follo District Court (Follo tingrett) annulled the Decision of the Competition Authority. It found that Ski Taxi and Follo Taxi were not potential competitors as regards Tender Procedure 1 and were only partially potential competitors as regards Tender Procedure 2. The submission of joint bids by SFD did not constitute a restriction of competition by object. It could, as regards Tender Procedure 2, constitute a restriction of competition by effect. However, that was not the case, since the effect on competition was not appreciable.

22 By judgment of 17 March 2015, Borgarting Court of Appeal (Borgarting lagmannsrett) upheld the Decision of the Competition Authority. It found that the dispatch centres of Ski Taxi and Follo Taxi were competitors in both tender procedures. The submission of joint bids by SFD was capable of restricting competition and the cooperation constituted a restriction of competition by object. The administrative fines imposed on Ski Taxi, Follo Taxi and SFD were set at, respectively, NOK 100 000, NOK 200 000 and NOK 1 million.

23 The Appellants challenged that judgment before the Supreme Court of Norway. By decision of 24 July 2015, the Supreme Court granted leave to appeal on matters of law. The proceedings before the Supreme Court concern, provisionally, only the question whether the submission of joint bids by SFD on behalf of Ski Taxi and Follo Taxi constitutes a restriction of competition by object.

24 OnPage
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24 February 2016, the Supreme Court made a request to the Court under Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice (“SCA”) and posed the following questions:

1. What is the legal test when determining whether an agreement between undertakings has a competition-restricting object within the meaning of Article 53 EEA?

a) In this context, is it sufficient in order to be able to categorise a form of conduct as an infringement by object pursuant to Article 53 EEA, that the cooperation is capable of restricting competition?

2. What is the legal significance for the consideration of whether a form of conduct constitutes an infringement by object, that such cooperation took place openly vis-à-vis the procuring authority?

3. What legal criteria must in particular be emphasised when considering whether cooperation that takes the form of two competing companies submitting a joint tender through a joint venture, and where the two undertakings are to be subcontractors to the joint venture, should be deemed to constitute an infringement by object?

25 Reference is made to the Report for the Hearing for a fuller account of the legal framework, the facts, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only insofar as is necessary for the reasoning of the Court.

III AdmissibilityPage
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Observations submitted to the Court

26 ESA submits that, although the proceedings before the referring court concern a purely internal situation, the Court has jurisdiction. Although the facts of the case are outside the direct scope of EEA law, provisions of EEA law have been rendered applicable by domestic law. Domestic law adopts, for internal situations, the same approach as that provided for under EEA law. Section 10 of the Norwegian Competition Act mirrors Article 53 EEA. Therefore, the Court has jurisdiction.

Findings of the Court

27 Where domestic legislation, in regulating purely internal situations, adopts the same or similar solutions as those adopted in EEA law in order to avoid any distortion of competition, it is in the interest of the EEA to forestall future differences of interpretation. Provisions or concepts taken from EEA law should thus be interpreted uniformly, irrespective of the circumstances in which they are to apply. However, as the jurisdiction of the Court is confined to considering and interpreting provisions of EEA law only, it is for the national court to assess the precise scope of that reference to EEA law in national law (see Case E-29/15 Sorpa, judgment of 22 September 2016, not yet reported, paragraph 35).

28 In the present case, as stated in the national court’s reference, Section 10 of the Competition Act corresponds to Article 53 EEA. Therefore, it must be held that the Court has jurisdiction to rule on the questions referred.

IV AnswersPage
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of the Court

29 The first and third questions are related, since they concern the legal test to be applied and the criteria to be emphasised when determining whether a cooperation between undertakings constitutes a restriction of competition “by object”. The Court therefore considers it appropriate to start by examining the first question, and then the third question. Finally, the Court will assess the second question on the legal significance of the fact that the cooperation took place openly.

The first question

Observations submitted to the Court

30 The Appellants submit that, for an agreement to be considered a restriction of competition by object, it must reveal a sufficient degree of harm to competition (reference is made to the judgment in CB v Commission, C-67/13 P, EU:C:2014:2204, paragraph 58).

31 Therefore, the Appellants claim that the test applied by Borgarting Court of Appeal, which held that conduct should be considered a restriction by object if it is capable of restricting competition, cannot be followed. It does not suffice, for an agreement to be considered a restriction by object, that it is capable of restricting competition.

32 In the Appellants’ view, the findings of the Court of Justice of the European Union (“ECJ”) in T-Mobile Netherlands and Others that a concerted practice may be regarded as having an anticompetitive object if it is “capable [….] of resulting in the prevention, restriction or distortion of competition” (reference is made to the judgment in T-Mobile Netherlands and Others, C-8/08, EU:C:2009:343, paragraph 31) were rejected in CB v Commission. The latter judgment set a higherPage
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standard for classification as a restriction by object, namely, a “sufficient degree of harm to competition”. That argument is supported by subsequent case law (reference is made to the judgment in SIA ‘Maxima Latvija’, C-345/14, EU:C:2015:784, paragraphs 22 and 23).

33 The Norwegian Government submits that an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition. In order to determine whether this is the case, account must be taken of the content of its provisions, its objectives and the economic and legal context. The intention of the parties is not an essential factor, although there is nothing to prevent the competent competition authorities or courts from taking it into account (reference is made to the judgments in ING Pensii, C-172/14, EU:C:2015:484, paragraphs 30 and 31, Toshiba v Commission, C-373/14 P, EU:C:2016:26, paragraph 27, TMobile Netherlands and Others, cited above, paragraph 31, and CB v Commission, cited above, paragraph 54).

34 The criterion for classifying an agreement as a restriction by object is the same in CB v Commission and in TMobile Netherlands and Others and reflects earlier case law of the ECJ (reference is made to the Opinion of Advocate General Wathelet in Toshiba v Commission, C-373/14 P, EU:C:2015:427, point 51). As confirmed in subsequent cases, an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition (reference is made to the judgments in Dole Food and Dole Fresh Fruit Europe v Commission, C286/13 P, EU:C:2015:184, paragraph 112, and Toshiba v Commission, cited above, paragraph 31).

35 In that regard, the Norwegian Government contends that it is sufficient, in order to classify an agreement as a restriction by object, that it has potential (as opposed to actual) anticompetitive effects, that is, that it is capable of restricting competition.

36 ESAPage
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submits that an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition. In order to determine whether an agreement reveals a sufficient degree of harm to competition, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms part (reference is made to the judgments in CB v Commission, cited above, paragraph 57, and Toshiba v Commission, cited above, paragraphs 26 and 27).

37 In that regard, ESA contends that for those agreements which previously have been held to reveal a sufficient degree of harm to competition, the analysis of the legal and economic context may be limited to what is strictly necessary in order to establish the existence of a restriction of competition by object (reference is made to the judgment in Toshiba v Commission, cited above, paragraph 29).

38 Moreover, ESA claims that, in order to classify an agreement as constituting a restriction by object, it suffices that the agreement, which in itself reveals a sufficient degree of harm to competition, is capable of restricting competition.

39 The Commission submits that, in paragraph 57 of CB v Commission, the ECJ held that an agreement has the object of restricting competition if it reveals in itself a sufficient degree of harm to competition (reference is also made to the judgment in Toshiba v Commission, cited above, paragraph 26).

40 The Commission disagrees with the contention made by the Appellants that in CB v Commission the ECJ set a higher standard than it did in its earlier judgment in T-Mobile Netherlands and Others. By stating in paragraph 31 of T-Mobile Netherlands and Others that an agreement constitutes a restriction by object if it is merely capable of restricting competition, the ECJ did not seek to define the standard for classifying an agreement as a restriction by object. Rather, it was intended to refute the referring court’s contention that classification ofPage
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an agreement as a restriction by object requires consideration of its effects. By no means did the ECJ establish in T-Mobile Netherlands and Others a lower standard according to which any agreement capable of restricting competition constitutes a restriction by object. This has been confirmed in the ECJ’s subsequent case law.

41 The Commission claims that, in order to determine whether an agreement reveals a sufficient degree of harm to competition, an analysis of its content and objectives, and of its economic and legal context is required. Although the intention of the parties is not a necessary factor, it may be taken into account (reference is made to the judgment in CB v Commission, cited above, paragraphs 53 and 54).

42 First, as regards the content and the objectives of the agreement, the Commission contends that account should be taken not only of the wording, but also of the substance of what was agreed between the parties. An agreement which does not have the restriction of competition as its sole aim but also pursues other, legitimate aims may still restrict competition by object (reference is made to the judgment in Beef Industry Development Society and Barry Brothers, C209/07, EU:C:2008:643, paragraph 21).

43 Second, as regards the economic and legal context of the agreement, it is necessary to take account of the nature of the goods or services affected, as well as the real conditions of the functioning or structure of the market (reference is made to the judgment in CB v Commission, cited above, paragraph 78). It may be necessary to investigate whether the parties are competitors, whether the market is two-sided or regulated, and whether the restriction at stake is ancillary, that is, objectively necessary for another, wider operation which is not anticompetitive (reference is made to the judgments in Pierre Fabre Dermo-Cosmétique, C439/09, EU:C:2011:649, paragraphs 39 to 47, and MasterCard and Others v Commission, C382/12 P, EU:C:2014:2201,Page
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paragraphs 90 to 95 and 107). However, account cannot be taken of the effects of the agreement or the market power of the parties. The Commission contends that the findings of the ECJ in paragraph 29 of Toshiba v Commission, according to which the analysis of the economic and legal context of a market-sharing agreement may be limited to what is strictly necessary in order to determine whether it constitutes a restriction by object, should be applied to other obvious, established restrictions by object such as price-fixing.

Findings of the Court

44 By its first question, the referring court asks what legal test must be applied in order to determine whether an agreement may be regarded as a restriction of competition by object. In particular, it seeks to establish whether it suffices, for an agreement to be classified as a restriction of competition by object, that it is capable of restricting competition.

45 The Court has consistently held that whether an agreement restricts competition is a legal question that must be examined in the light of economic considerations (see Case E-8/00 Norwegian Federation of Trade Unions and Others (“LO”) [2002] EFTA Ct. Rep. 114, paragraph 77).

(i) Legal test to determine whether an agreement may be considered a restriction of competition by object

46 For an agreement to be caught by the prohibition in Article 53(1) EEA, it must have as its “object or effect” the restriction of competition. Those are not cumulative but rather alternative requirements (compare the judgment in LTM, 56/65, EU:C:1966:38). In other words, conduct may infringe Article 53 EEA either if it aims at restricting competition or if it produces anticompetitive effects.

47 ThePage
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consequence of the classification of an agreement as a restriction of competition by object is, essentially, the following: it alleviates ESA’s burden of proof since ESA need not demonstrate that the agreement has anticompetitive effects (compare the judgment in Consten and Grundig v Commission, 56/64 and 58/64, EU:C:1966:41, page 342). Nonetheless, the undertakings involved may still benefit from an individual exemption under Article 53(3) EEA, but the burden of demonstrating that the conditions laid down in that provision are met is on the undertakings (see Article 2 of Chapter II of Protocol 4 SCA). Furthermore, restrictions by object are presumed to be appreciable so that the de minimis threshold does not apply (compare the judgment in Expedia, C-226/11, EU:C:2012:795, paragraph 37), the block exemption regulations do not apply and the undertakings are likely to be subject to higher fines (see point 15 of ESA’s Guidelines on the method of setting fines imposed pursuant to Article 23(2)(A) of Chapter II of Protocol 4 to the SCA (OJ 2006 C 314, p. 84)).

48 It is apparent from case law that certain types of coordination between undertakings reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects. That case law arises from the fact that certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition (compare the judgment in CB v Commission, cited above, paragraphs 49 and 50).

49 In the present case, Borgarting Court of Appeal held that the submission of joint bids by SFD was to be considered a restriction of competition by object because it “was, by its content, capable of restricting, and thus harming, competition”. The Appellants submit that the standard for classification as a restriction of competition by object applied by the Court of Appeal is lower than the standard set by the ECJ in CB v Commission.

50 InPage
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CB v Commission the ECJ held that, for an agreement to be considered a restriction of competition by object, it must reveal a sufficient degree of harm to competition (paragraph 49). The ECJ also held that, by finding that an agreement must simply be capable in the particular case, having regard to the specific legal and economic context, of restricting competition, the General Court had erred in law with regard to the definition of the relevant legal criteria in order to assess whether there was a restriction of competition by object. More precisely, the ECJ underlined that the essential legal criterion for ascertaining whether coordination between undertakings involves such a restriction of competition by object is the finding that such coordination reveals in itself a sufficient degree of harm to competition that it may be found that there is no need to examine its effects (see the judgment in CB v Commission, cited above, paragraphs 49 and 55 to 58).

51 The ECJ has reiterated that an agreement must reveal a sufficient degree of harm to competition in order to be regarded as a restriction of competition by object (compare the judgments in MasterCard and Others v Commission, cited above, paragraph 184; Allianz Hungária Biztosító Zrt. and Others, C-32/11, EU:C:2013:160, paragraph 34; Dole Food and Dole Fresh Fruit Europe v Commission, cited above, paragraph 113; ING Pensii, cited above, paragraph 31; SIA ‘Maxima Latvija’, cited above, paragraph 18; and, Toshiba v Commission, cited above, paragraph 26). This standard was also adopted by the General Court in its judgment in Lundbeck v Commission (T-472/13, EU:T:2016:449, paragraph 339), which was raised at the hearing.

52 The Court finds, contrary to the arguments advanced by the Appellants, that the ECJ did not set a higher standard for classification of an agreement as a restriction of competition by object in CB v Commission than in T-Mobile Netherlands and Others. In paragraph 31 of the latter judgment, the ECJ found that, for a concerted practice to be considered a restriction of competition by object,Page
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it must simply be capable in an individual case, having regard to the specific legal and economic context, of resulting in the prevention, restriction or distortion of competition (see the judgment in T-Mobile Netherlands and Others, cited above).

53 However, that finding must be read in the light of paragraph 30 and of the last sentence of paragraph 31 of that judgment. The ECJ held that, contrary to what the referring court claimed, there was no need to demonstrate that a concerted practice results in anticompetitive effects once its anticompetitive object is established. Therefore, by stating that a concerted practice must simply be capable of restricting competition, the ECJ held that, in order to establish that a concerted practice constitutes a restriction of competition by object, there is no need to demonstrate anticompetitive effects.

54 Moreover, in T-Mobile (cited above, paragraph 28) the ECJ relied on earlier case law, in particular on its findings in Beef Industry Development Society and Barry Brothers (cited above, paragraph 15) and in LTM (cited above) that the consequences of an agreement should be considered where an analysis of its clauses does not reveal the effect on competition to be sufficiently deleterious. Therefore, it is clear that since its judgment in LTM the ECJ has consistently held that the analysis of the object must reveal a sufficient degree of harm to competition.

55 Consequently, the judgments in T-Mobile Netherlands and Others and CB v Commission are not irreconcilable (see, to that effect, the Opinion of Advocate General Wathelet in Toshiba v Commission, cited above, point 51).

(ii) Criteria for determining whether an agreement is a restriction of competition by object

56 InPage
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order to determine whether an agreement between undertakings or a decision by an association of undertakings reveals a sufficient degree of harm to competition that it may be considered as a restriction of competition “by object” within the meaning of Article 53(1) EEA, 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 necessary 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 (compare the judgment in CB v Commission, cited above, paragraph 53).

57 In addition, although the parties’ intention is not a necessary factor in determining whether an agreement between undertakings is restrictive, there is nothing prohibiting the competition authorities, the national courts or the Court from taking that factor into account (compare the judgment in CB v Commission, cited above, paragraph 54).

58 The Court notes that consideration of the economic and legal context of an agreement in order to identify an anticompetitive object within the meaning of Article 53(1) EEA must be clearly distinguished from the demonstration of anticompetitive effects under that provision. Otherwise the distinction between restrictions of competition by object and restrictions of competition by effect would be blurred (compare the Opinion of Advocate General Wahl in CB v Commission, C-67/13 P, EU:C:2014:1958, point 44; and the judgments in M6 and Others v Commission, T-112/99, EU:T:2001:215, paragraph 74 et seq., and MasterCard and Others v Commission, cited above, paragraph 181).

59 However, an agreement which has the restriction of competition as its object must be capable of having at least some impact on the market (compare the Opinion of Advocate General Wathelet in Toshiba v Commission, cited above, point 65).

60 InPage
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that regard, the Court notes, first, that consideration of the economic and legal context of the agreement is required in order to characterise a restriction of competition within the meaning of Article 53(1) EEA. Therefore, the obligation to take account of the legal and economic context is imposed for the purpose of ascertaining both the object and effect of the agreement (compare judgments in GlaxoSmithKline Services v Commission, T-168/01, EU:T:2006:265, paragraph 110 and case law cited, and Asnef-Equifax, C-238/05, EU:C:2006:734, paragraph 49).

61 Second, the Court holds that, given the consequences that flow from classification of an agreement as a restriction of competition by object, that concept must be interpreted restrictively in the sense that it can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition that it may be found that there is no need to examine their effects (compare the judgment in CB v Commission, cited above, paragraph 58). Only conduct whose harmful nature is easily identifiable, in the light of experience and economics, should be regarded as a restriction of competition by object (compare the Opinion of Advocate General Wahl in CB v Commission, cited above, point 56).

62 Third, the Court recalls that it is incumbent on ESA or the competent national competition authority to adduce evidence capable of proving the existence of the circumstances that constitute an infringement of Article 53 EEA. Keeping in mind the guarantees provided by Article 6(2) of the European Convention on Human Rights, it follows from the principle of the presumption of innocence that the undertakings to which the decision finding an infringement was addressed must be given the benefit of the doubt (see Case E-15/10 Posten Norge v ESA [2012] EFTA Ct. Rep. 246, paragraph 93).

63 Finally,Page
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it should be recalled that an assessment of whether an agreement is capable of having some impact on the market is only concerned with the likely impact of the agreement on competition. It cannot go as far as a full examination of its actual or potential effects. Nor does it amount to carrying out an assessment of the pro- and anticompetitive effects of the agreement and thus to applying a rule of reason (compare the judgment in O2 (Germany) v Commission, T-328/03, EU:T:2006:116, paragraph 69).

64 The answer to the first question is therefore that, for an agreement to be regarded as a restriction of competition by object within the meaning of Article 53(1) EEA, it must reveal a sufficient degree of harm to competition. It does not suffice that it is simply capable, having regard to the specific legal and economic context, of resulting in the prevention, restriction or distortion of competition.

65 Moreover, in order to determine whether an agreement between undertakings or a decision by an association of undertakings reveals a sufficient degree of harm to competition, 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 necessary to take into consideration the nature of the services affected, as well as the real conditions of the functioning and structure of the market or markets in question. In addition, although the parties’ intention is not a necessary factor in determining whether an agreement between undertakings is restrictive, there is nothing prohibiting the competition authorities, the national courts or the Court from taking that factor into account.

66 AnPage
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agreement reveals a sufficient degree of harm to competition that it may be considered a restriction of competition by object only if its harmful nature is easily identifiable. That assessment cannot go as far as a full examination of its actual or potential effects. Nor can it amount to carrying out an assessment of the pro- and anticompetitive effects and thus to applying a rule of reason.

The third question

Observations submitted to the Court

67 The Appellants submit that joint bidding does not constitute a restriction by object.

68 They claim that, in order to determine whether joint bidding reveals a sufficient degree of harm to competition, in other words, whether it constitutes a restriction of competition by object, account must be taken of the content of the agreement between the parties submitting the joint bids, the objectives of that agreement, its economic and legal context, and the intention of the parties (reference is made to the judgment in CB v Commission, cited above, paragraphs 53 and 54).

69 The Appellants acknowledge that the submission of joint bids involves an agreement between the parties presenting the joint bids on the price offered to the contracting authority. However, the submission of joint bids allows tenderers to pool their limited resources and submit more competitive bids. Therefore, the submission of joint bids cannot be equated with a mere agreement to set prices. It does not follow from the case law that classifies price fixing as a restriction by object that joint bidding also constitutes a restriction by object.

70 AsPage
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regards the particular economic and legal context of the agreement at stake, the Appellants contend that, while it should be given consideration, classification as a restriction by object cannot be based on context alone (reference is made to the Opinion of Advocate General Wahl in CB v Commission, cited above, points 44 and 45). In any event, in terms of legal context, there is no case law of the Court or the ECJ, nor decisional practice of ESA or the Commission that recognises joint bidding to constitute a restriction by object. The economic context was not given proper consideration by Borgarting Court of Appeal.

71 Therefore, the Appellants contend that the submission of joint bids must be assessed with regard to its effects on competition. This follows, in their view, from paragraph 30 of ESA’s Guidelines on the applicability of Article 53 of the EEA Agreement to Horizontal Cooperation Agreements (“Horizontal Guidelines”) (OJ 2013 C 362, p. 3). Paragraph 30 belongs to a section headed “restrictive effects on competition”. It provides that “horizontal co-operation agreements between competitors who, on the basis of objective factors, would not be able independently to carry out the project or activity covered by the co-operation [.…] will normally not give rise to restrictive effects on competition”.

72 As for the situation where one of the parties submitting a joint bid is able to submit an individual bid, the Appellants argue that the Competition Authority itself has acknowledged in its Guidance on cooperation on projects that an assessment of the effects must be carried out. As regards the submission of joint bids by parties who are both able to submit individual bids, legal and economic literature considers this not to constitute a restriction by object.

73 The Norwegian Government maintains that the submission of joint bids by Ski Taxi and Follo Taxi in Tender Procedures 1 and 2 may be considered a restriction of competition by object.

74 ThePage
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agreements listed in Article 53(1) EEA, such as price fixing, constitute the hard core of restrictions by object. While agreements not listed in Article 53(1) EEA may be regarded as restrictions by object, their classification as such requires a more thorough analysis of their economic and legal context, although that analysis does not extend to an examination of their effects (reference is made to the Opinion of Advocate General Wathelet in Toshiba v Commission, cited above, points 72 to 74).

75 Moreover, the Norwegian Government contends that agreements of which only parts are hard core restrictions may nonetheless constitute restrictions by object. For instance, commercialisation agreements between competitors, that is, agreements between competitors to sell, distribute or promote their substitute products, are not listed in Article 101(1) TFEU. Nevertheless, if the parties to a commercialisation agreement coordinate on prices, the commercialisation agreement likely constitutes a restriction by object (reference is made to the Horizontal Guidelines, paragraph 234).

76 The Norwegian Government notes, however, that, according to paragraph 237 of the Horizontal Guidelines, a commercialisation agreement does not constitute a restriction by object if it “is objectively necessary to allow one party to enter a market it could not have entered individually or with a more limited number of parties than are effectively taking part in the cooperation”. The Norwegian Government suggests that joint bidding may be seen as a commercialisation agreement. It is apparent from paragraph 237 of the Horizontal Guidelines that a cooperation agreement is “objectively necessary” only if none of the parties could have entered the market without that agreement. Similarly, joint bidding is “objectively necessary” only if none of the parties that submitted the joint bid could have submitted an individual bid.

77 AsPage
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regards the first criterion to be taken into account in order to determine whether an agreement constitutes a restriction by object, namely, its content and objectives, the Norwegian Government contends that both Ski Taxi and Follo Taxi had sufficient capacity to submit individual bids in both tender procedures. Joint bidding by undertakings that have the capacity to submit individual bids is particularly harmful. It reduces the number of tenderers and eliminates potential competition between the parties submitting the joint bid. Joint bidding may be assimilated to a commercialisation agreement where the parties agree on prices, which is a hard core restriction.

78 As regards the second criterion to be taken into account in order to determine whether an agreement constitutes a restriction by object, namely, its economic and legal context, the Norwegian Government reiterates that the parties to the joint bid only need to be potential competitors. Since Ski Taxi and Follo Taxi could have submitted individual bids, they are to be considered as potential competitors.

79 Therefore, in the view of the Norwegian Government, the agreement at stake in the present case reveals a sufficient degree of harm to competition and must be regarded as a restriction by object.

80 That conclusion is not undermined by the argument advanced by the Appellants that that their joint bids are part of a wider, legitimate cooperation. Even if the joint bids were to be regarded as having legitimate, pro-competitive effects, such effects could only be taken into account under Article 53(3) EEA.

81 ESA submits that it is for the referring court to determine whether the submission of joint bids by Ski Taxi and Follo Taxi constitutes a restriction by object. However, ESA invites the Court to provide some guidance on the issue.

82 ThePage
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submission of a joint bid inevitably entails cooperation between the parties on the price offered to the contracting entity. Moreover, it is comparable to a market-sharing agreement, since the parties jointly provide the services at stake and share the contracts awarded.

83 In ESA’s view, since it is settled case law that price fixing and market sharing agreements reveal a sufficient degree of harm to competition, the analysis of the economic and legal context of the joint bids submitted by Ski Taxi and Follo Taxi can be limited to determining whether those undertakings are actual or potential competitors. Therefore, any pro-competitive elements may only be taken into account under Article 53(3) EEA.

84 The Commission submits that in order to determine whether joint bidding, or any type of agreement, constitutes a restriction by object, regard must be had to its content and the objectives, the economic and legal context of which it forms part, and, although that is not a necessary factor, the intentions of the parties.

85 As regards the content and the objectives of the agreement, the Commission notes that according to SFD Strategy Document and SFD Shareholders’ Agreement, SFD was established in order to reduce competition between Ski Taxi and Follo Taxi and to strengthen their market position vis-à-vis third parties.

86 As regards the economic and legal context of the agreement, it is, in the Commission’s view, of particular importance that, according to the reference of the national court, Ski Taxi and Follo Taxi could both have submitted individual bids (reference is made to paragraph 237 of the Guidelines of the Commission on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 C 11, p. 1).

87 Moreover,Page
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the submission of joint bids was part of a wider scheme, which entailed the establishment of SFD as a provider of administrative tasks for Ski Taxi and Follo Taxi. Therefore, the submission of joint bids may constitute a restraint ancillary to the operation of SFD. If such is the case and the operation of SFD is not anticompetitive, the submission of joint bids does not fall within the scope of Article 53 EEA. It should thus be assessed whether the submission of joint bids was “strictly indispensable” to the operation of SFD (reference is made to the judgment in MasterCard and Others v Commission, cited above, paragraph 91). The Commission questions whether the pooling of administrative resources through the establishment of SFD required cooperation on price, quality and capacity, as was achieved through the submission of joint bids.

Findings of the Court

88 By its third question, the referring court asks which legal criteria must be applied in order to determine whether the submission of joint bids by two undertakings may be considered a restriction of competition by object.

89 On this matter, regard must be had to the content of the agreement’s provisions, its objectives and the economic and legal context of which it forms a part. Although the parties’ intention is not a necessary factor, it may be taken into account.

90 It appears that the following categories of agreements have been held to constitute restrictions by object: horizontal agreements to set prices (CB v Commission, cited above, paragraph 51); market-sharing agreements (Toshiba v Commission, cited above, paragraph 28); agreements to restrict capacity (Beef Industry Development Society and Barry Brothers, cited above, paragraph 40); exclusive purchasing agreements (Stremsel- en Kleurselfabriek v Commission, 61/80, EU:C:1981:75, paragraph 12); and agreements to exchange pricePage
1033
information (T-Mobile Netherlands and Others, cited above, paragraph 35). Although often less harmful than horizontal agreements, some vertical agreements too have been held to constitute restrictions by object: resale price maintenance (Binon, 243/83, EU:C:1985:284, paragraph 47); the prohibition of parallel trade (Consten and Grundig, cited above, page 343); and a clause in a distribution contract whereby distributors are prohibited from selling certain products on the internet (Pierre Fabre Dermo-Cosmétique, cited above, paragraph 54).

91 In the present case, the Competition Authority found that the submission of joint bids by SFD on behalf of Ski Taxi and Follo Taxi was to be considered a restriction of competition by object within the meaning of Section 10 of the Competition Act. This was because, by submitting joint bids in Tender Procedures 1 and 2, Ski Taxi and Follo Taxi had “cooperated on price, quality and capacity”. The Appellants do not dispute that. By submitting joint bids in Tender Procedures 1 and 2, they agreed on the price offered to the contracting authority.

92 Direct or indirect price fixing is listed in Article 53(1)(a) EEA as prohibited conduct. It is established that horizontal price-fixing by cartels may be considered so likely to have negative effects, in particular on the price, quantity or quality of the goods and services, that it may be considered a restriction of competition by object (compare the judgment in CB v Commission, cited above, paragraph 51).

93 In the case of agreements expressly referred to in Article 53(1) EEA, the assessment of the economic and legal context of which the agreement under examination forms a part may be limited to what is strictly necessary in order to establish the existence of a restriction of competition by object (compare the judgment in Toshiba v Commission, cited above, paragraph 119). In other words, the assessment needs not be as thorough as it would be for agreements notPage
1034
listed in that provision (compare the Opinion of Advocate General Wathelet in Toshiba v Commission, cited above, point 74).

94 Therefore, in order to determine whether an agreement expressly referred to in Article 53(1) EEA may be regarded as a restriction of competition by object, it still needs to be assessed, albeit in an abridged manner, whether its parties are actual or potential competitors, and whether it is an ancillary restraint.

95 Whether the submission of joint bids by SFD on behalf of Ski Taxi and Follo Taxi in the two tender procedures is to be considered a restriction of competition by object is a matter of fact and as such for the referring court to assess. However, the Court will provide the referring court with all the criteria of interpretation within the scope of EEA law which may enable that court to determine the case before it.

96 First, as regards the content of the agreement’s provisions and its objectives, the Court notes that, although there appears to be no written agreement relating specifically to the submission of joint bids in the two tender procedures, SFD Shareholders’ Agreement states that “there will be less competition between [Ski Taxi and Follo Taxi] in the market than previously”, and “this applies to […] pricing policy in tenders”.

97 Second, as regards the economic and legal context of the submission of the joint bids, in particular the question whether the parties are actual or potential competitors, the Court observes that, according to paragraph 237 of the Horizontal Guidelines, a commercialisation agreement is normally not likely to give rise to competition concerns if it is objectively necessary to allow one party to enter a market it could not have entered individually. This applies in particular to consortia arrangements that allow the companies involved to participate in projects that they would not be able to undertake individually. Only if the parties are actual or potential competitors mayPage
1035
the agreement be considered a restriction of competition by object (compare the judgments in E.ON Ruhrgas v Commission, T-360/09, EU:T:2012:332, paragraph 104; Toshiba v Commission, cited above, paragraphs 30 to 36; and Lundbeck v Commission, cited above, paragraph 437). This is because, if the parties are not competitors, their agreement cannot have any form of impact or effect on competition.

98 However, in the present case, according to the Supreme Court’s request, Borgarting Court of Appeal found that Ski Taxi and Follo Taxi would have been able to submit individual bids in both tender procedures, and that they were thus competitors in both procedures. That finding is not challenged before the Supreme Court.

99 Third, on the question whether the submission of joint bids may be regarded as an ancillary restraint, the Court notes that an anticompetitive restriction may escape the prohibition laid down in Article 53(1) EEA because it is ancillary to a main operation that is not anticompetitive in nature. It is necessary to enquire whether that operation would be impossible to carry out in the absence of the restriction in question and whether that restriction is proportionate to the underlying objectives of the operation. The fact that that operation is simply more difficult to implement or even less profitable without the restriction concerned cannot be deemed to give that restriction the “objective necessity” required for it to be classified as ancillary. This would undermine the effectiveness of the prohibition laid down in Article 53(1) EEA (compare the judgment in MasterCard and Others v Commission, cited above, paragraphs 91 and 107).

100 It is for the referring court to assess whether those conditions are met. At the hearing, the Appellants stated that the question whether the submission of joint bids by SFD was to be considered ancillary to the operation of the joint management company SFD was hypothetical and that they preferred to refrain from commenting on thePage
1036
matter. The Norwegian Government and the Commission, on the other hand, questioned whether the pooling of Ski Taxi’s and Follo Taxi’s administrative resources achieved through the creation and the operation of SFD required the cooperation on price, quality and capacity which the submission of joint bids implied.

101 Therefore, the answer to the third question is that, in order to determine whether the submission of joint bids through a joint management company reveals a sufficient degree of harm that it may be considered a restriction of competition by object, regard must be had to the substance of the cooperation, its objectives and the economic and legal context of which it forms part. The parties’ intention may also be taken into account, although this is not a necessary factor.

102 Moreover, since the submission of joint bids involves price-fixing, which is expressly prohibited by Article 53(1) EEA, consideration of the economic and legal context may be limited to what is strictly necessary in order to establish the existence of a restriction of competition by object. However, such an assessment needs to take into account, albeit in an abridged manner, whether the parties to an agreement are actual or potential competitors and whether the joint setting of the price offered to the contracting authority constitutes an ancillary restraint.

The second question

Observations submitted to the Court

103 While the Appellants acknowledge that disclosure of the cooperation to the contracting authority does not preclude the submission of joint bids from being considered to have a restrictive object, they contend that bid-rigging arrangements such as cover bidding, bid suppression,Page
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bid rotation and market allocation, which are restrictions by object, are usually kept secret.

104 The Norwegian Government, ESA and the Commission submit that it is irrelevant, in order to determine whether a joint bid constitutes a restriction by object, whether the cooperation between the parties was made apparent in the bid. The Commission states that cooperation conducted publicly has been found to constitute a restriction by object.

Findings of the Court

105 By its second question, the referring court asks whether it is relevant, in order to determine whether the submission of joint bids may be considered a restriction of competition by object, that the joint character of the bids was disclosed to the contracting authority. It is not disputed that the tenders clearly stated that the bids were submitted on behalf of Ski Taxi and Follo Taxi.

106 Disclosure to the contracting authority may be an indication that the parties did not intend to infringe the prohibition on agreements between undertakings. However, as mentioned above, although the parties’ intention may be taken into account in order to determine whether an agreement may be considered a restriction of competition by object, it is not a necessary factor. As noted by the Commission, cooperation conducted publicly has been found to have an anticompetitive object (compare the judgment in Beef Industry Development Society and Barry Brothers, cited above, paragraph 10).

107 It is for the referring court to assess whether the fact that Ski Taxi and Follo Taxi disclosed the joint character of their bids to the contracting authority may support a finding that their conduct cannot be considered a restriction of competition by object.

108 Therefore,Page
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the answer to the second question is that, while the disclosure of the joint nature of the bids to the contracting authority may be an indication that the parties did not intend to infringe the prohibition on agreements between undertakings, that, in itself, is not a prerequisite for determining whether an agreement may be considered a restriction of competition by object.

V Costs

109 The costs incurred by ESA and the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are a step in the proceedings pending before the national court, any decision on costs for the parties to those proceedings is a matter for that court.

On those grounds,

The Court

in answer to the questions referred to it by the Supreme Court of Norway hereby gives the following Advisory Opinion:

1. For an agreement to be regarded as a restriction of competition by object within the meaning of Article 53(1) EEA, it must reveal a sufficient degree of harm to competition. It does not suffice that it is simply capable, having regard to the specific legal and economic context, of resulting in the prevention, restriction or distortion of competition.

2. In order to determine whether an agreement between undertakings or a decision by an association of undertakings reveals a sufficient degree of harm to competition, regard must bePage
1039
had to the content of its provisions, its objectives and the economic and legal context of which it forms part. When determining that context, it is also necessary to take into consideration the nature of the services affected, as well as the real conditions of the functioning and structure of the market or markets in question. In addition, although the parties’ intention is not a necessary factor in determining whether an agreement between undertakings is restrictive, there is nothing prohibiting the competition authorities, the national courts or the Court from taking that factor into account.

3. An agreement reveals a sufficient degree of harm to competition that it may be considered a restriction of competition by object only if its harmful nature is easily identifiable. That assessment cannot go as far as a full examination of its actual or potential effects. Nor can it amount to carrying out an assessment of the pro- and anticompetitive effects and thus to applying a rule of reason.

4. In order to determine whether the submission of joint bids through a joint management company reveals a sufficient degree of harm that it may be considered a restriction of competition by object, regard must be had to the substance of the cooperation, its objectives and the economic and legal context of which it forms part. The parties’ intention may also be taken into account, although this is not a necessary factor.

5. Since the submission of joint bids involves price-fixing, which is expressly prohibited by Article 53(1) EEA, consideration of the economic and legal context may be limited to what is strictly necessary in order to establish the existence of a restriction of competition by object. However, such an assessment needs to take into account, albeit in an abridged manner, whether the parties to an agreement are actual or potential competitors and whetherPage
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the joint setting of the price offered to the contracting authority constitutes an ancillary restraint.

6. While the disclosure of the joint nature of the bids to the contracting authority may be an indication that the parties did not intend to infringe the prohibition on agreements between undertakings, that, in itself, is not a prerequisite for determining whether an agreement may be considered a restriction of competition by object.

Carl Baudenbacher

Per Christiansen

Páll Hreinsson

Delivered in open court in Luxembourg on
22 December 2016.

Gunnar Selvik
Registrar

Carl Baudenbacher
President

ReportPage
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for the Hearing

in Case E-3/16

REQUEST to the Court pursuant to Article 34 of the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice by the Supreme Court of Norway (Norges Høyesterett), in a case pending before it between

Ski Taxi SA, Follo Taxi SA and Ski Follo Taxidrift AS

V

The Norwegian Government, represented by the Competition Authority (Den norske stat v/Konkurransetilsynet)

concerning the interpretation of the EEA Agreement, and in particular Article 53 thereof.

I Introduction

1 By a letter of 19 February 2016, registered at the Court as Case E-3/16 on 24 February 2016, the Supreme Court of Norway (Norges Høyesterett) requested an Advisory Opinion in the case pending before it between, on the one hand, Ski Taxi SA (“Ski Taxi”), Follo Taxi SA (“Follo Taxi”) and Ski Follo Taxidrift AS (“SFD”) and, on the other hand, the Norwegian Government, represented by the Norwegian Competition Authority (den norske stat v/Konkurransetilsynet) (“the Norwegian Government”). By its request, the Supreme Court referred three questions concerning the interpretation of Article 53 EEA.

2 InPage
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the proceedings before the referring court, Ski Taxi, Follo Taxi and SFD are appealing against the judgment of 17 March 2015 of Borgarting Court of Appeal (Borgarting lagmannsrett), which upheld a decision by the Competition Authority to impose administrative fines on Ski Taxi, Follo Taxi and SFD for infringing the national prohibition on anti-competitive agreements by submitting joint bids in two tender procedures launched by Oslo University Hospital.

II Legal background

EEA law

3 Article 53 EEA reads as follows:

1. The following shall be prohibited as incompatible with the functioning of this Agreement: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Contracting Parties and which have as their object or effect the prevention, restriction or distortion of competition within the territory covered by this Agreement, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) makePage
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the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

any agreement or category of agreements between undertakings;

any decision or category of decisions by associations of undertakings;

any concerted practice or category of concerted practices;

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

National law

The Competition Act

4 Section 10 of the Norwegian Act of 5 March 2004 No 12 on competition between undertakings and control of concentrations (“the Competition Act”) corresponds to Article 53 EEA. It prohibits allPage
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agreements between undertakings, decisions by associations of undertakings and concerted practices, which have as their object or effect the prevention, restriction or distortion of competition.

5 Pursuant to Section 12 of the Competition Act, undertakings that infringe Section 10 of that Act may be ordered to bring the infringement to an end.

6 According to Section 29(1)(a) of the Competition Act, administrative fines may be imposed on undertakings that infringe Section 10 of the same Act.

III Facts and procedure

Background

7 Ski Taxi and Follo Taxi provide passenger transport services using small passenger cars. They are active in the Follo region outside of Oslo, more precisely in the seven municipalities of Nesodden, Frogn, Vestby, Ås, Enebakk, Ski and Oppegård. In autumn 2010, approximately 24 taxi licence holders were affiliated to Ski Taxi. Ski Taxi is active mostly in the municipalities of Ski, Ås and Oppegård. However, it also provides services in the other municipalities in the Follo region. In autumn 2010, 46 taxi licence holders were affiliated to Follo Taxi. Follo Taxi is active mainly in the municipalities of Nesodden, Frogn, Vestby, Ås and Enebakk. It also has a certain amount of activity in Ski and Oppegård.

8 In 2001, Ski Taxi and Follo Taxi established a joint management company, SFD, to carry out administrative activities common to its shareholders’ respective dispatch centres. This is because neither Ski Taxi’s dispatch centre nor Follo Taxi’s have any employees. In particular, SFD is responsible for the booking system, the switchboardPage
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operation, the communication and IT infrastructure, the invoicing and accounting, as well as the organisation of courses for new drivers. Ski Taxi and Follo Taxi each own 50% of the shares in SFD.

9 SFD’s other activities consist in the submission of bids in tender procedures. While the tender is submitted by SFD and the contract is also awarded to SFD, for the purposes of fulfilling the contract, the taxi licence holders affiliated to Ski Taxi and Follo Taxi are SFD’s subcontractors.

10 An SFD document headed “strategy document – 2009-2010” (“SFD Strategy Document”) describes the activity of SFD as follows: “to secure and win major contracts” and “to take measures to meet competition in the form of joint projects or marketing efforts”. A shareholders’ agreement entered into by Ski Taxi and Follo Taxi on 3 May 2007 (“SFD Shareholders’ Agreement”) provides as follows: “the position of the parties in relation to the functions assigned to the company indicates that there will be less competition between them in the market than previously. This applies to both pric[ing] policy in tenders and other strategic measures in relation to the market. Should this changed situation require permits from public authorities, such permits must be obtained”.

11 The SFD Shareholders’ Agreement provides that SFD’s board shall consist of five members. Of those five members, two are selected by Ski Taxi, two are selected by Follo Taxi, and one is independent of the shareholders.

12 In 2010, Oslo University Hospital launched two tender procedures for the award of framework agreements for the provision of patient transport services for the South-Eastern Norway Regional Health Authority (Helse Sør-Øst RHF).

13 ThePage
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first procedure launched by Oslo University Hospital was for the award of framework agreements for the provision of patient transport services from and to nine different areas in the Counties of Oslo and Akershus (“Tender Procedure 1”). One of those nine areas, that of Southern Follo, covered the municipalities of Nesodden, Ås, Frogn and Vestby. Therefore, as regards the area of Southern Follo, the framework agreements concerned the transport of patients from Nesodden, Ås, Frogn and Vestby to Oslo University Hospital, and from that hospital to those municipalities. Another of the nine areas, that of Northern Follo, covered the municipalities of Ski, Enebakk and Oppegård. As regards the area of Northern Follo, the framework agreements concerned the transport of patients from Ski, Enebakk and Oppegård to Oslo University Hospital, and from that hospital to those municipalities. The contract documents stated that in 2009, transport assignments in Southern and Northern Follo had accounted for approximately 40 100 journeys, spread over the 24 hours of the day. The criteria for award were price and quality, each weighing 50%. Quality was itself based on four parameters, each weighing 12.5%: training and competence of personnel, capacity (number of dedicated cars), condition of vehicles and equipment for use in the assignments, and system for dealing with enquiries.

14 In Tender Procedure 1, SFD submitted a joint tender on behalf of Ski Taxi and Follo Taxi for two areas, Southern Follo and Northern Follo. The rate per kilometre in SFD’s tender was NOK 19.60, and the number of dedicated cars was 42 (21 cars for the Southern Follo area, and 21 cars for the Northern Follo area). It was clearly stated in the tender that the bid was submitted on behalf of Ski Taxi and Follo Taxi.

15 Since SFD was the sole tenderer for those two areas, Oslo University Hospital cancelled the procedure for those two areas. The procedure was completed for the remaining seven areas.

16 Therefore,Page
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on 21 September 2010, Oslo University Hospital launched another procedure (“Tender Procedure 2”). That procedure concerned the award of framework agreements for the provision of the same services as in Tender Procedure 1, in the areas where Tender Procedure 1 had been cancelled, that is, the two areas of Southern Follo and of Northern Follo. However, Southern and Northern Follo was this time divided into five, and not two, areas: Oppegård, Ås, Nesodden, Frogn and Vestby. According to the contract documents, transport assignments in those five areas had accounted for approximately 33 900 journeys in 2009 spread over the 24 hours of the day.

17 In Tender Procedure 2, SFD submitted a joint tender on behalf of Ski Taxi and Follo Taxi for all five areas. The rate per kilometre in SFD’s tender was NOK 18 for the Oppegård area and NOK 19.60 for the areas of Ås, Nesodden, Frogn and Vestby. The tender provided for 30 dedicated cars (10 cars for the Oppegård area, and 5 cars each for the other areas). It was clearly stated in the tender that the bid was submitted on behalf of Ski Taxi and Follo Taxi. Tenders for all five areas were also submitted by two other companies, Oslo Taxi and Konsentra. Konsentra offered the lowest price, but quality varied among the offers. Therefore, Oslo University Hospital entered into framework agreements with all three companies, namely SFD, Oslo Taxi and Konsentra, for all five areas. It assigned second priority to SFD in all areas, while Oslo Taxi and Konsentra were assigned first and third priority alternatively in different areas.

18 On 31 August 2010 Oslo University Hospital sent a letter to the Competition Authority and the municipal authority in charge of taxi licences, in which it voiced frustration concerning the lack of competition in the Follo region. In that letter, Oslo University Hospital stated, in particular, that “as one of the largest purchasers of taxi services we experience that lacking competition in the taxi market in the Follo region is exploited through a disproportionately high kilometre price”.

19 APage
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letter sent by SFD to the Competition Authority on 17 November 2010 describes as follows the submission of joint bids by SFD:

“b) Tenders that may be of interest to SFD are prepared and presented to the board of … SFD by the general manager. All aspects of the tender are then considered, such as capacity, profit and risk and so forth. It is thereafter decided whether a bid shall be submitted or not. This tender [the tenders submitted in Tender Procedures 1 and 2] is one of the most important tenders and sources of income for SFD and it has been agreed the whole time that SFD should submit a bid on behalf of the taxi centrals.

c) As of the start in the middle of June 2001, there has been agreement that SFD shall submit bids in tender competitions on behalf of both of the taxi centrals.

d) The content of the tender is examined and assessed by the general manager in SFD. The necessary information and statistics have been examined and assessed. Calculations made to ensure an acceptable economy and risk in the tender is presented to the board, which has approved the price setting.

e) The general manager in SFD calculated the prices based on the economy and risks in the tender”.

20 By Decision of 4 July 2011, the Competition Authority found that Ski Taxi, Follo Taxi and SFD had infringed Section 10 of the Competition Act and imposed fines on them (“the Decision of the Competition Authority”).

21 According to the Competition Authority, Ski Taxi and Follo Taxi would have been able to submit separate tenders in Tender Procedure 1 and Tender Procedure 2. They were thus to be regarded as competitors. Therefore, the submission of joint bids through SFD constituted cooperation between Ski Taxi and Follo Taxi. Such cooperation had as its object the restriction of competition and was prohibited by Section 10 of the Competition Act.

22 ThePage
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Decision of the Competition Authority reads as follows: “SFD’s submission of a joint tender on behalf of Ski Taxi and Follo Taxi was … a tender cooperation between de facto and potential competitors. The two dispatch centres cooperated with respect to price, quality and capacity. As a result of the cooperation, Ski Taxi and Follo Taxi did not compete by submitting separate tenders in Tender [Procedure] 1 and Tender [Procedure] 2. The Competition Authority therefore finds that the tender cooperation in question must be deemed to have had a competition-restricting object in contravention of Section 10, first paragraph, of the Competition Act. It is not necessary, therefore, to provide evidence of any competition-restricting effect.”

23 By judgment of 8 February 2013, Follo District Court (Follo tingrett) annulled the Decision of the Competition Authority. It found that Ski Taxi and Follo Taxi were not potential competitors as regards Tender Procedure 1, and were only partially potential competitors as regards Tender Procedure 2. The submission of joint bids by SFD did not constitute a restriction of competition by object. It could, as regards Tender Procedure 2, constitute a restriction of competition by effect. However, that was not the case, since the effect on competition was not appreciable.

24 By judgment of 17 March 2015, Borgarting Court of Appeal upheld the Decision of the Competition Authority. It held that the dispatch centres of Ski Taxi and Follo Taxi were competitors in Tender Procedure 1 and Tender Procedure 2. The Court of Appeal found that the submission of joint bids by SFD was capable of restricting competition and that the cooperation constituted a restriction of competition by object. Therefore, the Court of Appeal imposed on Ski Taxi, Follo Taxi and SFD administrative fines of, respectively, NOK 100 000, NOK 200 000 and NOK 1 million.

25 SkiPage
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Taxi, Follo Taxi and SFD appealed against that judgment to the Supreme Court of Norway. The appeal does not concern the factual findings of Borgarting Court of Appeal, which held that Follo Taxi and Ski Taxi would have been able to submit separate tenders in Tender Procedure 1 and Tender Procedure 2 and were thus competitors. Therefore, those factual findings may be relied on in the advisory opinion.

26 By decision of 24 July 2015, the Supreme Court granted leave to appeal on matters of law. The proceedings before the referring court concern, provisionally, only the question whether the submission of joint bids by SFD on behalf of Ski Taxi and Follo Taxi constitutes a restriction of competition by object.

27 On 24 February 2016, the Court received a request from the Supreme Court for an advisory opinion.

IV Questions

28 The following questions have been referred to the Court:

1. What is the legal test when determining whether an agreement between undertakings has a competition-restricting object within the meaning of Article 53 EEA?

a) In this context, is it sufficient in order to be able to categorise a form of conduct as an infringement by object pursuant to Article 53 EEA, that the cooperation is capable of restricting competition?

2. What is the legal significance for the consideration of whether a form of conduct constitutes an infringement by object, that such cooperation took place openly vis-à-vis the procuring authority?

3. WhatPage
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legal criteria must in particular be emphasised when considering whether cooperation that takes the form of two competing companies submitting a joint tender through a joint venture, and where the two undertakings are to be subcontractors to the joint venture, should be deemed to constitute an infringement by object?

V Written observations

29 Pursuant to Article 20 of the Statute of the Court and Article 97 of the Rules of Procedure, written observations have been received from:

Ski Taxi, Follo Taxi and SFD, represented by Stephan L. Jervell, Advokat;

the Norwegian Government, represented by Pål Wennerås, Advokat, Office of the Attorney General (Civil Affairs);

the EFTA Surveillance Authority (“ESA”), represented by Carsten Zatschler, Clémence Perrin, and Øyvind Bø, members of its Department of Legal & Executive Affairs, acting as Agents; and

the European Commission (“the Commission”), represented by Henning Leupold, Hubert van Vliet and Teresa Vecchi, members of its Legal Service, acting as Agents.

VI SummaryPage
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of the arguments submitted and answers proposed

Ski Taxi, Follo Taxi and SFD

30 At the outset, Ski Taxi, Follo Taxi and SFD submit that, contrary to the contention of the Norwegian Government before the referring court, neither the Decision of the Competition Authority nor the judgment of Borgarting Court of Appeal found that Ski Taxi and Follo Taxi had agreed to refrain from submitting individual bids. Hence, a finding that an agreement to that effect between Ski Taxi and Follo Taxi exists constitutes a new matter of fact, which, according to the Notes for the guidance of Counsel in written and oral proceedings before the EFTA Court,1 the Court should disregard.2

1 Reference is made to Section B1, second paragraph, of the Notes.

2 Reference is made to the judgment in AC-ATEL Electronics Vertriebs GmbH v Hauptzollamt München-Mitte, C-30/93, EU:C:1994:224, paragraph 18.

The first question

31 Ski Taxi, Follo Taxi and SFD submit that, in order to classify specific conduct as constituting a restriction by object, it does not suffice that such conduct is capable of restricting competition. Rather, it must reveal a sufficient degree of harm to competition.

32 In that respect, Ski Taxi, Follo Taxi and SFD state that Article 53(1) EEA prohibits agreements that “have as their object or effect” the restriction of competition. Only the most serious and harmful restrictions should be classified as restrictions by object.3 They argue that caution should be exercised in that regard since restrictions by objectPage
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(i) are prohibited without any requirement that their anti-competitive effects be shown; (ii) do not benefit from the de minimis exemption or the individual exemption provided for in Article 53(3) EEA; (iii) are presumed to appreciably restrict competition; and (iv) generally entail fines amounting to 10% of the annual turnover of the undertakings responsible for such conduct.

3 Reference is made, in particular, to the Opinion of Advocate General Wahl in Groupement des cartes bancaires v Commission, C-67/13 P, EU:C:2014:1958, points 54 to 61.

33 Ski Taxi, Follo Taxi and SFD claim that the test applied by Borgarting Court of Appeal, which is consistent with the case law of the Supreme Court of Norway, cannot be followed. The Court of Appeal held that conduct should be classified as constituting a restriction by object if it is capable of restricting competition. It further held that, since Ski Taxi and Follo Taxi could have submitted individual bids instead of joint bids, and since by submitting joint bids they agreed on the price to be offered to the contracting authority, their conduct was capable of restricting competition and thus constituted a restriction by object.

34 In the view of Ski Taxi, Follo Taxi and SFD, it follows from the case law of the Court of Justice of the European Union (“ECJ”), in particular its judgment in Cartes bancaires,4 from the Commission’s GuidancePage
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on restrictions by object,5 ESA’s General Guidelines6 and ESA’s Horizontal Guidelines,7 that conduct may be classified as constituting a restriction by object if it “reveal[s] a sufficient degree of harm to competition”, that is, if experience has revealed that such conduct likely leads to such harmful effects.

4 Reference is made to judgments in Groupement des cartes bancaires v Commission, C-67/13 P, EU:C:2014:2204, paragraph 58; Dole Food Company, Inc. and Dole Fresh Fruit Europe v Commission, C-286/13 P, EU:C:2015:184, paragraphs 115 to 117; SIA ‘Maxima Latvija’ v Konkurences padome, C-345/14, EU:C:2015:784, paragraph 20; Toshiba Corporation v Commission, C-373/14 P, EU:C:2016:26, paragraph 26; and ING Pensii, C-172/14, EU:C:2015:484, paragraphs 30 and 31.

5 Commission Staff Working Document of 25 June 2014 – Guidance on restrictions of competition “by object” for the purpose of defining which agreements may benefit from the De Minimis Notice, SWD(2014) 198 final, accompanying the Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) TFEU (De Minimis Notice), OJ 2014 L 291, p. 1 (“the Commission’s Guidance on restrictions by object”). Reference is made to page 3, according to which “the distinction between ‘restrictions by object’ and ‘restrictions by effect’ arises from the fact that certain forms of collusion between undertakings reveal such a sufficient degree of harm to competition that there is no need to examine their actual or potential effects”.

6 Guidelines of the EFTA Surveillance Authority on the application of Article 53(3) of the EEA Agreement, OJ 2007 C 208, p. 1, and EEA Supplement to the OJ 2007 No 42, p. 1 (“ESA’s General Guidelines”). Reference is made to paragraph 21 of ESA’s General Guidelines.

7 Guidelines of the EFTA Surveillance Authority on the applicability of Article 53 of the EEA Agreement to horizontal cooperation agreements, OJ 2013 C 362, p. 3, and EEA Supplement to the OJ 2016 No 47, p. 1 (“ESA’s Horizontal Guidelines”). Reference is made to paragraph 24 of ESA’s Horizontal Guidelines.

35 Therefore, Ski Taxi, Follo Taxi and SFD contend that it is not sufficient, in order to classify an agreement as a restriction by object, that it is capable of restricting competition. The ECJ’s findings in T-Mobile that a concerted practice may be regarded as having an anti-competitive object if it is “capable … of resulting in the prevention, restriction or distortion of competition”8 were rejected in Cartes bancaires, which set a higher standard for classification as a restriction by object, namely, a “sufficient degree of harm to competition”. That argument is supported by the subsequent judgment in Maxima Latvija. In that case, the ECJ held that a clause whereby the lessee of commercial premises in a hypermarket, a retailer, could prevent the lessor from renting premises to third parties,Page
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including competing retailers, “could potentially have the effect of restricting” those retailers’ access to the market. However, it went on to conclude that the agreements in question did “not … show a degree of harm with regard to competition sufficient for those agreements to be considered to constitute a restriction of competition by object”.9

8 Reference is made to the judgment in T-Mobile Netherlands, C-8/08, EU:C:2009:343, paragraph 31.

9 Reference is made to the judgment in SIA ‘Maxima Latvija’, cited above, paragraphs 22 and 23.

36 Ski Taxi, Follo Taxi and SFD consider it appropriate to reply next to the third question and, finally, to the second question.

The third question

37 Ski Taxi, Follo Taxi and SFD submit that joint bidding does not constitute a restriction by object. Only hard core restrictions, for instance price fixing, output limitation and market sharing, constitute restrictions by object. Such is the case of bid rigging, as is stated in the Commission’s Guidance on restrictions of competition by object.10 According to ESA’s Horizontal Guidelines, joint purchasing agreements do not constitute hard core restrictions, unless they serve as a tool to engage in a disguised cartel.11 The same applies to joint bidding.

10 Reference is made to the Commission’s Guidance on restrictions of competition by object, cited above, point 2.4.

11 Reference is made to ESA’s Horizontal Guidelines, cited above, paragraph 205.

38 Ski Taxi, Follo Taxi and SFD claim that, in order to determine whether joint bidding reveals a sufficient degree of harm to competition, in other words, whether it constitutes a restriction of competition by object, account must be taken of the content of the agreementPage
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between the parties submitting the joint bids, the objectives of that agreement, its economic and legal context, and the intention of the parties. Those are the criteria defined in Cartes bancaires.12

12 Reference is made to the judgment in Cartes bancaires, cited above, paragraphs 53 and 54.

39 First, Ski Taxi, Follo Taxi and SFD maintain that it cannot be deduced from the content of the agreement to submit joint bids, nor from the terms of the joint bids themselves, that joint bidding constitutes a restriction by object. They acknowledge that the submission of joint bids involves an agreement between the parties submitting the joint bids on the price offered to the contracting authority. However, the service tendered out is jointly performed by the parties to the joint bids. The submission of joint bids allows tenderers to pool their limited resources and submit more competitive bids. Therefore, the submission of joint bids cannot be equated with a mere agreement to set prices. It does not follow from the case law that classifies price fixing as a restriction by object that joint bidding also constitutes a restriction by object. Moreover, in the present case, the parties submitting the joint bids, namely, Ski Taxi and Follo Taxi, were not under an obligation to refrain from submitting individual bids. Had they been under such an obligation, the submission of joint bids would have to be assessed under the doctrine of ancillary restraints.

40 Second, Ski Taxi, Follo Taxi and SFD submit that, in order to determine whether joint bidding constitutes a restriction by object, account must be taken of the objectives of the parties submitting the joint bids. In the present case, their objective was to offer increased capacity on the market. Such objective is legitimate and cannot be regarded as restricting competition in principle. Moreover, neither the SFD Shareholders’ Agreement nor the SFD Strategy Document expresslyPage
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state that SFD is entrusted with the submission of joint bids on behalf of its shareholders. In any event, SFD would only be entrusted with the submission of joint bids in large tender procedures.

41 Third, Ski Taxi, Follo Taxi and SFD contend that, while consideration should be given to the economic and legal context of particular conduct in order to determine whether it constitutes a restriction by object, classification as a restriction by object cannot be based on context alone.13 In any event, in terms of legal context, there is no case law of the Court or the ECJ, nor decisional practice of the Commission or ESA that recognises joint bidding to constitute a restriction by object. As for the economic context, this was not given proper consideration by Borgarting Court of Appeal.

13 Reference is made to the Opinion of Advocate General Wahl in Cartes bancaires v Commission, cited above, points 44 and 45.

42 Fourth, Ski Taxi, Follo Taxi and SFD maintain that, in order to determine whether joint bidding constitutes a restriction by object, account may be taken of the subjective intentions of the parties, although that is by no means a necessary factor.14 In the present case, the Court of Appeal found that the parties did not intend to restrict competition.

14 Reference is made to the judgment in Cartes bancaires, cited above, paragraph 54.

43 Therefore, Ski Taxi, Follo Taxi and SFD contend that joint bidding does not constitute a restriction by object. They observe, in contrast, that legal literature and the French Competition Authority have recognised that joint bidding must be examined in view of its potentially restrictive effects.15

15 Reference is made to Bellamy & Child, European Union Law of Competition (2013), pp. 330-333, and to decisions of the French Competition Authority nº 05-D-24 of 31 May 2005, and nº 03-D-01 of 14 January 2003.

44 InPage
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that regard, Ski Taxi, Follo Taxi and SFD rely on paragraph 30 of ESA’s Horizontal Guidelines. Paragraph 30 belongs to a section headed “restrictive effects on competition”. It provides that “horizontal co-operation agreements between competitors who, on the basis of objective factors, would not be able independently to carry out the project or activity covered by the co-operation … will normally not give rise to restrictive effects on competition”. In their view, it can be deduced from that paragraph that an agreement between competitors who are not able to carry out independently the project covered by the agreement must be assessed with regard to its effects on competition, in other words, that it is not a restriction by object. Moreover, the Competition Authority itself has acknowledged in its Guidance on cooperation on projects that if only one of the parties submitting a joint bid is able to submit an individual bid, an assessment of the effects of that joint bid must be carried out.16 As for the submission of joint bids by parties who are both able to submit individual bids, legal and economic literature considers this not to constitute a restriction by object.17

16 Reference is made to paragraph 42 of the Competition Authority’s Guidance on cooperation on projects of 24 February 2014.

17 Reference is made to page 15 of the November 2011 opinion “Prosjektsamarbeid”, prepared for the Competition Authority by Erling Hjelmeng and Tommy Stahl Gabrielsen and to the articles by Simen Klevstrand: “Joint bid labelled ‘by object’ infringement”, published on Nordic Competition Blog on 30 March 2015, and “EFTA Court to consider joint bidding”, published on Nordic Competition Blog on 22 March 2016.

45 Finally, Ski Taxi, Follo Taxi and SFD argue that to classify joint bidding as constituting a restriction by object has the disadvantage of deterring small and medium-sized companies from submitting joint bids, even though such bids could increase the competitive pressure on leading market players. A further disadvantage results from the difficulty in distinguishing between tenderers who are able to submit individual bids and tenderers who are not.

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second question

46 Ski Taxi, Follo Taxi and SFD claim that the bids submitted by SFD in Tender Procedures 1 and 2 clearly stated that they were made on behalf of Ski Taxi and Follo Taxi, and that Ski Taxi and Follo Taxi would be SFD’s sub-contractors. While Ski Taxi, Follo Taxi and SFD acknowledge that such transparency does not preclude the practice at stake from having a restrictive object, they stress that bid-rigging arrangements such as cover bidding, bid suppression, bid rotation and market allocation, which are restrictions by object, are usually kept secret.

Proposed answers

47 Therefore, Ski Taxi, Follo Taxi and SFD propose that the Court should answer the questions as follows:

1. It is apparent from EU case law that the concept of restriction of competition “by object” can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition to such an extent that it may be found that there is no need to examine their effects.

That case law arises from the fact that certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition. Consequently, it is established that certain collusive behaviour, such as that leading to horizontal price-fixing by cartels, may be considered so likely to have negative effects, in particular on the price, quantity or quality of the goods and services, that it may be considered redundant, for the purposes of applying Article 53(1) EEA, to prove that they have actual effects on the market. Experience shows that such behaviour leads to decrease in production and increase in price, resulting in poor allocation of resources to the detriment, in particular, of consumers.

Consequently,Page
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to categorise a conduct as a “by object” restriction pursuant to Article 53 EEA, it is not sufficient that the cooperation is merely “capable of restricting competition”. Classification as a “by object” restriction may be applied only to an agreement which inherently, that is to say without the need to evaluate its actual or potential effects, have a degree of seriousness or harm to such an extent that its negative impact on competition seems highly likely.

2. While not a decisive criterion under the concept of a restriction “by object”, the fact that cooperation is carried out openly is capable of substantiating that the cooperation in question does not constitute a restriction by object. This is a relevant factor when examining the content and objectives of the agreement and the context of which it forms part, as well as the subjective intention of the parties. Thus, in case of a joint bid between competitors, openness vis-à-vis the procuring authority indicates that the joint bid truly involves a joint bid on the joint performance of the services requested, and that it does not serve as a tool to engage in a disguised cartel, that is to say, otherwise prohibited price fixing, output limitation or market allocation.

3. In order to determine whether an agreement between undertakings reveals a sufficient degree of harm to competition that it may be considered 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 part. In addition, although the parties’ intention is not a necessary factor in this regard, this factor may be taken into account.

These are also the relevant aspects to be considered when determining whether a joint bid between two undertakings, which each are able to submit individual bids, constitutes a “by object” restriction. As particularly regards the content of the provisions and the objectives of such cooperation, regard must be had, inter alia, to

(i) whetherPage
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the joint bid implies a cooperation on the joint performance of the contract services,

(ii) whether the agreement is carried out openly vis-à-vis the procuring authority, and

(iii) whether the agreement on submitting the joint bid is exclusive, i.e. preventing the parties from submitting individual bids in the same tender competition.

Insofar as the joint bid involves a cooperation on joint performance of services; is made open vis-à-vis the procuring authority; and does not impose exclusivity on the parties, such cooperation is, by its very nature, and absent any “hard core” restrictions, not capable of revealing a sufficient degree of harm to competition to such an extent that its negative impact on competition seems likely. In this respect, a joint price offered for the joint provision of services does not amount to “price fixing” within the meaning of Article 53(1)(a). In these circumstances, elements relating to the economic and legal context surrounding the joint bid at issue are not capable in themselves of establishing the existence of an anticompetitive object. Neither is the subjective intention by the parties.

The Norwegian Government

The first question

48 The Norwegian Government submits that an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition. This follows from the judgments of the ECJ in ING Pensii and Toshiba.18 Once an agreement has been classified as constitutingPage
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a restriction by object, its effects may only be taken into account in order to set the amount of the fine and to assess damage claims.19

18 Reference is made to judgments in ING Pensii, cited above, paragraph 31, and Toshiba, cited above, paragraph 26.

19 Reference is made, in particular, to judgments in T-Mobile, cited above, paragraph 31, and Allianz Hungária Biztosító Zrt. and Others, C-32/11, EU:C:2013:160, paragraph 38.

49 In order to determine whether an agreement reveals a sufficient degree of harm to competition, account must be taken of the content of its provisions, its objectives and the economic and legal context.20

20 Reference is made to judgments in ING Pensii, cited above, paragraph 33, and Toshiba, cited above, paragraph 27.

50 As to the intention of the parties, the Norwegian Government maintains that it is not an essential factor, although there is nothing preventing the competent competition authorities or courts from taking it into account.21 Therefore, it is irrelevant, in order to determine whether an agreement constitutes a restriction by object, that the parties had no intention to restrict competition on the market but aimed at improving it.22 The pursuit of legitimate objectives may only be taken into account under Article 53(3) EEA.23

21 Reference is made to judgments in T-Mobile, cited above, paragraph 27, and Cartes bancaires, cited above, paragraph 54.

22 Reference is made to judgments in General Motors BV v Commission, C-551/03 P, EU:C:2006:229, paragraph 64, and Competition Authority v BIDS, C-209/07, EU:C:2008:643, paragraph 21.

23 Reference is made to judgments in VSPOB and Others v Commission, T-29/92, EU:T:1995:34, paragraphs 96, 140 and 178, and BIDS, cited above, paragraph 21.

51 The Norwegian Government disagrees with the argument advanced by Ski Taxi, Follo Taxi and SFD to the effect that the threshold for classifying an agreement as a restriction by object is higher in Cartes bancaires than it was in T-Mobile. In Cartes bancaires, the ECJ held that an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition. In T-Mobile, it found that a concerted practice may be regarded as a restriction by object if it is capablePage
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in an individual case of restricting competition.24 In the view of the Norwegian Government, the criterion for classifying an agreement as a restriction by object is the same in Cartes bancaires and in T-Mobile and reflects earlier case law of the ECJ.25 As confirmed in subsequent cases Dole Food and Toshiba, an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition.26

24 Reference is made to judgments in Cartes bancaires, cited above, paragraph 49, and T-Mobile, cited above, paragraph 31.

25 Reference is made to the Opinion of Advocate General Wathelet in Toshiba, C-373/14 P, EU:C:2015:427, point 51.

26 Reference is made to judgments in Dole Food, cited above, paragraph 122, and Toshiba, cited above, paragraph 31.

52 In that regard, the Norwegian Government notes that, once an agreement has been classified as a restriction by object, it is not necessary, in order to conclude that Article 53 EEA has been infringed, to demonstrate anti-competitive effects. Therefore, it is sufficient, in order to classify an agreement as a restriction by object, that it has potential anti-competitive effects, in other words, that it is capable of restricting competition. Actual anti-competitive effects of such an agreement may only be taken into account in order to determine the amount of the fine. The Norwegian Government concludes that, in order to classify an agreement as constituting a restriction by object, it suffices to demonstrate that it has potential anti-competitive effects, that is, that it is capable of restricting competition.

53 The Norwegian Government considers it appropriate to reply next to the third question and, finally, to the second question.

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third question

54 Having regard to the requirement of independence and the proper functioning of normal competition, the Norwegian Government emphasizes at the outset that Article 53(1) EEA is intended to prohibit any form of coordination which deliberately substitutes practical cooperation between undertakings for the risks of competition.27

27 Reference is made to judgments in VSPOB and Others, cited above, paragraph 123; and BIDS, cited above, paragraph 34.

55 The Norwegian Government claims that the agreements listed in Article 53(1) EEA, namely, price fixing, output limitation, market sharing, the application of dissimilar conditions to equivalent transactions and tying, constitute the hard core of restrictions by object. While agreements not listed in Article 53(1) EEA may be regarded as restrictions by object, their classification as such requires a more thorough analysis of their economic and legal context, although that analysis does not extend to an examination of their effects.28 For instance, in Toshiba a market-sharing agreement was regarded as a restriction by object. Since market sharing is mentioned in Article 101(1)(c) TFEU, the analysis of the economic and legal context was limited to what was strictly necessary in order to establish the existence of a restriction of competition by object. The analysis of the economic and legal context only sought to determine whether the parties to the agreement were competitors.29 The same reasoning applies to price fixing. Price fixing is mentioned in Article 101(1)(a) TFEU and is considered to be a restriction by object even if the parties to the agreement set only one component ofPage
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the price,30 or if they set the price indirectly through the exchange of information.31

28 Reference is made to the Opinion of Advocate General Wathelet in Toshiba, cited above, points 72, 73 and 74.

29 Reference is made to the judgment in Toshiba, cited above, paragraphs 29 to 34.

30 Reference is made to the judgment in VSPOB and Others, cited above, paragraphs 145 and 146.

31 Reference is made, in particular, to the judgment in Dole Food, cited above, paragraph 122.

56 The Norwegian Government contends that agreements of which only parts are hard core restrictions may nevertheless constitute restrictions by object. For instance, commercialisation agreements, that is, agreements between competitors to sell, distribute or promote their substitute products, are not listed in Article 101(1) TFEU. Therefore, they do not constitute hard core restrictions. Nevertheless, the parties to a commercialisation agreement may coordinate on prices. In that case, according to ESA’s Horizontal Guidelines, commercialisation agreements are likely to constitute restrictions by object.32 However, a commercialisation agreement does not constitute a restriction by object if, according to ESA’s Horizontal Guidelines, it “is objectively necessary to allow one party to enter a market it could not have entered individually or with a more limited number of parties than are effectively taking part in the cooperation”. In that situation, an assessment of its effects is required, although it normally does not restrict competition.33 The Norwegian Government suggests that joint bidding may be seen as a cooperation agreement. It is apparent from paragraph 237 of ESA’s Horizontal Guidelines, cited above, that a cooperation agreement is “objectively necessary” only if none of the parties to the cooperation agreement could have entered the market without that agreement. Similarly, joint bidding is “objectively necessary” only if none of the parties that submitted the joint bid could have submitted an individual bid.

32 Reference is made to ESA’s Horizontal Guidelines, cited above, paragraphs 225 and 234.

33 Reference is made to ESA’s Horizontal Guidelines, cited above, paragraph 237.

57 ThePage
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Norwegian Government emphasises that independence of economic operators, which must determine independently their policy on the market,34 is of particular importance when those operators prepare bids. Therefore, any coordination between tenderers is harmful. As stated by the Commission in European Sugar Industry, “in a system of tendering, competition is of the essence. If the tenders submitted by those taking part are not the result of individual economic calculation, but knowledge of the tenders by other participants or of concertation with them, competition is prevented, or at least distorted and restricted”.35 In VSPOB and Others, the General Court found that concertation between potential competitors in response to an invitation to tender had the object and effect of restricting competition since it could lead to the fixing of certain terms of the tenders.36 Moreover, Stockholm District Court recently held that joint bids by potential competitors are restrictions by object.37 So did the Danish Competition Appeal Tribunal.38 The OECD has also warned against situation where “two or more businesses file a ‘joint bid’ even though at least one of the undertakings could have bid on its own”.39

34 Reference is made, in particular, to the judgment in T-Mobile, cited above, paragraph 32.

35 Reference is made to Commission Decision of 2 January 1973 relating to proceedings under Articles 85 and 86 of the EEC Treaty (IV-26 918 – European Sugar Industry), OJ 1973 L 140, p. 7, Section II, F.

36 Reference is made to the judgment in VSPOB and Others, cited above, paragraph 123.

37 Reference is made to the judgment of Stockholm District Court (Stockholm Tingsrätt) of 21 January 2014, Konkurrensverket v Däckia and Others, p. 136.

38 Reference is made to the order of the Danish Competition Appeal Tribunal (Konkurranceankenævnet) of 11 April 2016, Eurostar and Others v Konkurrencerådet, pp. 17-18.

39 Reference is made to the OECD Roundtable on “Public Procurement – The Role of Competition Authorities in Promoting Competition”, DAF/COMP (2007), 8 January 2008, pp. 9 and 146.

58 InPage
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the present case, the Norwegian Government maintains that the submission of joint bids by Ski Taxi and Follo Taxi in Tender Procedures 1 and 2 constitutes a restriction by object.

59 As regards the first criterion to be taken into account in order to determine whether an agreement constitutes a restriction by object, namely, its content and objectives, the Norwegian Government contends that both Ski Taxi and Follo Taxi had sufficient capacity to submit individual bids in Tender Procedures 1 and 2. Joint bidding by undertakings that have the capacity to submit individual bids is particularly harmful since it entails a form of coordination which deliberately substitutes practical cooperation between undertakings for the risks of competition. First, joint bidding reduces the number of tenderers and eliminates potential competition between the parties submitting the joint bid. Second, the parties submitting the joint bid substitute their judgment for that of the contracting entity. Third, joint bidding may be assimilated to a commercialisation agreement where the parties agree on prices, which is a hard core restriction. Fourth, Ski Taxi and Follo Taxi also agreed on the number of dedicated cars, which entails fixing “other trading conditions” within the meaning of Article 53(1)(a) EEA and/or “limit[ing] or control[ling] production” within the meaning of Article 53(1)(b) EEA. Finally, since Ski Taxi and Follo Taxi had, independently of each other, the capacity to submit individual bids, joint tendering amounts to an agreement to share markets.

60 As regards the second criterion to be taken into account in order to determine whether an agreement constitutes a restriction by object, namely, its economic and legal context, the Norwegian Government reiterates that the parties to the joint bid only need to be potential competitors. Since Ski Taxi and Follo Taxi could have submitted individual bids, they are to be considered as potential competitors.

61 Therefore,Page
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in the view of the Norwegian Government, the agreement at stake in the present case reveals a sufficient degree of harm to competition and must be regarded as a restriction by object.

62 The Norwegian Government submits that the arguments put forward by Ski Taxi, Follo Taxi and SFD do not undermine that conclusion.

63 First, as regards the argument advanced by Ski Taxi, Follo Taxi and SFD that their joint bids are part of a wider, legitimate cooperation, the Norwegian Government maintains that the joint bids at stake involved price fixing, which is a restriction by object. Moreover, only if Ski Taxi and Follo Taxi had lacked the sufficient resources to submit individual bids could their joint bids be regarded as promoting competition. In the present case, Ski Taxi and Follo Taxi had the resources to submit individual bids. Even if the joint bids were to be regarded as having legitimate, pro-competitive effects, such effects could only be taken into account under Article 53(3) EEA. They are irrelevant in order to determine whether the joint bids constitute a restriction by object within the meaning of Article 53(1) EEA.

64 Second, as regards the argument advanced by Ski Taxi, Follo Taxi and SFD argument that their joint bids are not sufficiently harmful to normal competition, the Norwegian Government reiterates that the joint bids eliminated potential competition between Ski Taxi and Follo Taxi with regard to price. Moreover, the existence, or absence of, a non-compete arrangement whereby Ski Taxi and Follo Taxi refrain from submitting individual bids would only be relevant in order to establish a single and continuous infringement since the creation of SFD in 2001. However, the existence, or absence of, a non-compete arrangement is irrelevant in order to determine whether by submitting joint bids in Tender Procedures 1 and 2 Ski Taxi and Follo Taxi infringed Article 53 EEA.

65 Third,Page
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as regards the argument advanced by Ski Taxi, Follo Taxi and SFD that joint bidding may only have anti-competitive effects if the parties submitting the joint bid have significant market shares, the Norwegian Government reiterates that classification of an agreement as a restriction by object does not entail an assessment of its effects. In any event, in tender procedures market power cannot be assessed by reference to market shares held in the general market, since the market is defined by the contracting entity (as evidenced by the fact that, in Tender Procedure 2, Oslo University Hospital defined smaller areas in comparison with Tender Procedure 1 in order to generate competition).

The second question

66 The Norwegian Government contends that it is irrelevant, in order to determine whether a joint bid constitutes a restriction by object, whether the cooperation between the parties was made apparent in the bid.

67 In that regard, the Norwegian Government submits that it is irrelevant whether disclosure of the joint character of the bid indicates that the parties had no intention to restrict competition. As mentioned above, the subjective intention of the parties is not a necessary factor when assessing if an agreement constitutes a restriction by object. Moreover, an agreement may be regarded as a restriction by object even if it does not aim only at restricting competition but also pursues legitimate objectives.40 In any event, in the present case Ski Taxi and Follo Taxi only disclosed that they were SFD’s sub-contractors because the contract documents required this. Therefore, no conclusion may be drawn from such disclosure as to their intentions.

40 Reference is made to the judgment in General Motors, cited above, paragraph 64.

68 Moreover,Page
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the Norwegian Government contends that it is irrelevant, in order to determine whether a joint bid reveals a sufficient degree of harm to competition, whether the joint character of the bid was disclosed by the parties. In the present case, the joint bids reduced the number of potential tenderers and eliminated competition between the parties. They also led the parties to coordinate on all terms of the bids, namely, price, quantity and quality. Those restrictions of competition arise whether or not the joint character of the bid is disclosed to the contracting entity. Therefore, an agreement may constitute a restriction by object irrespective of whether the cooperation was disclosed by the parties. This is consistent with the judgments of the ECJ in BIDS and VSPOB.41 This is also consistent with the judgment of Stockholm District Court of 21 January 2014 according to which “the question of whether an agreement has been open or concealed is immaterial in order to determine whether it restricts competition by object or effect”, and with the order of the Danish Competition Appeal Tribunal of 11 April 2016.42

41 Reference is made to judgments in BIDS, cited above, paragraphs 4 to 10 and 40, and VSPOB and Others, cited above, paragraphs 359 and 360.

42 Reference is made to the judgment of Stockholm District Court of 21 January 2014, cited above, p. 134, and the order of the Danish Competition Appeal Tribunal of 11 April 2016, cited above, p. 18.

Proposed answers

69 Therefore, the Norwegian Government proposes that the Court should answer the questions as follows:

1. The classification of an agreement as a restriction of competition by object relates to certain types of coordination between undertakings that reveal a sufficient degree of harm to competition that there is no need to examine their effects. That case-law arises from the fact thatPage
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certain types of coordination between undertakings can be regarded, by their very nature, as being harmful to the proper functioning of normal competition. An agreement pursues an anti-competitive object within the meaning of Article 53(1) EEA where, according to its content and objectives and having regard to its legal and economic context, it is capable in an individual case of resulting in the prevention, restriction or distortion of competition.

2. Joint tendering by potential competitors in response to an invitation to tender, irrespective of whether it is made known to the contract awarder, is by its very nature harmful to the proper functioning of normal competition in a system of tendering. It is therefore immaterial for the classification of a joint tender as a restriction of competition by object within the meaning of Article 53(1) EEA whether the cooperation between the undertakings is made apparent in the tender. Beneficial effects and legitimate objectives put forward in justification of such cooperation may only be considered in relation to the criteria laid down in Article 53(3) EEA.

3. When assessing whether joint tendering constitutes a restriction of competition by object, particular regard must be had to whether one or more of the participants could have submitted independent bids and thus whether the joint tendering was objectively necessary. Joint tendering by potential competitors restricts competition by object since it leads to fixing of competition parameters, including selling prices, and entails that practical cooperation is substituted for the risks of competition. A joint tender accordingly pursues an anti-competitive object within the meaning of Article 53(1) EEA in situations where the participating undertakings could have submitted separate bids.

ESAPage
1072

Admissibility

70 ESA submits that, although the proceedings before the referring court concern a purely internal situation, the Court has jurisdiction. It is settled case law that it has jurisdiction to rule in situations where the facts of the cases being considered by the national courts were outside the direct scope of EEA law but where those provisions have been rendered applicable by domestic law, which adopts, for internal situations, the same approach as that provided for under EEA law.43 In the present case, Section 10 of the Competition Act mirrors Article 53 EEA. Therefore, the Court has jurisdiction.

43 Reference is made, in particular, to the judgment in Allianz Hungária, cited above, paragraph 20.

The first question

71 ESA submits that an agreement constitutes a restriction by object if it reveals a sufficient degree of harm to competition.44 In order to determine whether an agreement reveals a sufficient degree of harm to competition, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms part.45

44 Reference is made to judgments in Cartes bancaires, cited above, paragraph 57, and Toshiba, cited above, paragraph 26.

45 Reference is made to the judgment in Toshiba, cited above, paragraph 27.

72 In that regard, ESA contends that for those agreements which previously have been held to reveal a sufficient degree of harm to competition, the analysis of the legal and economic context may be limited to what is strictly necessary in order to establish the existencePage
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of a restriction of competition “by object”. The purpose of such analysis is to assess whether the individual agreement, in the particular circumstances, is capable of revealing a sufficient degree of harm to competition. For example, an agreement may constitute a restriction by object if its parties are competitors, whereas a similar agreement may not constitute such a restriction if its parties are not competitors. Therefore, analysis of the economic and legal context is required.46

46 Ibid., paragraph 29.

73 Moreover, ESA claims that, in order to classify an agreement as constituting a restriction by object, it suffices that the agreement, which in itself reveals a sufficient degree of harm to competition, is capable of restricting competition.

The second question

74 ESA contends that it is irrelevant, in order to determine whether an agreement constitutes a restriction by object, whether the cooperation between the parties was disclosed to the contracting entity. Moreover, it is irrelevant, to that end, whether the parties to the agreement had the subjective intention to restrict competition or whether they had other legitimate objectives.47

47 Reference is made to the judgment in BIDS, cited above, paragraph 21.

The third question

75 ESA submits that it is for the referring court to determine whether the submission of a joint bid by Ski Taxi and Follo Taxi constitutes a restriction by object. However, ESA proposes to provide some guidance on the issue.

76 ESAPage
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contends that the submission of a joint bid inevitably entails cooperation between the parties on the price offered to the contracting entity. Moreover, it is comparable to a market-sharing agreement, since the parties jointly provide the services at stake and share the contracts awarded.

77 In ESA’s view, since it is settled case law that price fixing and market sharing agreements reveal a sufficient degree of harm to competition, the analysis of the economic and legal context of the joint bid submitted by Ski Taxi and Follo Taxi can be limited to determining whether those undertakings are actual or potential competitors. Therefore, the pro-competitive elements, if any, may only be taken into account under Article 53(3) EEA.

78 Finally, ESA claims that sub-contracting agreements have to be analysed on a case-by-case basis.48 There is nothing to prevent competitors from acting as subcontractors for each other. However, subcontracting cannot result in the substitution of cooperation for competition.

48 Reference is made to ESA’s General Guidelines and ESA’s Horizontal Guidelines.

Proposed answers

79 Therefore, ESA proposes that the Court should answer the questions as follows:

1. The legal test to be applied when determining whether an agreement between undertakings has a competition-restricting object within the meaning of Article 53 EEA is whether it reveals a sufficient degree of harm to competition, having regard to the content of its provisions, its objectives and the economic and legal context in which it forms part. In order to categorise an agreement asPage
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an infringement “by object”, it is sufficient that the agreement, which in itself reveals a sufficient degree of harm to competition, is capable of restricting competition.

2. The fact that a cooperation takes place openly is not a determining element when assessing whether a form of conduct constitutes an infringement by object.

3. The legal criteria that must be emphasised when considering a cooperation in the form of two competing companies submitting a joint tender through a joint venture is whether it reveals a sufficient degree of harm to competition, having regard to the content of its provisions, its objectives and the economic and legal context of which it forms part. In order to categorise an agreement as an infringement “by object”, it is sufficient that the agreement, which in itself reveals a sufficient degree of harm to competition, is capable of restricting competition.

The Commission

The first question

80 The Commission submits that in Cartes bancaires the ECJ clearly stated that an agreement has the object of restricting competition if it reveals in itself a sufficient degree of harm to competition.49

49 Reference is made to judgments in Cartes bancaires, cited above, paragraph 57; BIDS, cited above, paragraph 15; and Société Technique Minière (L.T.M.) v Maschinenbau Ulm GmbH, 56/65, EU:C:1966:38, page 249.

81 The Commission disagrees with the contention made by Ski Taxi, Follo Taxi and SFD that in Cartes bancaires the ECJ set a higher standard than it did in its earlier judgment in T-Mobile. It is true that in T-Mobile the ECJ held that, in order to be categorised as a restriction by object, an agreement must simply be “capable in an individualPage
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case, having regard to the economic and legal context, of restricting competition”.50 However, by stating in T-Mobile that an agreement constitutes a restriction by object if it is merely capable of restricting competition, the ECJ did not seek to define the standard for classifying an agreement as a restriction by object. It aimed at dismissing the referring court’s contention that classifying an agreement as a restriction by object requires consideration of its effects. By no means did the ECJ in T-Mobile establish a lower standard according to which any agreement capable of restricting competition constitutes a restriction by object. Therefore, in Cartes bancaires the ECJ did not, contrary to the allegations of Ski Taxi, Follo Taxi and SFD, overrule the standard set in T-Mobile. The standard for classifying an agreement as a restriction by object is, and has always been, that it must reveal a sufficient degree of harm to competition. This was confirmed in the subsequent judgment in Toshiba.51

50 Reference is made to the judgement in T-Mobile, cited above, paragraph 31.

51 Reference is made to the judgment in Toshiba, cited above, paragraph 26.

82 The Commission states, however, that an agreement cannot constitute a restriction by object if it is not capable of restricting competition. This is because Article 101 TFEU can only apply where there is competition to be restricted. Consequently, while an agreement needs to be capable of restricting competition in order to be classified as a restriction by object, it may not be classified as such simply because it is capable of restricting competition; it must also reveal a sufficient degree of harm to competition.

83 ThePage
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Commission submits that horizontal price fixing,52 market sharing,53 customer sharing54 and joint capacity reduction55 have been recognised by the ECJ as restrictions by object. However, the category of restrictions by object encompasses also other, less obvious, restrictions, for which a closer examination of the agreement may be required.

52 Reference is made, in particular, to the judgment in Cartes bancaires, cited above, paragraph 51.

53 Reference is made to the judgment in Toshiba, cited above, paragraph 28.

54 Reference is made to the judgment in ING Pensii, cited above, paragraph 32.

55 Reference is made to the judgment in BIDS, cited above, paragraphs 33 to 40.

84 The Commission claims that, in order to determine whether an agreement reveals a sufficient degree of harm to competition, an analysis of its content and objectives, and of its economic and legal context, is required.56 Although the intention of the parties is not a necessary factor, it may be taken into account.57

56 Reference is made, in particular, to the judgment in Cartes bancaires, cited above, paragraph 53.

57 Ibid., paragraph 54.

85 First, as regards the content and the objectives of the agreement, the Commission contends that account should be taken not only of the wording of the agreement58, but also of the substance of what was agreed between the parties. An agreement which does not have the restriction of competition as its sole aim but also pursues other, legitimate aims may restrict competition by object.59

58 Reference is made, in particular, to the judgment in BIDS, cited above, paragraph 21.

59 Reference is made, in particular, to the judgment in General Motors, cited above, paragraph 64.

86 Second, as regards the economic and legal context of the agreement, the Commission submits that it is necessary to take account of the nature of the goods or services affected, as well as the real conditions of the functioning or structure of the market.60 It may be necessaryPage
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to investigate whether the parties are competitors, whether the market is two-sided or regulated, and whether the restriction at stake is ancillary, that is, “objectively necessary” for another, wider operation which is not anti-competitive.61 However, account cannot be taken of the effects of the agreement or the market power of the parties. The Commission contends that the findings of the ECJ in Toshiba, according to which the analysis of the economic and legal context of a market-sharing agreement may be limited to what is strictly necessary in order to determine whether it constitutes a restriction by object, should be applied to other obvious, established restrictions by object such as price-fixing.62

60 Reference is made, in particular, to the judgment in Cartes bancaires, cited above, paragraph 78.

61 Reference is made to judgments in Pierre Fabre Dermo-Cosmétique SAS, C-439/09, EU:C:2011:649, paragraphs 39 to 47, and MasterCard Inc. and Others v European Commission, C382/12 P, EU:C:2014:2201, paragraphs 90 to 95 and 107.

62 Reference is made to the judgment in Toshiba, cited above, paragraph 29.

The second question

87 The Commission contends that it is irrelevant, in order to determine whether joint bidding constitutes a restriction by object, whether the cooperation between the parties was disclosed to the contracting entity. What is relevant is whether joint bidding reveals in itself a sufficient degree of harm to competition. Whether cooperation was concealed or disclosed to the contracting entity has no bearing on this. Moreover, cooperation conducted publicly has been found to constitute a restriction by object.63

63 Reference is made to the judgment in BIDS, cited above.

The third question

88 The Commission submits that in order to determine whether joint bidding, or any type of agreement, constitutes a restriction by object, regard must be had to its content and the objectives, the economic andPage
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legal context of which it forms part, and, although that is not a necessary factor, the intentions of the parties.

89 As regards the content and the objectives of the agreement, the Commission notes that it follows from the SFD Strategy Document and from the SFD Shareholders’ Agreement that SFD was established in order to, first, reduce competition between Ski Taxi and Follo Taxi, second, strengthen their market position vis-à-vis third parties.

90 As regards the economic and legal context of the agreement, the Commission contends that Ski Taxi and Follo Taxi were competitors in each of the seven municipalities in the Follo region. Moreover, it is of particular importance that, according to the request for an advisory opinion, Ski Taxi and Follo Taxi could both have submitted individual bids, and the submission of joint bids is thus not necessary to allow them to enter the market.64

64 Reference is made to the Guidelines of the Commission on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 L 11, p. 1, paragraph 237.

91 Moreover, the Commission notes that the submission of joint bids was part of a wider scheme, which entailed the establishment of SFD as a provider of administrative tasks for Ski Taxi and Follo Taxi. Therefore, the submission of joint bids may constitute an ancillary restraint to the operation of SFD. If such is the case and the operation of SFD is not anti-competitive, the submission of joint bids would not fall within the scope of Article 53 EEA. It should thus be assessed whether the submission of joint bids was “strictly indispensable” to the operation of SFD.65 More precisely, it should be assessed whether the pooling of administrative resources through the establishment of SFD required cooperation on price, quality and capacity, as was achieved through the submission of joint bids.

65 Reference is made to the judgment in MasterCard, cited above, paragraph 91.

92 Finally,Page
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the Commission claims that the fact that an agreement does not seek only to restrict competition but has other, legitimate aims is irrelevant in order to determine whether it constitutes a restriction by object. Such additional aims may only be taken into account under Article 53(3) EEA.

Proposed answers

93 Therefore, the Commission proposes that the Court should answer the questions as follows:

1. The legal test for determining whether an agreement constitutes a restriction of competition “by object” within the meaning of Article 53 EEA is whether it reveals, in itself, a sufficient degree of harm to competition such as to be regarded, by its very nature, as being injurious to the proper functioning of normal competition.

The criteria to be applied in making this assessment require an analysis of the content and objectives of the agreement, as well as the economic and legal context of which it forms part.

Furthermore, the EFTA Court is not precluded, in its assessment of whether an agreement constitutes a restriction of competition by object, from having regard to the intentions of the parties to that agreement.

It is not sufficient, in order to categorise a form of conduct as restrictive by object pursuant to Article 53 EEA, that it is capable of restricting competition. While agreements need to be capable of restricting competition to constitute restrictions by object, the mere fact of such capacity is not, of itself, sufficient to find an anti-competitive object, without proof that the agreement discloses a sufficient degree of harm to competition such as to restrict competition by its very nature.

2. ThePage
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fact that cooperation is conducted openly is of no legal significance for the consideration of whether it constitutes a restriction by object.

3. The application of the legal criteria employed to determine if an agreement reveals a sufficient degree of harm to competition and thus constitutes a restriction by object does not vary depending on the circumstances of the case.

Therefore, an agreement to submit a joint tender ought to be assessed with regard to its content and objectives, as well as the economic and legal context of which it forms part.

In this regard, the Commission takes the view that particular consideration be given to (i) the wording used by the parties themselves in characterising their cooperation; (ii) the national court’s finding that both parties could have submitted a tender application separately; and (iii) the fact that joint tendering generally has the object of coordinating prices.

Carl Baudenbacher
Judge-Rapporteur