Cookies on Pinsent Masons website

This website uses cookies to allow us to see how the site is used. The cookies cannot identify you. If you continue to use this site we will assume that you are happy with this

If you want to use the sites without cookies or would like to know more, you can do that here.

CJEU: Online businesses must show distance from anti-competitive behaviour

Online businesses must clearly distance themselves from anti-competitive behaviour to avoid possible sanctions, the Court of Justice of the European Union (CJEU) said.25 Jan 2016

The CJEU, Europe's highest court, was ruling on a case where 29 Lithuanian tour operators used an online booking system called E-Turas. The Lithuanian antitrust regulator had fined the tour operators in 2012, saying that they had participated in an anticompetitive practice by agreeing not to offer discounts over 3%.

The 3% uniform discount policy was announced by E-Turas using a message sent over its automated system. This message said that the discount rate had been capped "to preserve the amount of the commission and to normalise the conditions of competition".

Although the travel agents were not prevented from granting their customers discounts greater than 3%, they were nevertheless required to take additional technical steps in order to do so, as the system would by default automatically reduce the discount to 3%. The Lithuanian antitrust regulator found that the travel agents did not challenge the provisions or distance themselves from the limits and therefore concluded that all participated in an anticompetitive practice.

On appeal against that decision, a Lithuanian court asked the CJEU whether the mere sending of the message by E-Turas over its automated system was sufficient to presume that the travel agents knew or ought to have known about the anticompetitive practice.

The CJEU ruled that, in this case, the travel agents may be presumed to have participated in a concerted practice unless they publicly distanced themselves from that practice, reported it to the administrative authorities or gave other evidence to disprove that presumption, such as evidence of systematically applying a discount exceeding the 3% cap.

However, national courts cannot require that the travel agencies take excessive or unrealistic steps, such as proving that they did not receive the message or that they did not look at the section in question or did not look at it until some time had passed, the CJEU said.

Competition law expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com said: "It is long-established law that to avoid an infringement finding, and possible sanctions, under EU competition law a business must at the time actively distance itself from the anti-competitive behaviour in which it has somehow become involved. Merely doing nothing in such a scenario is no defence."

"This case is interesting, because it applies that legal principle to the online world. The problem in this case arose from the structure and operating rules of the shared online booking system, requiring participants not to offer a discount exceeding 3%, with that prohibition being enforced by technical means," Lougher said.

"Participants could in principle demonstrate that on each occasion they sought to actively distance themselves from the discount restriction, by sending a message to the system operator to that effect. However, even if participants did routinely send such messages, knowingly continuing to trade on the platform subject to the technical limit on further discounting would not be consistent with the need to demonstrate that in fact they distanced themselves from the pricing restriction. The case highlights the need to exercise real caution when designing online sales platforms," he said.