Joint bids and cartels: is it ok to share a taxi?

Mark Tricker: Good afternoon Richard. We wanted to talk to you today about a case that doesn’t necessarily leap out of the page of being particularly of interest, but one which I think does contain some very interesting points around whether or not joint-bidding should be considered as a by object infringement of competition law and that’s the EFTA Court judgement in Ski Taxi. Perhaps you could start by just giving us a brief overview of the facts and what the court found.

Richard Whish QC: OK, it is an interesting case. So very briefly, a hospital in Oslo goes out to competitive tender to ask taxi companies to provide taxi services ferrying patients to and from hospital. Two taxi companies used a JV vehicle SFD to submit a joint tender on their behalf. The hospital was not entirely satisfied with the response to the competitive tender, makes a complaint to the government and to the Norwegian Competition Authority. In due course, the authority reached the conclusion that the joint-bidding in this case was a restriction of competition by object. That gets appealed up through the Norwegian Appellate structure. At the level of the court of appeal, that court decides that these were actual or potential competitors and so that is a given, it’s a premise for everything that follows. The Supreme Court is then asked whether this was a restriction by object, they refer the matter to the EFTA Court. The EFTA Court judgement is in 3 parts firstly, a discussion of Cartes Bancaires and what is an object restriction (I think we will probably come back to that later). Second part, can joint-bidding in principle be a restriction of competition by object?…Well yes, it can in principle. Third question, how relevant is the intention of the taxi companies in this case while its relevant but not a necessity for a finding of an object restriction. The matter then gets referred back to the Supreme Court to reach a decision on the facts.

Mark Tricker: Well, let’s take each of those parts in turn starting perhaps with the second one. Do you consider that joint-bidding should be in the by object box? Certainly the commentary on this seems to have been quite split both ways.

Richard Whish QC: Well. I think the answer is that joint-bidding can be a restriction of competition by object. I don’t think it always is necessarily. Why could it be as a matter of principle? Well, if we have got two companies who could have bid independently they could have submitted prices in sealed envelopes. There could have been price competition between them. It’s not difficult to see that in certain circumstances joint-bidding could be regarded as a fairly straight forward example of price fixing that is a restriction by object. However, I think one has to look a little bit more into the economic and legal context of the case and I note that one of the things that the Court asks is whether there could be some sense of object necessity or ancillarity about the arrangements that were concluded on this occasion and, ultimately, it does refer the matter back to the Supreme Court for further consideration so I wouldn’t want to say that all joint-biddings are restriction of competition by object. I wouldn’t go as far as to say that joint-bidding can never be a restriction by object.

Mark Tricker: And then perhaps another part of the judgement to which there aren’t many paragraphs given, but which is quite interesting, is the section on intention which you mentioned. How do you read the Court’s paragraph on intention?

Richard Whish QC: Well, I find this part of the judgement fairly frustrating so the question is, is it relevant to find out the state of mind the intention of the parties when they were submitting their bid jointly and that’s answered in 4 paragraphs. And actually the answer is, we are going to send that back to the Supreme Court to decide on the facts of this particular case. But the Court does make the legal point that a finding of an object restriction does not have as a pre-condition as a requirement that the parties should be intending to restrict competition so you can have an object restriction without guilty intent. On the other hand there can be cases where perhaps there is some element of doubt or being on a border line in which case intention might be relevant. That seems to me to be consistent with previous law, Beef Industry Development Society of Ireland, for example. The Court was quite clear there that you didn’t have to prove intention to reach the conclusion that there was an object restriction.

Mark Tricker: In some ways it makes it interesting, the discussion of Cartes Bancaires, apparently in the speeches that the President of the EFTA Court has given since the Ski Taxi judgement, he suggested that this judgement is very much in line with that one in restricting the by object box, how do you read that section?

Richard Whish QC: Well, I actually think that the most interesting part of this judgement is the discussion of Cartes Bancaires which begins at paragraph 56 and goes on to 66. I think it is fully in line with Cartes Bancaires it uses the Cartes Bancaires test whether the agreement shows its a sufficient degree of harm to competition. Paragraph 61 an object restriction is something that should be construed restrictively,its only restrictions that areeasily identifiable that should be regarded as object restrictions and the very interesting point in paragraph 62 and the reference to Article 6 Paragraph 2 of the European Convention on Human Rights on the presumption of innocence and the Court says that if you’ve got a case where there is some doubt then basically the undertaking concern-the defendant- should be given the benefit of the doubt which seems to be a very useful sentence for future recipients of Statements of Objections to recite. So, I think that is actually the best part of the judgement.

Mark Tricker: As you have said the principles from the judgement are reasonably clear - I think how they are going to be applied for the Norwegian Supreme Court will be very interesting.

Richard Whish QC: And that will happen on the 30th and 31st May when there is a 2 day hearing.

Mark Tricker: Well that’s very interesting, and we will await that with great interest, thank you very much Richard.