Anticompetitive behaviour by professional regulators – Wouters naturalised

The ECJ’s judgment in Case C-309/99 Wouters – that the Dutch legal regulator was an association of undertakings for the purposes of competition law, but that its prohibition on partnerships between lawyers and accountants nevertheless fell outside Article 101(1) having regard to its context and objectives – was a controversial one.

To some it suggested the emergence in European competition law of a “rule of reason”. Professor Whish preferred to treat it as an example of a standalone doctrine of “regulatory ancillarity” that enabled the courts to overlook the incidentally anticompetitive effects of primarily regulatory measures. Whatever the explanation, it was clear that the ECJ had introduced a doctrine which cut across the express wording of Article 101(1) and allowed measures of certain types to benefit from an unwritten exemption. It was unclear whether that doctrine was a new beginning or an evolutionary dead-end.

The CJEU in Case C-1/12 Ordem dos Técnicos Oficiais de Contas v. Autoridade da Concorrência has upheld that approach without cavil, despite finding that there was nothing in the particular regulatory measure at hand which was capable of displacing Article 101(1). It examined the measure’s context and objectives and concluded that these were insufficient to justify the anticompetitive effects.

The measure in question was a regulation adopted by the Order of Chartered Accountants (“OTOC”) in relation to its members’ continuing professional education. It required chartered accountants to obtain a number of training credits each year, a third of which had to be obtained through training provided by the OTOC itself, with the remainder obtained through training approved by it. The approval process required details of the programmes to be submitted three months in advance.

The anticompetitive effects of the regulation were obvious. A third of the market was artificially closed to competitors, and the requirement of advance approval meant that competitors were hindered from providing training on up-to-date issues while also having to reveal the details of their proposed training to the OTOC.

The position was complicated by the fact that the purpose of imposing the relevant rules was to protect the public by guaranteeing the quality of professional services.  The Portuguese Competition Authority nevertheless imposed a fine, and the OTOC challenged it.

The OTOC raised a number of preliminary arguments why competition law did not prohibit the measure, which the Court dismissed. It was irrelevant that the OTOC was not providing its services for a profit, since the effect of the measures was to hinder the ability of others to do so. It was also irrelevant that the OTOC was charged by law with promoting its members’ continued training and with “planning, organising and providing compulsory training schemes for its members”, since this in the Court’s view amounted to a discretion to make appropriate arrangements rather than a requirement to carry out the training itself. Had the regulations been mandated by law, they would have been State measures and therefore outside the scope of the provisions applicable to undertakings [54], but they were not.

The OTOC therefore relied on the unwritten exemption recognised in Wouters, arguing that proper account had to be taken of the context and objectives of rules relating to continuing professional education. The Court recognised the applicability of that principle at [93], and concluded that the measure was aimed at guaranteeing the quality of services offered by chartered accountants, that compulsory training did effectively contribute to the pursuit of that objective, but that these particular measures imposed restrictions beyond what was necessary [94-100]. The CJEU also dismissed, shortly, the argument that the measures fell within the exemption in Article 101(3), for the similar, but not identical, reason that the restrictions imposed were not essential.

It has been clear at least since Wouters that associations carrying out regulatory functions in relation to an industry or sector are subject to the requirements of competition law. The most interesting effects of that principle have been in the sporting world where, for instance, Articles 101 and 102 have determined who gets to play in the RFU Premiership. In English law, those provisions now sit alongside the ordinary grounds of judicial review (for associations carrying out a public function) and the analogous supervisory jurisdiction recognised in Bradley v Jockey Club (for other associations) as means by which the decisions of such associations can be challenged. The relative uniqueness of the Wouters decision, however, has meant that they are weapons of uncertain power.

There is nothing particularly new in the OTOC decision, and in a sense that is what makes it notable. The CJEU was given an opportunity to reject, qualify, or distance itself from the Wouters doctrine (since the outcome of the case did not require any reliance on it), but instead chose to recognise and apply it, albeit reaching the opposite result. Its juridical basis is no clearer, but it is at least more firmly established.

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One response to “Anticompetitive behaviour by professional regulators – Wouters naturalised

  1. Very good post about competition law, thanks for sharing.

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