The Luxembourg Competition Authority’s president rejects a request for interim measures in the context of the COVID-19 health crisis (Bionext / Laboratoire National de Santé)

I. Introduction

On 17 December 2020, the President of the Luxembourg Competition Council (hereinafter the “President”) rendered a decision [1] on a request for interim measures requested by the laboratory Bionext S.A. (hereinafter “Bionext”) against the Laboratoire National de Santé (hereinafter “LNS”).

This application is part of a main proceeding initiated by Bionext in relation to several potential abuses of dominant position taking place in the context of the Covid-19 health crisis.

This is only the fourth decision on a request for interim measures rendered by the President of the Competition Council (hereinafter “the President”) since the beginning of the year 2008 [2]. This is the third decision by which the President refused to grant interim measures.

Bionext may lodge an action for annulment before the administrative Tribunal.

II. Scope of the Decision n° 2020-MC-06 rejecting a request for interim measures

The President reminded the conditions of interim measures and gave a detailed assessment of the third condition concerning a prima facie infringement of competition law.

He also took the opportunity to remind the competences of the Luxembourg Competition Council (hereinafter the “Competition Council”).

A. Assessment of the conditions for granting interim measures

It should be reminded that Luxembourg competition law governs interim measures through Article 12 of the Competition Act of 23 October 2011 (hereinafter the “Competition Act”).

1. Analysis of the conditions for granting interim measures by the President

a. Four cumulative conditions for granting interim measures

The decision rendered by the President reminded the conditions for granting interim measures, which are set out in Article 12 of the Competition Act and in decision of the Competition Council [3].

These conditions are:

  1. A main proceeding must have been initiated;
  2. The plaintiff must have made an express request for interim measures;
  3. A prima facie violation of competition law must be established, that is a reasonably strong presumption of violation of competition law must be established;
  4. The denounced practice must cause serious and irreparable harm to the plaintiff or to the public economic order, in particular if the damage caused could threaten the survival of the plaintiff, such as through a loss of turnover or profitability.

The above-mentioned conditions are cumulative since the President did not consider the fourth condition, considering that the third condition was not met in this case.

b.In-depth analysis of the condition relating to a prima facie violation of competition law

The President provided an in-depth analysis of the condition relating to a prima facie violation of competition law.

As the main proceeding concerns possible abuses of a dominant position, which are prohibited by Article 5 of the Competition Act and Article 102 of the Treaty on the Functioning of the European Union (hereinafter the “TFEU”), the President had to determine whether the LNS holds a dominant position and to assess whether the practices concerned could, at first sight, constitute abuses.

For determining a dominant position, the President necessarily had to define the markets concerned. In this context, the President studied the various markets that may be concerned, whether they are:

  • The upstream market for the supply of biological equipment, reagents and consumables; or
  • The downstream market for the provision of medical biology analyses.

He also had to study the position of the LNS in these various markets and the practices denounced by Bionext.

Concerning the upstream market, the President considered that the LNS could have a dominant position at the time it was in charge of managing the national stock.

Following the determination of this possible dominant position, the President analyzed the abusive practices alleged by Bionext, that is over-invoicing, refusal of delivery and access to confidential information. The President found that these practices could not be presumed to be abusive.

As the third condition was not met, interim measures were not granted.

Concerning the downstream market, the President concluded that the LNS does not have a dominant position, while nevertheless analyzing the alleged abusive practices concerning the granting of advantages and monopolies by the public authorities, the policy of massive poaching and the cross-subsidization. The President concluded that no abusive practices could be found against the LNS.

Without the characterization of a dominant position, it seemed unlikely that a possible abuse of dominant position could be found.

It should also be noted that concerning past practices, interim measures cannot be granted since the principle of proportionality to which they are subject, according to Article 12, paragraph 1, subparagraph 2, of the Competition Act, implies that “interim measures which would intervene too late to redress a situation cannot be granted, since they are no longer strictly speaking necessary to deal with the emergency [4].

2. Confirmation of the ineffectiveness of interim measures under the current Competition Act

a.Decision making practice of the President

By this decision, the President has once again rejected a request for interim measures, thus confirming the ineffectiveness of this instrument under the current Competition Act.

Indeed, it should be noted that since the Competition Act of 17 May 2004, first competition act, until today only four decisions were rendered on interim measures.

Of the four decisions published on the Competition Council’s website, three of them refused to grant interim measures. Only one decision of 22 January 2008 rendered by the President pronounced such measures in the context of a main proceeding concerning an abuse of dominant position [5]. However, the administrative Tribunal annulled this decision [6].

b.Scope of bill n° 7479 on the organization of the National Competition Authority and repealing the Competition Act of 23 October 2011

It is also interesting to note that bill n° 7479 on the organization of the National Competition Authority and repealing the Competition Act of 23 October 2011 (hereinafter the “Bill”) introduces some changes to the regime of interim measures [7].

It is clear from Article 44 of the Bill that the decision for granting interim measures will no longer be rendered by the President but by the panel of three members. This request may no longer be made exclusively by the parties concerned, but also by the instructor member.

However, there is still a limit concerning the conditions for granting interim measures, the latter being “proportionate to the situation found and may only be taken in urgent cases due to the risk of serious and irreparable damage to public economic order, the economy of the sector concerned, the interest of consumers or, in the framework of a complaint, to the plaintiff, on the basis of a prima facie recognition of violation of Article 4 or 5 of the law and Article 101 or Article 102 of the TFEU [8].

The third and fourth conditions remain, making the granting of interim measures particularly difficult to obtain. Indeed, the degree of proof required to show that these two conditions are met remains the main obstacle to obtain interim measures.

It is therefore to be hoped that the conditions for granting interim measures will be mitigated in order to make this instrument operational.

B. Reminder of the Competition Council’s competences

In the analysis of the abusive practice alleged by Bionext against the LNS concerning the granting of advantages and monopolies by the public authorities, the President reminded the competences of the Competition Council.

Indeed, according to Bionext this practice would be contrary to Articles 102 and 106, paragraph 1, of the TFEU.

The President thus reminded that the Competition Council is only competent to rule on practices committed by undertakings [9].

European case-law has defined this notion as “every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed [10].

The Court of Justice also declared that “the Treaty rules on competition do not apply to activity which, by its nature, its aim and the rules to which it is subject does not belong to the sphere of economic activity, or which is connected with the exercise of the powers of a public authority [11], the President reaffirmed that “a public authority will not be considered as an undertaking with regard to its activities relating to the exercise of public authority prerogatives, which therefore do not fall within the scope of Articles 3 to 5 of the Competition Act and 101 and 102 of the TFEU [12].

However, concerning Article 106, paragraph 1, of the TFEU, the President stated that this Article “governs the obligations of member states acting as state authorities and not anti-competitive behaviors adopted by undertakings [13]. The analysis of the practice in question does not therefore fall within the competence of the Competition Council. The President was thus not competent to render a decision on such practice.

Conclusion

This decision of the President confirms the necessity to reform the instrument of interim measures, which is currently unfortunately totally ineffective due to the difficulty of meeting the cumulative conditions for granting such measures. It is therefore to be hoped that these conditions will soon be reviewed in order to make this instrument truly operational.

Footnotes

[1Decision of the Competition Council, 17 December 2020, LNS, n° 2020-MC-06.

[2Decision of the Competition Council, 22 January 2008, Entreprise des Postes et Télécommunications, n° 2008-MC-01; decision of the Competition Council, 24 August 2012, Telecom Luxembourg against the EPT, n° 2012-MC-02; decision of the Competition Council, 3 July 2019, Amazon Services Europe S.à r.l.; decision of the Competition Council, 17 December 2020, LNS, n° 2020-MC-06.

[3Decision of the Competition Council, 24 August 2012, Telecom Luxembourg against the EPT, n° 2012-MC-02, point 16: condition relating to a prima facie violation of competition law.

[4Decision of the Competition Council, 17 December 2020, LNS, n° 2020-MC-06, point 65.

[5Decision of the Competition Council, 22 January 2008, Entreprise des Postes et Télécommunications, n° 2008-MC-01.

[6Judgement of the administrative Tribunal of the Grand-Duchy of Luxembourg, 1st chamber, 20 May 2009.

[7Title IV, Chapter V of the bill n° 7479 on the organization of the National Competition Authority and repealing the Competition Act of 23 October 2011.

[8Article 44 of the bill n° 7479 on the organization of the National Competition Authority and repealing the Competition Act of 23 October 2011.

[9Decision of the Competition Council, 17 December 2020, LNS, n° 2020-MC-06, point 55.

[10Judgment of the Court, 23 April 1991, Höfner and Elser, C-41/90, point 21.

[11Judgment of the Court, 19 February 2002, Wouters, C-309/99, point 57.

[12Decision of the Competition Council, 17 December 2020, LNS, n° 2020-MC-06, point 57.

[13Decision of the Competition Council, 17 December 2020, LNS, n° 2020-MC-06, point 58.

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Authors

  • Bonn & Schmitt (Luxembourg)
  • Bonn & Schmitt (Luxembourg)

Quotation

Clémence Patte, Gabriel Bleser, The Luxembourg Competition Authority’s president rejects a request for interim measures in the context of the COVID-19 health crisis (Bionext / Laboratoire National de Santé), 17 December 2020, e-Competitions Competition Law & Covid-19, Art. N° 98754

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