It's a well established fact that we as a species are particularly fond of bananas and don't shy away from resorting to some naughty tricks and cheat strategies in order to grab one. Therefore, it doesn’t come as a surprise to a seasoned lemur with a faible for competition policy that, as Advocate General Kokott put it, “hardly any other fruit has been the source over the years of as acrimonious and diverse legal disputes at European level as the banana” The last episode in this series of European savoury skirmishes over the beloved Musa fruit ended solemnly on 18 March 2015 by way of CJEU ruling C-286/13 P.
To my frequently perplexed primate’s eyes, it seems that this ruling will likely cheer up those who haven’t totally lost faith in the now largely démodé understanding of competition policy as aiming to protect also “the structure of the market and thus competition as such”. Instead, the majority of competition policy acolytes will be seen shaking their respective heads, with at least some of them breaking into a restrained smile at the ever assuaging thought of unstinting counsel fees.
As well known also in my remote part of the world, competitors in some cases do not fix the prices charged to customers or exchange information on those prices but rather exchange information on some form of list or quotation prices (“pure” information exchange). These jolly chinwags are unlikely to be considered by competition policy watchdogs as facetious gossip unworthy of further scrutiny. Following a three year-long investigation, the EU Commission found in 2008 that the exchange of quotation prices between bananas suppliers gave rise to a ‘concerted practice having as its object the restriction of competition' contrary to Article 81 (Article 101 of the Treaty on the Functioning of the European Union). The magic here is twofold. Being a "concerted practice", the EU Commission didn't need to demonstrate that the arrangement amounted to an agreement between the parties or any other form of consensual conduct. Second, being a restriction "by object" there was no need to demonstrate that the practice had any anti-competitive effect. The General Court in 2013 and the CJEU earlier this week confirmed the decision by the EU Commission.
Specifically, the banana cartel involved Chiquita, Dole, and Weichert, major importers of Latin/American bananas to Northern Europe (Austria, Belgium, Denmark, Finland, Germany, Luxembourg, the Netherlands and Sweden). The case had come to light following Chiquita’s leniency application (Chiquita was granted immunity from fines). The banana shipments to Northern European ports arrived on a weekly basis. Following the same time schedule, Dole and Chiquita on the one hand and Dole and Weichert on the other were holding regular chats on Wednesday-Thursday. The parties exchanged information related to pre-pricing factors, i.e. information related to future quotation prices, not actual pricing information. More specifically, the information exchanged concerned sales, supply conditions such as leftover import stocks at the ports, demand conditions and more general factors influencing price trends such as weather forecasts. On Thursday mornings between 11 a.m. and 11.30 a.m each week, Chiquita, Dole and Weichert sat their respectively quotation prices and notified them urbi et orbi, i.e. to customers, to the trade press, and to competitors. These quotation prices applied to untasty green, unripe bananas (and to yellow banana on the basis of the green price plus a ripening fee). After setting quotation prices, on Thursday afternoon or later, the importers started chummy negotiations with retailers and distributors. The actual banana price paid by the latter was the result either of weekly negotiations or was set on the basis of pre-established pricing formulae linked to the quotation price of the seller. In other words, the actual transaction prices were negotiated bilaterally (and discretely) between the banana importers and their customers. Therefore, and differently from the quotation prices, the outcomes of such bilateral negotiations were not publicly observable.
We ringtailed lemurs are renowned for our social intelligence, despite the comparatively small brain size. We form jovial social groups and communicate in a whole array of effective and elaborate ways, by scents included. As somebody with a fine eye for complex social interactions, I’m therefore inclined to share the EU Commission’s view that, although the
quotation prices were not the actual prices paid by customers, they "served
at least as market signals, trends or indications as to the intended
development of banana prices". The assumption, it seems to me, is that since
the quotation prices served at least as reference
point for bilateral price negotiations with retailers (if not directly linked to quotation
prices in accordance with a pre-specified formulae), the actual prices tended
to be different than absent the regular pre-pricing chats between banana
importers. Importantly, the CJEU holds in this respect that proof of a “a direct link between the
information exchanged and the wholesale prices” is not necessary for the
finding of an anticompetitive object. It's in fact sufficient to
demonstrate “that information is exchanged between competitors about factors
relevant to their respective pricing policy or — more generally — to their
conduct on the market.” Shrewd banana importers, the GC found, can learn preciously much from quotation prices: market signals, market trends and/or indications as
to the intended development of banana prices. Moreover, at least in some
transactions, banana prices were directly linked to the quotation prices on the
basis of contractually agreed pricing formulae. Otherwise, as pointedly noted by Advocate
General Kokott, the whole pre-pricing communication drill would seem to make alarmingly
little sense: why bother “if the undertakings' own quotation prices and the
information obtained about the quotation prices of competitors were not to be
factored into the respective undertakings' future conduct on the market and the
prices actually applied by them”? Competition policy recognizes that humans,
also those having embraced the business creed, can be a bit mindless at times,
but claims of widespread market obtusity are hardly sustainable.
