EU-Competition Law in the Overseas: some recent French precedents

Parts of the territory of some EU-Member States are situated overseas. Does EU-Competition law apply there? Some recent French precedents answer this question. According to Art. 52 TEU the EU-treaties apply to the 27 Member States mentioned therefore. EU-law applies, in principle, to the whole territory of those Member States including the overseas parts of their territory. In Art. 355 TFEU, the territorial scope of the EU-treaties is further specified. There are more or less three ‘categories’ or ‘degrees’ of territorial scope with regard to the overseas (for a more extensive and general description see Kochenov’s article).

1. First, the Outermost Regions, where EU-law applies, with the possibility for temporary exceptions to the acquis of the EU; although the term ‘temporary’ is perhaps not the right word, since the derogations are constantly extended. The Outermost Regions consist of the French départements d’outre-mer, the Spanish Canary Islands and the Portuguese Azores and Madeira.
2. Secondly, the Overseas Countries and Territories (OCT) , where EU-law applies, with the possibility for more permanent exceptions to the acquis of the Union. On the OCTs a special regime of EU-law is applicable: the association regime (of Part IV of the TFEU). The OCTs are listed in Annex II to the TFEU and consist of Danish Greenland, the French territoires and collectivités d’outre-mer, the Caribbean part of the Netherlands and most of 12 British Overseas Territories.
3. And thirdly, custom made regimes for specific parts of some Member States, such as the Channel Islands and Åland Islands. In addition some custom made regimes can be found in the accessions treaties, such as Gibraltar and the Spanish territories Ceuta and Mellila, which are situated on the African continent.

With regard to the two main categories Outermost Regions and OCT, the question arises whether EU-Competition law applies there. It is well established case-law of the ECJ that the Outermost Regions constitute an integral part of the internal market (cf. Case 148/77 Hansen, par. 11). The OCTs are not part of the internal market and are therefore in a comparable situation as third countries.

Since the decentralized enforcement of EU-Competition law, especially the French competition authority, l’Autorité de la concurrence, is confronted with that question, because the French republic incorporates both categories: Outermost Regions and OCTs. Some recent decisions of the French competition authority and in the aftermath of those decisions, the French courts, can answer that question.

 

EU-Competition law: applicable in the Outermost Regions and not in the OCTs

In 2009, in a case concerning the market for mobile telecom on the French Indian Ocean islands of la Réunion and Mayotte, the French competition authority imposed interim measures on a subsidiary of the French telecom operator SFR because of (alleged) abuse of a dominant position; I use the word ‘alleged’, since the final decision is not given yet (cf. a second interim decision of 24 January 2012, par. 73 and 74). La Réunion is an Outermost Region and Mayotte an OCT. Concerning the question whether the behavior of SFR’s subsdiairy might also constitute an infringement of Art. 102 TFEU, the French competition authority concluded the following.

La collectivité départementale de Mayotte est une collectivité territoriale française qui ne fait pas partie de la Communauté européenne. Les dispositions du Traité CE ne lui sont donc pas applicables.

Concernant La Réunion, département français, l’article 299 du Traité CE [now Art. 355(1) TFEU] prévoit que « les dispositions du présent traité son  applicables aux départements français d’outre-mer, aux Açores, à Madère et aux îles Canaries ». Les dispositions du traité CE trouvent donc à s’appliquer pleinement sur ce territoire. (par. 19 and 20)

The Commission came to the same conclusion with regard to the applicability of the state aid rules of Art. 107 TFEU et seq.

Actuellement seuls [les régions ultrapériphériques (RUP); the Outermost Regions] sont soumis[es] aux dispositions du traité (article 355, paragraphe 1, TFUE). Les [pays et territoires d’outre-mer (PTOM ; the OCTs)] (…) ne font l’objet que du régime spécial d’association défini dans la quatrième partie du traité (article 355, paragraphe 2, TFUE). Ce régime d’association ne comprend pas les dispositions sur les aides d’Etat (Commission decision of 5 October 2010 in case N 159/2010 concerning state aid for inhabitants of the French overseas territories, par. 39 and footnote 15)

According to the French competition authority and the European Commission EU-Competition law is thus applicable on the Outermost Regions and not on the OCTs. This is in my view not only the logic of Art. 355 TFEU, but also of the concept that Outermost Regions are part on the internal market in which undistorted competition must be guaranteed by EU-Competition law.

 

Can behaviour on remote and isolated islands affect trade between Member States?

Even though formally EU-Competition law applies to the Outermost Regions, it is very questionable whether inter-state trade can be affected by undertakings on the Outermost Regions since the the overseas regions are suffering from remoteness and insular isolation. Without affect on inter-state trade, EU-Competition law remains inapplicable.

That was the main argument made by France Télécom and Orange Caraïbe when they appealed against a decision of the French competition authority which had fined them for abusing their dominant positions. France Télécom abused its dominant position on the French Antilles and French Guyana market for fixed telecom by offering low-cost tariffs for fixed-to-mobile telephone calls on its fixed and mobile networks when a new operator arrived on the market for mobile telecom. Orange Caraïbe had abused its dominant position on the French Antilles and French Guyana market for mobile telecom by several exclusive practices, such as exclusivity clauses for its independent distributors in those regions and loyalty ‘rebates’ for its customers, by offering mobile phones for free with long term contracts. The French competition authority considered this to be a breach of Art. 102 TFEU, next to the breach of national competition law.

In the Antilles-Guyana market for mobile telecom only one non-French operator was active; it was a Jamaican operator. The fined operators therefore put forward the argument that the possibility of effect on inter-state trade was theoretical, since no other EU-operators than French operators were active on the relevant market. The Paris Court of Appeal ruled that inter-state effect was theoretical and not proven. Consequently there was no breach of Art. 102 TFEU. All parties appealed to the Cour de cassation, the French Supreme Court. The Commission intervened as an amicus curiae in this case on the basis of Art. 15(3) Reg. 1/2003. The French Supreme Courtdecided that the Paris Court of Appeal erred in law, by accepting the argument that there was no other EU-operator active or willing to be active on the relevant market and thereby there was no effect on inter-state trade. The foreclosure of the market by the French operators could already be enough to conclude that there was effect on inter-state trade. The case has been sent back to the Paris Court of Appeal to a chamber with other judges than those who ruled earlier in this case in order to come to a final decision.

What this case in my view demonstrates is that even though EU-Competition law formally applies in the Outermost Regions, it is questionable whether anti-competitive behaviour by undertakings on the Outermost Regions can affect inter-state trade, because the Outermost Regions are remote and isolated islands. This is a factual analysis which has to be made on a case-by-case basis and depends of the market concerned.