Adjudicating Europe

EMC Development AB v Commission: Standardisation under EU Competition Law

On 12 May 2010, the General Court (GC) delivered its judgment in Case T-432/05 EMC Development AB v. Commission. This judgment relates to a review of the legality of the Commission’s decision not to act on a competition complaint against allegedly anti-competitive effects of standardisation in the European cement industry. It can provide interesting guidance on the application of EU competition law to standardisation.

The European Committee for Standardisation (CEN), whose members are the national standard setting bodies of European countries, is a Standardisation Body recognised under Directive 98/34/EC. In 2000, CEN members adopted the European cement standard EN 197-1 (Standard) which was developed by a CEN technical committee, in close cooperation with the European Cement Association (Cembureau), under a mandate granted by the Commission pursuant to Directive 89/106/EC on the approximation of Member States’ legislation on construction products. The Standard defines each of 27 common cement products on the “traditional and well tried” basis and further groups them into five cement types. The complaint’s cement which is energetically modified cement produced under a new technology developed in Sweden in 1990s is not in the Standard (paras 12-16). Therefore, the complaint contended that CEN and Cembureau, particularly European Portland cement producers who were behind these two bodies, through adopting the Standard acted as a cartel and created barriers to entry into the European cement market (para 28). The GC agreed with the Commission’s two-pronged test to scrutinize standard setting under Art. 101 TFEU (Art. 81 EC): “(i) whether the procedure for adoption of the Standard had not been non-discriminatory, open and transparent, and (ii) whether the Standard was binding” (para 65). For assessing the procedure, the Court confirmed that the Commission had not made a manifest error of assessment relating to three criteria, namely non-discrimination, openness and transparency (paras 79-104). For the binding nature, the GC decided that the Standard was neither legally mandatory nor de facto binding (paras 113-129). Interestingly, it said that even if national regulations excluded new products by using specifications included in the Standard, “the Standard is not binding on account of its adoption by CEN. The fact that Member States do not apply the [free movement rules] could fall within the scope of [such rules] but that does not mean that the Standard falls within the scope” of Art. 101(1) TFEU (para. 122).

It seems thus impossible for EMC Development to have the judgment reversed under competition law if it brings the case to the ECJ. Although it was not discussed by the GC, it should be noted that the CEN’s standard setting was made under the Commission’s mandate with the support of the harmonisation rules. Such activities possibly are not economic activities under EU competition law; they constitute public powers as the ECJ said in Case C-113/07 P Selex. Put it differently, “public power entrusted” standard setting organisations are hardly subject to competition law. However, EMC Development may find another way under EU law to reach the same end. It can challenge the Commission’s mandate granted to CEN by claiming that the mandate, as its effect, has restricted competition and/or free movement in the EU cement market. The facts that (i) DG Enterprise “was considering amending [the mandate] in order to add a ‘sub-family’ to the common cements and to allow new technical specifications to be developed [but] it was abandoning that proposal, since the majority of the Member States were opposed to the amendment” (para 25) and (ii) “the present action relates to a review of the legality of the contested decision and not of the Standard” (para 136) may support EMC Development in such a claim.

In any case, a general test for the scrutiny of standardisation is recognised. It absolutely gives the Commission inspiration in improving the standardisation section in its draft horizontal cooperation Guidelines, which are in the period of ongoing public consultation. The Commission should take this opportunity to “adopt a policy as to how it will exercise its discretion in the form of measures such as guidelines, in so far as those measures contain rules indicating the approach which the institution is to take and do not depart from the rules of the Treaty” (para 62). Therefore, the standardisation saga is still ahead.

Tu Thanh Nguyen is Lecturer at Ho Chi Minh City School of Law and has recently published a book entitled “Competition Law, Technology Transfer and the TRIPS Agreement: Implications for Developing Countries” (Edward Elgar Publishing, May 2010).