Newsletter 6 | June 2020

EU LAW & DIGITAL ECONOMY

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IN THIS ISSUE

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• DATA PROTECTION

• DIGITAL SINGLE MARKET

• INTELLECTUAL PROPERTY

• STATE AID

• COMPETITION

• INTERNAL MARKET

• PUBLIC PROCUREMENT

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The Belgian DPA imposes a fine of EUR 50,000 on Proximusfor failure to protect its Data Protection Officer fromconflicts of interest

European Commission unveils its strategy for Europe’s digital future, the use of artificial intelligence and a data-driven economy

Online platforms further regulated in the context of the EU’sNew Deal for Consumers

Online platforms are not liable for trade mark infringementwhen merely storing infringing goods, says the EU Court ofJustice

EU Court of Justice rules that the hiring out of cars equippedwith a radio does not constitute a communication to the public

The General Court finds that an imprecise analysis of a Stateaid measure by the Commission constitutes evidence of theexistence of “serious difficulties”

The Court of Justice clarifies principles applicable to theperiod of limitation for recovery of State aid

Stricter conditions for finding a restriction of competition“by object”

Belgian prohibition on multidisciplinary activities of accountants ruled unlawful by the Court of Justice

National legislation may limit the use of in-house transactions

Successful tenderers may be held liable and fined in caseof substantial modifications to public contracts

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CONTENT

DATA PROTECTION

DIGITAL SINGLE MARKET

DIGITAL SINGLE MARKET

INTELLECTUAL PROPERTY

INTELLECTUAL PROPERTY

STATE AID

INTERNAL MARKET

PUBLIC PROCUREMENT

STATE AID

COMPETITION

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PUBLIC PROCUREMENT14

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DATA PROTECTION

The Belgian DPA imposes a fine of EUR 50,000on Proximus for failure to protect its Data Protection Officer from conflicts of interest

include, among other things, informing and advising interestedparties of the obligations pursuant to data protection legislationand monitoring compliance with this legislation. Pursuant to Article 38.6 of the GDPR, the DPO may fulfilother tasks and duties; however, the data controller or processor must ensure that any such tasks and duties do notresult in a conflict of interest.

In this case, Proximus’ DPO was also the head of the Compliance, Risk Management and Internal Audit departments.Proximus argued that in these functions its DPO takes ononly an advisory role and does not take any decisions relatingto the purposes and means of any data processing activity.According to the DPA, however, it follows from the fact thatthe DPO also acts as head of these departments that, in thiscapacity, he also determines the means and purposes of thedata processing activities within these departments and assuch is responsible for the data processing flows relating tocompliance, risk management and internal audits. Any independent supervision of these departments by the DPOwould therefore be impossible. In addition, secrecy and confidentiality towards employees could not be guaranteed.

The DPA therefore concluded that Proximus failed to protectits DPO from conflicts of interest in violation of Article 38.6of the GDPR, and imposed a EUR 50,000 fine on the company. Proximus has already announced that it will notappeal the DPA’s decision before the Market Court.

The DPA’s decision is a reminder for companies that givetheir DPO other significant responsibilities within the company to ensure that any situations where conflicts of interest may arise are avoided and that the necessary measures and policies are in place - and duly documented -to mitigate such situations.

Please contact Karel Janssens, Marion Nuytten or Alice Asselberghs for further information about this case and/or for general legal advice relating to privacy and data protectionlaw.

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In a decision dated 28 April 2020 (only available in Frenchand Dutch), the Belgian Data Protection Authority (“DPA”)had the opportunity to reiterate the fundamental role of theData Protection Officer (“DPO”) and the need to ensure thatthe latter’s tasks and duties do not result in a conflict of interest. In the context of an investigation following a self-reported data breach by Proximus (which itself was not considered by the DPA as a violation of the GDPR), the DPA’sInspection Service observed a situation of conflict of interestin which Proximus’ DPO performed his tasks.

As a reminder, the GDPR imposes the obligation upon datacontrollers and processors to designate a DPO in any situationwhere (i) the data processing is carried out by a public authority or body, (ii) the data controller’s or processor’s coreactivities consist of processing operations which require regular and systematic monitoring of data subjects on a largescale, or (iii) the data controller’s or processor’s core activitiesconsist of large-scale processing of special categories of datapursuant to Article 9 and 10 of the GDPR. The DPO’s tasks

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Newsletter 6 | June 2020

DIGITAL SINGLE MARKET

European Commission unveils its strategy forEurope’s digital future, the use of artificialintelligence and a data-driven economy

The Commission already took the first two steps and presenteda White Paper on artificial intelligence as well as a Communication on Europe’s data strategy.

In its White Paper on Artificial Intelligence, the Commissionpresents policy options to enable a trustworthy developmentof AI. These include creating a European regulatory frameworkthat both promotes the uptake of AI and addresses the risksassociated with certain uses of this new technology (e.g. safety issues, loss of privacy, limitations to the right of freedom of expression, discrimination, etc.).

To this end, the Commission proposes to follow a twofold approach. The existing provisions of EU law (e.g. ensuringconsumer protection, protection of personal data, etc.) willcontinue to apply in relation to AI, although certain updatesto that framework may be necessary to reflect the use of AI(e.g. liability under product safety legislation). A new andspecific regulatory framework for AI, on the other hand,should follow a risk-based approach and only apply to AI applications qualified as ‘high-risk’, in particular from the viewpoint of safety, consumer rights and fundamental rights.For these high-risk AI applications, the following key requirements could be considered:

• requirements relating to the data set used to train AI systems;

• requirements regarding the keeping of records in relationto the programming of the algorithm, the data used, etc.;

• ensuring clear information as to the AI system’s capabilitiesand limitations;

• requirements ensuring that the AI systems are robust andbehave reliably as intended;

Given that digital technologies are profoundly transformingour world, the European Commission has set out a strategyto best meet the risks and challenges ahead and to positionEurope as a trendsetter in the global debate.

These ideas and actions are summarised in the Commission’spublication “Shaping Europe’s Digital Future“, presentedearlier this year. In particular, the Commission will focuson three key objectives to ensure that Europe becomes a strong and independent digital player in itsown right: (i) technology that works for people, (ii) a fairand competitive economy, and (iii) an open, democraticand sustainable society.

To achieve these objectives, the Commission has set outseveral key actions for the next five years, including:

• publishing a White Paper on Artificial Intelligence setting out options for a legislative framework for trustworthy AI;

• communicating a European Data Strategy to make Europe a global leader in the data-agile economy;

• accelerating investments in Europe’s Gigabit connectivity,including an updated Action Plan on 5G and 6G;

• evaluating and reviewing the fitness of EU competitionrules for the digital age, including the launch of a sectorinquiry;

• increasing and harmonising the responsibilities of online platforms and ISPs and reinforcing oversight over platforms’ content policies in the EU;

• launching initiatives to improve labour conditions for platform workers;

• publishing a media and audio-visual action plan to support the digital transformation and the competitivenessof the audio-visual and media sector;

• setting out a European cybersecurity strategy, which includes the establishment of a joint cybersecurity unit.

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making more high-quality public sector data available forre-use;

• investing in data-driven innovation and strengthening Europe’s data infrastructures, including competitive Europeancloud services;

• supporting individuals in enforcing their rights with regardto the use of the data they generate, and investing in skillsand general data literacy;

• promoting the development of common European dataspaces in strategic economic sectors and domains of publicinterest, which should lead to the availability of large poolsof data (e.g. a Common European health data space, financialdata space, energy data space, and Green Deal data space).

It is clear that the goals set out in the context of Europe’s digital future are very ambitious, including the aim for theEU to become a world leader in trustworthy AI and the mostsecure and dynamic data-agile economy in the world. TheCommission will undoubtedly face many challenges in developing a regulatory framework fit for Europe so that itcan reach these objectives, but the coming years in any eventpromise to be very exciting for everyone active in the digitaleconomy.

Please contact Karel Janssens, Marion Nuytten or Alice Asselberghs for further information regarding the aboveand/or for general advice on the Digital Single Market.

• requirements ensuring appropriate involvement by humanbeings;

• specific requirements regarding the use of biometric datafor remote identification purposes (e.g. facial recognition).

The Commission proposes to implement prior conformity assessments that would be mandatory for all economic operators targeted by these requirements, regardless of theirplace of establishment. For AI applications that do not qualifyas “high-risk” and that are not subject to the mandatory requirements, an option would be, in addition to applicablelegislation, to establish a voluntary labelling scheme.

The Commission also published its “European strategy fordata“, in which it outlines Europe’s strategy to enable thedata economy for the coming five years. In particular, theCommission aims to create a genuine single market for datawhere personal and non-personal data are secure, where businesses have easy access to an almost infinite amount ofhigh-quality industrial data, and where rules for access toand use of data are fair, practical and clear.

The Commission’s data strategy is based on the following fourpillars:

• establishing a cross-sectoral regulatory framework to facilitate the use of data and to provide incentives for horizontal data sharing across sectors. This also includes

DIGITAL SINGLE MARKET

Online platforms further regulated in thecontext of the EU’s New Deal for Consumers

online service providers, such as online marketplaces, socialmedia platforms and comparison websites, and consumers. Assuch, the Directive complements the previously adopted Platform-to-Business Regulation (Regulation 2019/1150) that introduced transparency requirements in the relationship between online intermediaries and traders.

The European Commission’s “New Deal for Consumers” initiativeaims to strengthen and modernise EU consumer protection rulesin the digital society. In this context, the EU has recently adoptedthe Directive on the better enforcement and modernisation ofUnion consumer protection rules (Directive 2019/2161).

The new Directive also focuses on the relationship between

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(such as the information obligation, the right to withdrawal,etc.), except where the personal data provided by the consumerare exclusively processed for the purpose of supplying the digital service or for meeting legal requirements.

• Personalised pricing: Consumers must be clearly informed whenthe price presented to them is personalised on the basis of automated decision-making and profiling so that they can takeinto account the potential risk that the price has been increased.

• Price reduction claims: Price reduction claims will have to indicate as the reference price the lowest price applied by theplatform within a period of at least 30 days prior to the application of the price reduction.

• Penalties for cross-border infringements: To ensure that penaltiesin relation to widespread infringements can be effective,proportionate and dissuasive, national authorities will beable to impose maximum fines of at least 4% of the platform’s annual turnover in the Member State or MemberStates concerned.

Member States have until 28 November 2021 to transpose thesemeasures into national legislation and will be required to applythem as from 28 May 2022. The Platform-to-Business Regulation will already apply from 12 July 2020.

Please contact Karel Janssens, Marion Nuytten, Ludovic Panepinto or Alice Asselberghs for further information regarding the above and/or for general advice on the Digital Single Market.

Below are some of the key aspects of the new Directive:

• Transparency as regards online marketplaces: Consumers haveto be informed whether the third party offering the goods orservices on the marketplace is a trader or a non-trader (privateindividual). If it concerns a non-trader, the consumer must bewarned that EU consumer protection rules do not apply. Also,the online marketplace must inform the consumer whether thesupplier or the marketplace itself is responsible for e.g. delivery,handling returns, etc.

• Rankings:Higher ranking of commercial offers has an importantimpact on consumers’ behaviour. Online platforms will therefore have to inform consumers about the main criteria determining the ranking of the offers provided in response to asearch query (e.g. price, distance, consumer ratings), and haveto clearly indicate when a trader has directly or indirectly paidthe platform for a higher ranking.

• Consumer reviews: As consumers increasingly rely on consumerreviews when they make purchasing decisions, traders will haveto inform consumers whether processes are in place to ensurethat the reviews originate from consumers who have actuallyused or purchased the products. Submitting fake reviews andendorsements, such as ‘likes’ on social media, is expressly prohibited.

• ‘Free’ digital services: Some important EU consumer rights onlyapply to service contracts, including contracts for digital services, under which the consumer has to pay a fee. Today,many digital services are supplied free of charge but requireconsumers to provide personal data in exchange (e.g. socialmedia platforms). Under the new Directive, these “free” onlineplatforms will be subject to the same consumer protection rules

Newsletter 6 | June 2020

INTELLECTUAL PROPERTY

Online platforms are not liable for trade markinfringement when merely storing infringinggoods, says the EU Court of Justice

company does not itself use these trade marks and so doesnot infringe the related rights (the ruling is available here).Coty Germany, a distributor of perfumes and licensee of theEU trade mark Davidoff, sued the online platform Amazonbefore the German Courts for storing and dispatching infringingbottles of Davidoff perfume on behalf of third party sellerson the Amazon marketplace.

The German Federal Court referred the following question tothe Court of Justice: “Does a person who, on behalf of a thirdparty, stores goods which infringe trade mark rights, withouthaving knowledge of that infringement, stock those goods for

The EU Court of Justice ruled on 2 April 2020 that, by storinggoods on behalf of a third-party seller without being aware ofthe fact that these goods infringe trade mark rights, a

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it follows from its wording that in order for the storage ofgoods to be classified as ‘using’ the trademarks they bear, itis necessary for the storage provider itself to pursue the aimof offering the goods or putting them on the market. As thereferring court unequivocally stated that Amazon did not itself offer the goods concerned for sale or put them on themarket, the Court concluded that there was no infringing useof the trade mark by Amazon.

Interestingly, in the course of the proceedings, Coty Germanyasked the Court of Justice, in the event that the answer tothe question submitted would be in the negative, to rule onwhether the storage activity of Amazon falls within the scopeof the safe harbour provisions of the E-commerce Directive2000/31 and, if not, whether Amazon must be regarded asan ‘infringer’ as referred to in Article 11 of the IPR EnforcementDirective 2004/48. The Court, however, stated that the referring court did not raise that question, and that there istherefore no need to answer it. The Court merely observedthat it is apparent from settled case-law that, where an economic operator has enabled another operator to make useof a trade mark, its role must, as necessary, be examinedfrom the point of view of rules of law other than Article 9 ofRegulation 2017/1001, such as Article 14(1) of the E-commerce Directive or Article 11 of the IPR EnforcementDirective.

By limiting its analysis in this case to the question and factsas referred by the German court, the Court missed out on anopportunity for further clarification. This is particularly sosince Amazon, as follows from Advocate General CamposSánchez-Bordona’s analysis in his Opinion, also offers a specific programme (“Amazon Logistics”) which involves amuch broader range of activities than mere storage. Theseactivities include preparing the goods for shipment (e.g. bylabelling them, adequately wrapping them or wrapping themin gift wrapping) and shipping them to the buyer, as well astaking care of the advertisements, managing the customersupport service, receiving payment from the buyer of thegoods, etc. For the Advocate General, these activities cannotbe considered as a mere storage service and result in an active involvement by Amazon.

Please contact Karel Janssens, Marion Nuytten or Alice Asselberghs for further information about this case and/or forgeneral legal advice relating to IP and online platform liability.

Newsletter 6 | June 2020

the purpose of offering them or putting them on the market,if it is not that person himself but rather the third party alonewhich intends to offer the goods or put them on the market”.Under Article 9, 3 (b) of EU Trademark Regulation2017/1001 (“EUTMR”), stocking goods under an infringingtrade mark for the purpose of offering them or putting themon the market may be considered as an infringing use.

The Court of Justice ruled on the basis of the facts as presentedby the referring court. Therefore, the premises where thatAmazon merely stored the goods, without itself offering themfor sale or putting them on the market and without havingthe intention to do so. The question therefore was whetherthis act of storing goods could be considered as “stockinggoods for the purpose of offering them or putting them onthe market” within the meaning of Article 9, 3 (b) EUTMR.

The Court then referred to its previous case law where it heldthat the notion of “use” of a trade mark involves active behaviour and direct or indirect control of the act constitutingthe use. For example, as regards e-commerce platforms, theCourt ruled that the use of trade marks in offers for sale displayed in an online marketplace is made by the sellers onthat marketplace and not by the platform operator itself (seeL’Oréal and Others, C-324/09).

With respect to Article 9, 3 (b) EUTMR, the Court noted that

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INTELLECTUAL PROPERTY

EU Court of Justice rules that the hiring outof cars equipped with a radio does notconstitute a communication to the public

customers would not be able to enjoy the broadcast work orwould be able to do so only with difficulty.

However, the mere provision of physical facilities for enablingor making a communication does not amount to an act ofcommunication (see Recital 27 of the InfoSoc Directive). According to the Court, this is also the case of the supply ofa radio receiver forming an integral part of a car, which makesit possible to receive the radio broadcasts available and thiswithout any additional intervention by the rental company.Such a situation differs from acts of communication by whichservice providers intentionally broadcast protected works totheir clientele, by distributing a signal by means of receiversthat they have installed in their establishment. The Court hereby refers to its Reha Training case law. Hence, the rentalcompanies’ activity does not constitute an act of communicationto the public.

The Court’s ruling is another addition to the existing “maze”of case law relating to the complex notion of “communicationto a public”. In this decision, the Court had the opportunityto emphasise (once again, cf. for example GS Media) the central role of the person providing access to the protectedworks and the deliberate nature of his intervention.

Please contact Karel Janssens, Jeff Keustermans, MarionNuytten or Alice Asselberghs for further information aboutthis case and/or for general legal advice relating to intellectualproperty.

On 2 April 2020, the EU Court of Justice ruled in caseC‑753/18 that the hiring out of cars equipped with a radiodoes not constitute a communication to the public.

The main question submitted to the Court was whether thehiring out of cars equipped with a radio receiver constitutesan act of communication to the public within the meaning ofArticle 3 of the InfoSoc Directive (Directive 2001/29/EC) andwithin the meaning of Article 8 of the Rental Right and Lending Right Directive (Directive 2006/115/EC). If so, carrental companies would be liable for the payment of copyrightfees to collective management organisations for the musictransmitted through the radios.

In his Opinion, Advocate General Szpunar had pointed outthat the act of communication to the public has already ledto many decisions by the Court, and that this case law hasbecome quite fragmented and was even referred to as a“maze”. He concluded, however, that in this case, no act ofcommunication to the public takes place.

According to the case law of the EU Court of Justice, a communication to the public comprises two elements: an actof communication of a protected work and a public to whichthe communication is addressed. The act of communicationto the public should be understood in a broad sense, coveringall communication to the public not present at the placewhere the communication originates, whether by wire or wireless transmission or re-transmission.

In assessing whether acts consist of a communication to thepublic, the Court has emphasised the indispensable roleplayed by the user and the deliberate nature of his intervention.That user makes an “act of communication” when he intervenes, in full knowledge of the consequences of his action, to give his customers access to a protected work, particularly where, in the absence of that intervention, those

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Newsletter 6 | June 2020

STATE AID

The General Court finds that an impreciseanalysis of a State aid measure by the Commission constitutes evidence of the existence of “serious difficulties”

serious difficulties as regards the classification of the disputedmeasure as State aid and its possible compatibility with theinternal market.

On 13 December 2018, the General Court issued two judgments further clarifying the circumstances under whichthe Commission should find that there are serious difficultiesin the assessment of the notified measure. The judgments inquestion are cases T-630/15, Scandlines Danmark ApS andScandlines Deutschland GmbH v European Commission andT-631/15, Stena Line Scandinavia AB v European Commission,two cases opposing the Commission to ferry operators.

These cases concerned a Commission decision not to raiseobjections in relation to measures granted by the DanishState to support the planning, construction and operation ofinfrastructure, road and railway connections between Denmark and Germany. More precisely, the Commission decided, following a preliminary investigation, that the measures did not constitute State aid and that, even if theydid, they were compatible with Article 107(3)(b) TFEU andwith the communication on State aid to promote the executionof important projects of common European interest (IPCEI).

The General Court reviewed the process that led the Commission to conclude that the measures were compatiblewith the internal market. In this context, the General Courtobserved that, on various points, the Commission’s analysiswas imprecise or contradictory. According to the GeneralCourt, these elements demonstrated that the Commissionhad encountered serious difficulties in its assessment of theaid requiring the initiation of the formal investigation procedure.

These judgments may of course have a significant impact onthe handling of State aid notifications and complaints because they urge the Commission to consider the aid measures brought to its attention more carefully. For interestedparties (such as competitors of an aid recipient), this is ofcourse a welcome development. These judgments endorsetheir procedural rights and may well enhance the possibility ofexpressing their opinion in the context of formal investigationprocedures.

Please contact Pierre de Bandt or Jeroen Dewispelaere forfurther information on these cases and/or for general advicerelating to State aid.

Pursuant to article 108 TFEU, the Commission is called uponto assess the compatibility with the internal market of anyState aid granted by Member States. Following a preliminaryinvestigation, the Commission can either decide not to raiseobjections, thereby approving the measure concerned, orinitiate a formal investigation. According to settled case law,the initiation of the formal investigation procedure must takeplace once the Commission experiences “serious difficulties”in its assessment of the compatibility of the proposed aidwith the internal market and is unable to overcome all thedifficulties raised by that assessment in the course of theinitial examination.

The existence of such “serious difficulties” may be substantiatedby reference to a body of consistent evidence concerning,firstly, the length and the circumstances of the preliminaryinvestigation and, secondly, the content of the decision at issue.In particular, if the decision reveals that the Commission’spreliminary investigation is insufficient or incomplete, thisconstitutes evidence that the Commission encountered

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STATE AID

The Court of Justice clarifies principles applicable to the period of limitation for recovery of State aid

In a judgment of 30 April 2020, in case C-627/18, the Courtof Justice clarifies the scope of the 10-year period of limitationapplicable in relation to the recovery of State aid pursuant toArticle 17 of Regulation 2015/1589 of 13 July 2015 layingdown detailed rules for the application of Article 108 of theTFEU. On this occasion, the Court also lays down some generalprinciples applicable to the limitation period for State aid recovery as foreseen under national law.

The judgment follows a request for preliminary ruling introduced by a Portuguese administrative court. In the caseat hand before the national court, the national judge was calledupon to rule on the applicability of the limitation period provided under Portuguese legislation for the recovery ofState aid granted through a scheme that had been consideredincompatible with the internal market by the Commission.

The aid in question had been granted from 1994 through anon-notified scheme. The scheme had therefore been deemedincompatible with the internal market in a decision of theCommission in 1999. Following that decision, the PortugueseState was under the obligation to recover the aid.

In the case at hand, the Portuguese administration only

started the actual recovery proceedings in 2013. The recoveryclaimed by the authorities concerned both the principalsum and the interest (which, due to the passage of time,had become almost equal to the initial amount of the aid).

Under Portuguese law, the general limitation period is 20 years, but as regards interest, it is limited to five years.The beneficiary of the aid assigned before the administrativecourt therefore claimed that the period of limitation applicable to the interest had expired and that only theprincipal sum of the aid could be recovered.

Following a first question of the national court, regardingthe applicability of the 10-year limitation period providedin Article 17(1) of Regulation 2015/1589, the Court of Justice clarifies that the limitation period contained in thisprovision only applies to the powers of the Commission inrelation to State aid recovery and does not apply to nationalproceedings. National authorities and courts are thereforenot bound by this provision.

In another question, the national Court asks whether theprinciples of equivalence and effectiveness prevent the application of the five-year limitation period to the interestto be recovered from the beneficiary, as provided underPortuguese law. The Court replies that the application ofnational provisions which create a five-year limitation period for the recovery of interest is an obstacle to the recovery of the full amount of the aid, which is required forthe proper functioning of the internal market. The Court ofJustice underlines that the recovery of the aid following adecision of the Commission must be immediate and effective, and that the action (or lack of action) of the national administration cannot prevent the recovery of theaid.

The Court also rules that the principle of legal certainty isnot violated by the inapplicability of the limitation periodin this case, as the beneficiary of the aid is aware that theaid granted was illegal, following the decision of the Commission in 1999.

Following this judgment, the principle of effectiveness cannow be considered to be preventing the application of a period of limitation under national law that would limit therecovery of the full amount of the aid (including interest),if the limitation period expired before the adoption of thedecision of incompatibility or if the limitation period

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expired because of the action (or lack of action) of the national administrative authorities. The principle of effectiveness therefore implies that certain limitation periods applicable under national law should be set asideby national jurisdictions in order to ensure the recovery ofthe full amount of the State aid.

It is still for the national judge to establish the balance between effectiveness and legal certainty in each case, although this judgment does appear to provide some interpretative guidelines.

Please contact Pierre de Bandt, Jeroen Dewispelaere orRaluca Gherghinaru for further information on this caseand/or for general advice relating to State aid.

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COMPETITION

Stricter conditions for finding a restriction ofcompetition “by object”

When asked for a preliminary ruling by the Hungarian Supreme Court (case C-228/18), the Court of Justice clari-fied the notion of restriction “by object” and provided detailed guidance on how to assess such a restriction.

The Budapest Bank case concerns an agreement betweenseven banks which introduced uniform multilateral interchange fees (MIF) applicable to transactions using Visaand MasterCard cards (the MIF Agreement). MIFs are thefees paid to the card holder’s bank (the issuing bank) bythe merchant’s bank (the acquiring bank) for each creditcard transaction.

In that context, the referring court asked the Court of Justice whether an interbank agreement which fixes at thesame amount the interchange fee payable, where a paymenttransaction by card takes place, to the banks issuing suchcards can, in the light of Article 101(1) TFEU, be classifiedas an agreement which has as its object the prevention, restriction or distortion of competition.

In its judgment of 2 April 2020, the Court recalled that, inorder to determine whether an agreement between undertakings or a decision by an association of undertakingsreveals a sufficient degree of harm to competition to beconsidered a restriction of competition “by object” withinthe meaning of Article 101(1) TFEU, regard must be had

to the content of its provisions, its objectives and the economic and legal context of which it forms a part. Whendetermining that context, it is also necessary to take intoconsideration the nature of the goods or services affected,as well as the real conditions of the functioning and structure of the market or markets in question.

Moreover, the Court underlined that the concept of restrictionof competition “by object” must be interpreted restrictively.The concept of restriction of competition “by object” canonly be applied to certain types of coordination between undertakings which reveal a sufficient degree of harm tocompetition for it to be found that there is no need to examine their effects. Only agreements which are, by theirvery nature, harmful to the proper functioning of competitioncan therefore exempt competition authorities from the obligation to prove the actual effects on the market of theagreements in question.

When examining the content, objectives and context of theMIF Agreement, the Court developed some key criteria tobe taken into consideration in the assessment of potential“by object” infringements.

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In particular, as regards the objectives pursued by the MIFAgreement, the Court considered that the pro-competitiveeffects of the agreement constitute a relevant element. Indeed, if it can be established that setting the interchange fees at a uniform level may have led to intensifying competition or preventing an excessively highlevel of interchange fees, a restriction of competition onthe payment systems market can only be found after anassessment of the effects of that agreement, thus excluding a finding of a restriction “by object”.

In addition, the Court emphasised that, in order to justify anagreement being classified as a restriction of competition “byobject”, there must be sufficiently reliable and robust experience for the view to be taken that that agreementis, by its very nature, harmful to the proper functioning of competition. With regard to the MIF Agreement, the Courtfound that it was not possible to conclude on the basis ofthe information available to it that sufficiently general andconsistent experience exists for the view to be taken thatthe harmfulness of such an agreement to competition justifies dispensing with any examination of the specific effects of that agreement on competition. It would therefore be necessary to examine whether, having regardto the situation which would have prevailed if that agreement had not existed, the agreement was restrictive

of competition by virtue of its effects.

Finally, it results from the judgment of the Court that theanalysis of the opposite situation is also relevant when examining the existence of a restriction “by object”. It istherefore necessary to examine the scenario which wouldhave existed with no MIF Agreement. If there were to bestrong indications that, if the MIF Agreement had not beenconcluded, upwards pressure on interchange fees wouldhave ensued, so that it cannot be argued that that agreementconstituted a restriction “by object” of competition on theacquiring market in Hungary, an in-depth examination ofthe effects of that agreement should be carried out.

In line with the Cartes Bancaires case, the Court is clearlycontinuing its efforts to tighten the conditions under whichan agreement can be classified as a restriction “by object”.To do so, competition authorities may certainly not rely onthe apparently suspicious character of an agreement but arerequired to carry out a (possibly highly) detailed analysis ofthe relevant economic and legal context and rely on robustexperience.

Please contact Pierre de Bandt, Jeroen Dewispelaere orChloé Binet for further information on this case and/or forgeneral advice on competition law.

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Newsletter 6 | June 2020

INTERNAL MARKET

Belgian prohibition on multidisciplinary activities of accountants ruled unlawful bythe Court of Justice

In its judgment of 27 February 2020, the Court of Justiceof the European Union ruled that the Belgian prohibition oncombining accounting activities with certain other activitiesis incompatible with EU law (case C-384/18). This judgment is the result of an infringement procedure initiatedby the European Commission against the Belgian State.

Under Belgian law, certified accountants are not allowed to

combine their accounting activities with certain other activities. This prohibition is absolute with respect to theactivities of an insurance broker or agent, as well as thoseof an estate agent, or with respect to any banking and financial services activity. As for artisanal, commercial oragricultural activities, accountants can ask their professionalchamber for an exemption from this prohibition.

In the first part of its ruling, the Court of Justice concludedthat the prohibition is incompatible with Article 25 of theServices Directive (2006/123/EC), which (essentially)obliges Member States to eliminate restrictions on the combined execution of services unless they can justify thatsuch restrictions are necessary.

As regards the absolutely prohibited activities, the Court rejected the Belgian State’s arguments that the prohibition

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is necessary to ensure accountants’ independence and impartiality and that less restrictive measures would not beas effective in attaining this objective. The Court in particular pointed out that an ex post review by the professionalchamber would be less restrictive and also ensure accountants’independence and impartiality.

Moreover, the Court found that the system of prior authorisation to carry out certain commercial activities isalso unjustified. The Belgian State’s argument that the requests for exemption are, in practice, always granted wasnot accepted because there are no criteria for dealing withthese requests, a situation which gives the professionalchamber considerable discretion.

As for the second part of the judgment, the Court ruled thatthe regulation at issue also restricts freedom of establishmentbecause it may prevent accountants from other MemberStates from establishing themselves in Belgium. The justifications put forward by the Belgian State were rejectedfor the same reasons as those set out in the context of theCourt’s ruling on Article 25 of the Services Directive.

Please contact Pierre de Bandt, Jeroen Dewispelaere orJoren Vuylsteke for further information on this case and/orfor general legal advice relating to the internal market rules.

PUBLIC PROCUREMENT

National legislation may limit the use of in-house transactions

In the Rieco SpA v. Comune di Lanciano e.a. case (joinedcases C-89/19 to C-91/19), the Court of Justice was askedin a first question whether article 12(3) of Public ProcurementDirective 2014/24/EU (hereafter “Directive 2014/24”)must be interpreted as precluding national legislation whichmakes the conclusion of an in-house transaction subject tothe impossibility of awarding a public contract and, in anyevent, subject to the demonstration by the contracting authority of the benefits specifically linked, for the community,to recourse to the in-house transaction.

In its Order of 6 February 2020, the Court of Justice firstrecalled that it already held in the Irgita case that Article12(1) of Directive 2014/24 must be interpreted as not precluding a rule of national law whereby a Member Stateimposes a requirement that the conclusion of an in-house

transaction should be subject, inter alia, to the conditionthat public procurement fails to ensure that the quality ofthe services performed, their availability or their continuitycan be guaranteed, provided that the choice made in favourof one means of providing services in particular, made at astage prior to that of public procurement, has due regard tothe principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency.

Secondly, the Court observed that it is apparent from thewording of Article 12(1) of Directive 2014/24 and Article12(3) of that directive that the only difference betweenthose provisions lies in the fact that, under the first provision,the contracting authority alone controls the in-house entitywhereas, under the second provision, that entity is jointlycontrolled by several contracting authorities.

Therefore, the Court ruled in the same sense and held thatthe freedom of Member States to choose the method of providing services through which contracting authorities willmeet their own needs authorises them to make the conclusionof an in-house transaction subject to the impossibility ofawarding a public contract and, in any event, subject to thedemonstration by the contracting authority of the benefits

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specifically linked, for the community, to recourse to the in-house transaction.

The second question that the Court had to answer was, inessence, whether Article 12(3) of Directive 2014/24 mustbe interpreted as precluding national legislation which prevents a contracting authority from acquiring shareholdings

in the capital of an entity the shareholders of which areother contracting authorities, where those shareholdings arenot capable of guaranteeing control or a power to block, andwhere that contracting authority intends subsequently to acquire a position of joint control and, consequently, thepossibility of awarding contracts directly to that entity thecapital of which is held by several contracting authorities.

After having observed that Article 12(3) of Directive2014/24 does not lay down any requirement relating to theconditions under which an administration acquires shareholdings in a company the shareholders of which areother administrations, the Court provided a negative answerto the second question.

Please contact Peter Teerlinck or Louise Galot for furtherinformation about this case and/or for general advice on public procurement.

PUBLIC PROCUREMENT

Successful tenderers may be held liable andfined in case of substantial modifications to public contracts

The EU directives on public procurement determine theconditions further to which public contracts falling withintheir scope may be subject to modifications during theirterm. In this context, so-called “substantial modifications”are prohibited unless they are subject to a new procurementprocedure.

In the case at hand, the Budapest public transportationcompany (BKK) concluded a public contract with T-Systemsfor the transport, installation and operation of transporttickets distributors following a tender procedure. BKK andT-Systems subsequently agreed on several amendments tothis contract. The competent Hungarian authorities conductedan ex officio investigation and found that these amendments

involved substantial modifications to the initial contract andso should have given rise to a new procurement procedure.As a consequence, they imposed a financial penalty on bothBKK and T-Systems.

BKK and T-Systems challenged this decision before the Budapest-Capital Court. This jurisdiction then referred questions to the Court of Justice, seeking clarification as towhether EU law precludes national rules according to whichthe successful tenderer may be held liable and fined in caseof the substantial modification of a public contract. It alsorequested guidance as to whether the respective conduct ofthe contracting authority and the successful tenderer shouldbe taken into account in the context of the determination ofthe amount of the fine.

In its judgment of 14 May 2020 (case C-263/19), the Courtof Justice ruled that EU public procurement legislation doesnot preclude national rules which, in the context of a reviewprocedure initiated ex officio by a supervisory authority,make it possible to attribute an infringement and impose afine, not only on the contracting authority but also on thesuccessful tenderer, in the event that the rules on public

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procurement have been unlawfully disregarded.

However, the Court held that, where such a possibility isprovided for by national rules, the procedure must complywith EU law, including the general principles thereof, in sofar as the public contract at issue falls within the materialscope of the public procurement directives, either ab initioor as a result of its unlawful modification.

In this respect, the Court ruled that, in accordance with theprinciple of proportionality, the amount of the fine imposedon the successful tenderer may not be determined solely inlight of the fact that a substantial modification requires acontractual relationship between it and the contracting authority. On the contrary, the respective conduct of eachparty should also be taken into account.

The Court provided certain examples of circumstances thatcould be taken into account to this effect. With regard, moreparticularly, to the successful tenderer, account may betaken of the fact that it took the initiative to propose thesubstantial modification or that it suggested, or even required,the contracting authority not to organise a procurement procedure to meet the needs requiring an amendment tothe contract. However, the amount of the fine imposed onthe successful tenderer cannot depend on the fact that a

procurement procedure was not organised, since the decision to carry out such a procedure falls within the prerogatives of the contracting authority alone.

Please contact Peter Teerlinck, Raluca Gherghinaru or Ludovic Panepinto for further information on this caseand/or general advice on public procurement law.

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