European Union: AG Bobek's Opinion In Budapest Bank: On Object vs. Effect, Fish And Lilies

Last Updated: 10 October 2019
Article by Yves Botteman and Camille Keres

On September 5, 2019, Advocate General Bobek published his opinion in the Budapest Bank case (C-228/18). The opinion provides very clear and practical guidance on the concept of restriction of competition by object – a subject that has long been a bone of contention among competition practitioners, enforcers and courts. The opinion is also noteworthy as it features an unorthodox, though pedagogic, metaphor on restrictions of competition involving fish and lilies. In sum, it is worth a commentary.

Quick refresher on object vs. effect

The concept of restriction of competition by object is rooted in Article 101 TFEU, which prohibits agreements "[...] which have as their object or effect the prevention, restriction or distortion of competition within the internal market [...]". The EU courts have consistently interpreted this provision as meaning that, when assessing an agreement or a coordinated practice between competitors, competition authorities should:

  • First, examine whether the agreement or coordinated practice reveals a sufficient degree of harm to competition, such that there is no need to examine its effects (restriction of competition by object);
  • Second, and if the first examination did not prove successful, examine whether the agreement or coordinated practice is capable of producing anti-competitive effects (restriction of competition by effect).

One of the key milestones in the development of the notion of restriction of competition by object is the judgment of the European Court of Justice (CoJ) in Groupement des Cartes Bancaires (C-67/13 P). In this case, the CoJ set out a key principle: the concept of restriction of competition by object must be interpreted restrictively. Otherwise, "the Commission would be exempted from the obligation to prove the actual effects on the market of agreements which are in no way established to be, by their very nature, harmful to the proper functioning of normal competition". The CoJ also provided guidance on how to assess the existence of a restriction by object, emphasizing in particular the need to evaluate the restriction not in the abstract but in its economic and legal context.

While Groupement des Cartes Bancaires addressed a number of important questions, it did not exhaust the debate on object vs. effect. Against this background, AG Bobek's opinion brings a refreshing and indeed welcome perspective on the topic.


Similar to Groupement des Cartes Bancaires, the Budapest Bank case concerns multilateral interchange fees (MIF), that is, the amount paid by the bank of the card holder (acquiring bank) to the bank of the merchant (issuing bank) when a credit card transaction takes place.

On 28 August, 1996, seven banks adopted an agreement introducing a uniform MIF agreement, applicable to both Visa and Mastercard (the MIF agreement). Visa and Mastercard were not present at the meeting where the banks concluded the agreement but received a copy. The MIF agreement remained in force from 1996 to 2008.

On September 24, 2009, the Hungarian Competition Authority ("HCA") found that the MIF agreement was a restriction of competition both by object and effect. As a result, it imposed a fine on the seven banks as well as on Visa and Mastercard.

The parties appealed the decision before the Budapest High Court, which annulled the decision on the grounds that (i) it is not possible for a conduct to be both a restriction of competition by object and by effect, and (ii) the MIF agreement was not a restriction of competition by object. The HCA lodged a further appeal against this judgment before the Hungarian Supreme Court, which referred a number of questions to the CoJ, including the following:

  • Can the same conduct be both a restriction of competition by object and by effect?
  • Under what conditions can an agreement, such as the MIF agreement, be deemed to amount to a restriction by object?

The same conduct can be both a restriction of competition by object and by effect

According to the AG, this solution is obvious and stems from, inter alia:

  • The broad wording of Article 101(1) TFEU, which catches all forms of collusion that may have a negative impact on competition in the EU. 
  • The fact that agreements that are anti-competitive by object and agreements that are anti-competitive by effect "are not ontologically different: they both restrict competition". In this regard, the distinction between object and effect is of a procedural nature, i.e. it is meant to indicate the type of analysis that is required when assessing an agreement under Article 101(1) TFEU.
  • The case law of the EU courts, including the Groupement des Cartes Bancaires judgment, where the CoJ noted that, for restrictions by object, it would be redundant to prove that they have actual effects on the market, since "experience shows that such behaviour leads to falls in production and price increases". In other words, the CoJ implied that restrictions by object necessarily have anti-competitive effects.

Therefore, competition authorities may examine an agreement under either or both the by object and by effect standards. This is a common practice that aims at achieving procedural efficiency, as an appeal court may take the view that the agreement does not meet the standard of a by object infringement but do meet those of a by effect infringement.

However, the AG stresses that "the existence of alternative legal boxes is no licence for vagueness, in particular when imposing administrative sanctions". This is an important caveat, specifically because the European Commission (EC) and national competition authorities have been criticized for expanding the concept of restriction by object in order to avoid embarking on the more challenging effects-based analysis. As such, this comment echoes the findings of the CoJ in Groupement des Cartes Bancaires, which made clear that the concept of restriction by object should be interpreted restrictively.

More on restrictions by object

The opinion then focuses on the million-dollar question, namely: how to assess whether an agreement is a restriction of competition by object? In this regard, the AG offers a number of important clarifications:

  • Based on the case law, the finding of a restriction of competition by object requires a two-step analysis:
    • First, one must look at the content of the agreement and its objectives, in order to assess whether the agreement falls within a category of agreements whose harmful nature is, in the light of a reliable and robust wealth of experience, commonly accepted and easily identifiable.
    • Second, one must assess the agreement in its legal and economic context by taking into account the nature of the goods or services affected, the real conditions of the functioning and structure of the markets in question, and, if applicable, the intentions of the parties. This in concreto assessment is indispensable because an abstract assessment, "completely detached from reality", could lead to prohibiting neutral or even pro-competitive agreements.
  • The second step of the analysis, i.e. assessing an agreement in its legal and economic context, does not amount to a de facto by effect analysis. Rather, this assessment is "a basic reality check" that "no specific circumstances may cast doubt on the presumed harmful nature of the agreement in question". The AG nevertheless acknowledges that the boundary between a basic reality check and a by effect analysis is not a clear one and will vary depending on the circumstances of each case.
  • In the event that an analysis of the context does cast doubt on the presumed harmful nature of the agreement, then the authority has no other choice but to turn to an analysis of the effects of the agreement. In this regard, the AG notes that the standard is that of plausibility, i.e. an analysis of the effects is required if there is countervailing explanation that seems plausible enough. This effect analysis must focus (1) on a full-fledged and detailed counterfactual, i.e. what would have been the competitive structure absent the agreement, and (2) the net effects of the agreement as opposed to the mere capability of the agreement to have anti-competitive effects. 
  • In sum, the paramount difference between a by object and a by effect is more "one of degree than of kind", i.e., a question of intensity in the work to be conducted by the antitrust enforcer.

By way of recap of the above, the AG proposes one of the best metaphors of the history of EU competition law:

"[s]implified to a metaphorical extreme, if it looks like a fish and it smells like a fish, one can assume that it is fish. Unless, at the first sight, there is something rather odd about this particular fish, such as that it has no fins, it floats in the air, or it smells like a lily, no detailed dissection of that fish is necessary in order to qualify it as such. If, however, there is something out of the ordinary about the fish in question, it may still be classified as a fish, but only after a detailed examination of the creature in question."

Conclusion and take away

The distinction between restriction of competition by object and restriction of competition by effect is relatively easy to make in theory. However, in practice, it often proves quite challenging – even in a post-Groupement des Cartes Bancaires world, as illustrated by Budapest Bank.

Against this background, AG Bobek's opinion is most welcome in that:

  • It makes sense of a complex, and sometimes vague, case law on object versus effect. Specifically, the opinion proposes a clear and workable roadmap to establishing the existence of a restriction of competition by object or by effect – or both.
  • It further reiterates the importance of assessing any practice not in the abstract but in its economic and legal context, specifically in a by object inquiry.
  • Finally, it provides an important reminder that the concept of restriction by object should be interpreted restrictively, which is essential not only for a robust and sound antitrust enforcement but also for the preservation of the rights of defence. This restrictive interpretation echoes the calls that have arisen in the review of the Vertical Block Exemption Regulation (VBER) and accompanying guidelines, where a number of stakeholders have been advocating in favour of a more flexible approach towards, for example, resale price maintenance, taking greater account of its potential pro-competitive effects.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Fieldfisher LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Fieldfisher LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions