Unipart Group Ltd v O2 (UK) Ltd & Anor

Article 81(1) applies only where allegedly anti-competitive conduct is the subject of an agreement, decision or concerted practice between undertakings. A supplier’s genuinely unilateral policy remains outside the provision unless the customer expressly or tacitly acquiesces in that policy, creating a concurrence of wills.

A continuing commercial relationship, contractual effect, standard terms, or agreement to pay published prices does not, without more, establish agreement as to an underlying anti-competitive pricing policy. A policy capable of implementation without customer assistance is unilateral. The distinction between Article 81(1) and Article 82 remains material.

Unipart, as assignee of UniqueAir, purchased mobile telephone airtime wholesale from Cellnet under standard agreements. It claimed damages under Article 81(1), alleging that Cellnet used excessive wholesale prices and cross-subsidised tied service providers, producing an unlawful margin squeeze.

Lloyd J assumed the pleaded facts, held that Cellnet’s conduct was truly unilateral, and entered summary judgment for Cellnet on 22 November 2002. The appeal concerned whether Unipart’s agreement to pay prices set by Cellnet could engage Article 81(1), or whether Unipart also had to have acquiesced in the alleged margin squeeze policy. Cellnet raised an alternative argument that the agreements did not restrict or distort competition.

Unanimous dismissal. Parker LJ gave the leading judgment. Laddie J and Gibson LJ agreed. The appeal was dismissed and the summary judgment for Cellnet stood.

1. Scope of Article 81(1). Applying the CFI and ECJ decisions in Bayer AG v European Commission, including the CFI decision reported at [2000] ECR II-3383, the court held that Article 81(1) has a limited purpose. It regulates coordinated conduct resulting from a concurrence of wills between at least two undertakings. A genuinely unilateral measure falls outside Article 81(1), although apparently unilateral conduct may be caught where the other undertaking expressly or tacitly acquiesces. Unilateral conduct may instead engage Article 82 where the relevant conditions of dominance and abuse are present.
2. Conduct requiring agreement. The court must first identify precisely the conduct alleged to have caused the loss. Unipart’s complaint was not simply that Cellnet set prices, or set them too high. It was that Cellnet adopted a margin squeeze policy by setting excessive wholesale prices while cross-subsidising tied service providers. That policy, rather than the contractual obligation to pay prices, had to be the subject of an agreement.
3. Effect of the contractual relationship. A continuing commercial relationship, contractual effect, standard terms, or the ability to vary prices under a contract does not itself establish agreement as to an anti-competitive policy. The BMW cases were consistent with that approach. Distillers was distinguishable because the offending pricing policy there was treated as an integral element of the continuing commercial relations.
4. Tacit acquiescence. Unipart had not positively consented to a policy operating against its commercial interests and had complained to OFTEL. The alleged margin squeeze could be implemented without cooperation or assistance from ISPs. It therefore remained unilateral. Sandoz was distinguishable because repeated orders and payments without protest, together with an express export-prohibition clause, demonstrated acquiescence. The alternative argument on restriction or distortion of competition was unnecessary to decide.

• Court of Appeal (Civil Division) — The appeal from Lloyd J’s summary judgment was dismissed: [2004] EWCA Civ 1034.
• High Court, Chancery Division — Lloyd J assumed the pleaded facts, held that the conduct was truly unilateral, and entered summary judgment for the defendants under Part 24 on 22 November 2002.