Case C‑128/21

Lietuvos notarų rūmai and Others

v

Lietuvos Respublikos konkurencijos taryba

(Request for a preliminary ruling
from the Lietuvos vyriausiasis administracinis teismas)

Judgment of the Court (First Chamber) of 18 January 2024

(Reference for a preliminary ruling – Competition – Article 101 TFEU – Concepts of ‘undertaking’ and ‘decisions of associations of undertakings’ – Decisions of the chamber of notaries of a Member State fixing the methods for calculating fees – Restriction ‘by object’ – Prohibition – Lack of justification – Fine – Infringement on the association of undertakings and its members – Infringer)

1. Questions referred for a preliminary ruling – Admissibility – Questions relating to the applicability of EU law – Questions relating to the merits of the case – Admissible questions

   (Art. 267 TFEU)

   (see paragraphs 42-44)

2. Agreements, decisions and concerted practices – Effect on trade between Member States – Criteria for assessment – Assessment on the basis of a number of factors which, taken separately, do not necessarily have a decisive effect – Agreements, decisions and concerted practices covering the entire territory of a Member State

   (Art. 101(1) TFEU)

   (see paragraphs 48-54)

3. Competition – EU rules – Undertaking – Concept – Exercise of an economic activity – Concept – Activity as a notary – Liberal profession – Included

   (Art. 101(1) TFEU)

   (see paragraphs 55-59)

4. Competition – EU rules – Undertaking – Concept – Exercise of an economic activity – Activities connected with the exercise of public power prerogatives – Not included – Notary activities in the real estate sector – Activities that can be dissociated from the exercise of public authority – Included

   (Art. 101(1) TFEU)

   (see paragraphs 61-68, operative part 1)

5. Agreements, decisions and concerted practices – Decisions of associations of undertakings – Concept of an association of undertakings – Professional association – Criteria for assessment – Chamber of Notaries of a Member State – Absence of state intervention or control – Included – National courts able to review the legality of decisions of that chamber – Irrelevant

   (Art. 101(1) TFEU)

   (see paragraphs 70-82)

6. Agreements, decisions and concerted practices – Decisions of associations of undertakings – Concept – Rules standardising the calculation of the fees of notaries of a Member State adopted by the Chamber of Notaries of that Member State – Binding character – Included

   (Art. 101(1) TFEU)

   (see paragraphs 83-87, operative part 2)

7. Agreements, decisions and concerted practices – Adverse effect on competition – Criteria for assessment – Distinction between restrictions by object and by effect – Restriction by object – Whether sufficient degree of harm – Sufficient degree of harm revealed

   (Art. 101(1) TFEU)

   (see paragraphs 91-93)

8. Agreements, decisions and concerted practices – Adverse effect on competition – Decisions of associations of undertakings – Rules establishing a mechanism for calculating the amount of notaries’ fees requiring notaries to retain the highest price for certain activities – Horizontal price-fixing – Restriction by object

   (Art. 101(1) TFEU)

   (see paragraphs 94-96, 104, 105, operative part 3)

9. Agreements, decisions and concerted practices – Adverse effect on competition – Decisions of associations of undertakings – Rules establishing a mechanism for calculating the amount of notaries’ fees requiring notaries to retain the highest price for certain activities – Justification on grounds of legitimate objectives in the public interest – Condition – No restriction by object – Exemption – Conditions

   (Art. 101(1) and (3) TFEU)

   (see paragraphs 97-103)

10. Competition – Fines – Amount – Determination – Deterrent effect – Compliance with the principle of proportionality

    (Art. 101(1) TFEU)

    (see paragraphs 109-112)

11. Competition – EU rules – Infractions – Imputation – Association of undertakings – Imputation of the infringement to the association of undertakings that committed the infringement and to the undertakings that are members of that association’s governing body – Undertakings that participated in the infringement solely as members of that association – Inadmissibility – Justification in light of the deterrent effect of the fine – Not included

    (Art. 101(1) TFEU)

    (see paragraphs 113-121, 129, operative part 4)

12. Competition – Fines – Amount – Determination – Deterrent effect – Turnover which may be taken into account – Turnover of all the undertakings constituting an association of undertakings – Lawfulness – Conditions

    (Council Regulation No 1/2003, Art. 23(2))

    (see paragraphs 123-128)

Résumé

Ruling on a reference for a preliminary ruling from the Lietuvos vyriausiasis administracinis teismas (Supreme Administrative Court of Lithuania, ‘the referring court’), the Court of Justice clarified the extent to which decisions of a professional organisation, such as the Chamber of Notaries of a Member State, intended to regulate the calculation of the fees payable for the performance of certain activities by notaries fall within the prohibition on decisions by associations of undertakings which restrict competition laid down in Article 101 TFEU. In addition, the Court has clarified the conditions under which the members of such an association may assume liability for an infringement of competition law committed by the association.

In the present case, the governing body of the Lithuanian Chamber of Notaries, the Presidium, has adopted rules intended to clarify the methods of calculating the fees payable by notaries for the performance of certain of their activities ( 1 )(‘the clarifications’). According to those clarifications, the amount of fees charged by notaries is set at the highest amount in the price range provided for in the provisional scale drawn up by the Minister for Justice of the Republic of Lithuania.

Considering that, by adopting those clarifications, the Chamber of Notaries, acting through its management body, the Presidium, and its members had indirectly fixed the amounts of the fees charged by notaries and thus infringed, inter alia, Article 101(1)(a) TFEU, the Lietuvos Respublikos konkurencijos taryba (Competition Council of the Republic of Lithuania, ‘the Competition Council’) fined the Chamber of Notaries and the eight notaries who were members of its Presidium by decision of 26 April 2018.

The action for annulment brought by the addressees of that decision was partially upheld at first instance. The Competition Council then appealed against the decision of the court of first instance to the referring court. It was in that context that the latter referred a number of questions to the Court for a preliminary ruling.

By those questions, the referring court asks, in essence, first of all, whether the notaries of the Republic of Lithuania, when carrying on the activities covered by the clarifications at issue, are to be regarded as ‘undertakings’ within the meaning of Article 101 TFEU; next, if so, whether the clarifications must be classified as decisions of an association of undertakings which restrict competition; and, finally, should such a classification be accepted, whether fines may be imposed both on the Chamber of Notaries and on each of the notaries who are members of its Presidium.

Findings of the Court

As a preliminary point, the Court considers whether it is appropriate to exclude from the outset the application of Article 101 TFEU to the main proceedings since, as the Chamber of Notaries and the Lithuanian Government submit, the clarifications are not capable of affecting trade between Member States.

In that regard, it observes that these clarifications extend to the entire territory of the Republic of Lithuania, as they are decisions of the Chamber of Notaries binding on all notaries established in that Member State. They could therefore have the effect of consolidating national divisions and thus hindering the economic interpenetration sought by the FEU Treaty. Moreover, the concept of ‘trade between Member States’, within the meaning of Article 101(1) TFEU, is not limited to cross-border trade in goods and services, but has a broader scope which covers any cross-border economic activity, including establishment. Even if a notary could not, in principle, provide services in a Member State other than that in which he or she is established, the fact remains that such a profession is subject to the freedom of establishment. Rules such as clarifications, which relate to a fundamental aspect of the practice of the profession of notary in the Member State concerned, are, in principle, likely to have a significant influence on the choice of nationals of other Member States to establish themselves in that first Member State in order to practise that profession. Moreover, nationals of Member States other than the Republic of Lithuania may avail themselves of the services of notaries established in the latter Member State. It follows that the clarifications at issue in the main proceedings, in so far as they should be classified as agreements between undertakings or decisions by associations of undertakings within the meaning of Article 101(1) TFEU, are capable of affecting trade between Member States within the meaning of that provision.

That being so, the Court considers, as a first step, whether Article 101 TFEU is capable of being applied in a situation such as that in the main proceedings. In order to do so, it analyses, first, whether notaries can be classified as undertakings, secondly, whether the Chamber of Notaries must be regarded as an association of undertakings and, thirdly, whether the clarifications at issue in the main proceedings must be regarded as decisions of an association of undertakings.

First of all, the Court finds that notaries established in the territory of a Member State must be classified as undertakings where they pursue activities such as those referred to in the clarifications. In so far as notaries exercise a liberal profession which involves, as their principal activity, the provision of a number of separate services for remuneration, they are, in principle, engaged in an economic activity. Moreover, the Court has already held ( 2 ) that activities such as those referred to in the clarifications ( 3 ) do not fall directly and specifically within the exercise of the prerogatives of a public authority, which is not economic in nature.

Next, the Chamber of Notaries is an association of undertakings and not a public authority. In view of the tasks conferred on it, it has the characteristics of an organisation for regulating the profession, and as such is subject to the application of competition rules. Moreover, the Presidium is composed exclusively of members of the profession who are elected solely by their peers, and the Lithuanian State does not appear to intervene either in the appointment of those members or in the adoption of its decisions. In addition, the mere fact that the Lithuanian courts may review the legality of the decisions of the Chamber of Notaries does not imply that the chamber operates under the effective control of the State.

Finally, rules such as clarifications are decisions of an association of undertakings, namely decisions which reflect the will of representatives of the members of a profession to obtain that they adopt a particular course of conduct in the course of their economic activity. Furthermore, the fixing of a price by means of a binding act must be regarded as constituting a decision for the purposes of Article 101 TFEU.

As a second step, having established that the clarifications at issue in the main proceedings can be classified as decisions of associations of undertakings, the Court examines whether they fall within the prohibition laid down in Article 101(1) TFEU.

Accordingly, the Court considers that the clarifications at issue in the main proceedings fall within the prohibition laid down in Article 101(1) TFEU in that they are capable of being regarded as constituting a restriction of competition ‘by object’ prohibited by that provision. A mechanism for calculating the amount of fees such as that provided for by the clarifications leads precisely to the horizontal fixing of the prices of the services concerned.

In that regard, the argument of the Chamber of Notaries and the Lithuanian Government that those clarifications pursue legitimate objectives cannot succeed in the present case. Admittedly, it is clear from the Court’s case-law, in particular the judgment in Wouters and Others, ( 4 ) that certain anticompetitive conduct may be regarded as justified by the pursuit of legitimate objectives in the general interest provided that such conduct is not in itself anticompetitive and that the necessity and proportionality of the means employed to that end have been duly established. However, that case-law does not apply to conduct that is so harmful that it can be considered to have the ‘object’ of preventing, restricting or distorting competition within the meaning of Article 101 TFEU. With regard to such conduct, it is only the benefit of the exemption provided for in Article 101(3) TFEU that can be invoked, provided that all the conditions set out in that provision are met.

As a third step, the Court examines the question whether the Competition Council may impose a fine for an infringement of Article 101 TFEU on the Chamber of Notaries, as the association of undertakings which committed the infringement, and on each notary who is a member of that association’s governing body.

On that point, the Court notes that, where the existence of an infringement of Article 101 TFEU is established, national competition authorities must, in principle, impose on the infringer a fine which is sufficiently dissuasive and proportionate. In accordance with that provision, an ‘association of undertakings’, such as the Chamber of Notaries, may constitute the infringer of that provision.

In the present case, it follows from the order for reference that the infringement of Article 101(1) TFEU found by the Competition Council consisted in the adoption of the clarifications by decision of the Presidium of the Chamber of Notaries. The decisions of the Presidium are binding on that Chamber, so that those decisions must be regarded as decisions of the Chamber of Notaries itself. It follows that the Chamber of Notaries must be regarded as the infringer found by the Competition Council in the main proceedings.

As far as the notaries on the Presidium are concerned, they appear to have acted solely in their capacity as members of the Presidium without having participated in any other way in the infringement thus established. However, the Competition Council had imposed individual fines on the members of the Presidium in order to ensure the dissuasive effect of the sanctions imposed for that infringement, given that the Lithuanian law applicable at the time did not permit the imposition on the Chamber of Notaries alone of a fine of a sufficiently high amount to produce that dissuasive effect.

In that regard, the Court held that the principle of personal liability, which requires that only the entity responsible for an infringement of the competition rules be penalised, precludes such an approach. Moreover, the fact that the Lithuanian law applicable at the material time did not provide for the possibility of taking into account the turnover of the members of the Chamber of Notaries for the purposes of calculating the fine which the Competition Council was to impose on that chamber did not prevent that national competition authority from taking that turnover into account. Thus, it follows both from the case-law of the Court and from Article 23 of Regulation No 1/2003, ( 5 ) which is also relevant to the determination of the powers of the national competition authorities, in substance, that, in particular, where the infringement committed by the association of undertakings relates to the activities of its members, the fine to be imposed on that association must, in order to determine a penalty which is dissuasive, be calculated by reference to the turnover achieved by all the undertakings which are members of that association on the market affected by the infringement, even if those undertakings did not actually participate in the infringement. Furthermore, Article 23(4) of that regulation provides that, where a fine is imposed on an association of undertakings taking account of the turnover of its members and the association has not participated in the infringement, the fine is to be calculated by reference to the turnover achieved by all the undertakings belonging to that association on the market affected by the infringement, even if those undertakings did not actually participate in the infringement.

It follows that a national competition authority may not impose individual fines on undertakings which are members of the governing body of the association of undertakings which committed the infringement where those undertakings are not co-infringers.

( 1 ) The activities in question are as follows:

- approving mortgage transactions and affixing enforcement clauses in situations where the parties to the transaction do not indicate the value of the property subject to the mortgage and where several properties are subject to a mortgage in a single mortgage transaction;

- notarial deeds, draft transactions, consultations and technical services, in situations where an easement is established by a single contract for several properties;

- validation of an exchange contract, in situations where parts of several goods are exchanged by contract.

( 2 ) See to that effect: judgment of 1 February 2017, Commission v Hungary (C‑392/15, EU:C:2017:73, paragraphs 119 and 120 and 125 to 127); judgment of 24 May 2011, Commission v France (C‑50/08, EU:C:2011:335, paragraph 97); judgment of 1 December 2011, Commission v Netherlands (C‑157/09, EU:C:2011:794, paragraph 72).

( 3 ) Namely, the notarial activity of authenticating deeds reflecting unilateral commitments or agreements freely entered into by the parties, the creation of mortgages, the simple affixing of the executory formula, as well as the preparation of draft transactions, consultations and the provision of technical services by notaries.

( 4 ) Judgment of 19 February 2002, Wouters and Others (C‑309/99, EU:C:2002:98).

( 5 ) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101] and [102 TFEU] (OJ 2003 L 1, p. 1).