I. Introduction
The distinction between restrictions of competition ‘by object’ and ‘by effect’ is a fundamental component of the interpretative framework of Article 101(1) TFEU. Although ‘by object’ restrictions relieve the European Commission or National Competition Authorities (NCAs) from the obligation to prove specific market effects, recent case law clarifies that this classification cannot serve as an automatic or mechanistic presumption of illegality. This development raises the question of whether, and to what extent, counterfactual analysis constitutes an autonomous and necessary requirement for characterising an agreement as restrictive of competition by object.
This article contends that counterfactual analysis does not operate as a standalone or distinct test. Instead, it is functionally integrated into the assessment of the legal and economic context of the agreement under consideration. The intensity and depth of this evaluation, however, depend on the nature and specific characteristics of the conduct being reviewed.
II. The jurisprudential foundation of the ‘restriction by object’ concept
A pivotal development in modern jurisprudence occurred with Case C‑67/13 P, Cartes Bancaires, in which the Court of Justice of the European Union (CJEU) emphasised that the concept of a restriction of competition ‘by object’ must be interpreted restrictively and applies only to conduct demonstrating a “sufficient degree of harm” to competition. Assessing whether conduct is harmful cannot rely on abstract categorisation; rather, it requires a comprehensive evaluation of the agreement’s content and objectives, as well as the legal and economic context in which it operates.
Additional clarification was provided in Case C-228/18, Budapest Bank, where the CJEU stated that when serious doubts exist regarding the harmfulness of an agreement, its characterisation as a restriction ‘by object’ is not permissible. This approach precludes a strictly formalistic method that would permit the automated categorisation of certain behaviours as ‘by object’ restrictions, independent of their specific context.
Nevertheless, Budapest Bank does not mandate a comprehensive effects analysis in every case. It clarifies, however, that identifying a restriction ‘by object’ must remain connected to the structure and functioning of the relevant market. The ‘by object’ classification serves as a tool for delineating the burden of proof, but it does not allow authorities to bypass a substantive assessment of the legal and economic context.
III. The Concept of the Counterfactual in Article 101(1) TFEU
Counterfactual analysis in competition law consists of comparing the actual market situation with the hypothetical situation that would have prevailed in the absence of the conduct in question. In ‘by effect’ cases, this comparison is explicit, systematic, and often quantified, as proof of a specific negative impact on the structure or functioning of competition, is required.
In contrast, in ‘by object’ cases, a comprehensive and detailed counterfactual analysis, as required in ‘by effect’ cases, is not obligatory. Nevertheless, the obligation to consider the legal and economic context inherently involves elements of counterfactual reasoning.
Specifically, determining whether an agreement is, by its nature, capable of restricting competition requires identifying the competitive baseline of the relevant market, that is, the form competition takes or would take in the absence of the conduct. Establishing this hypothetical benchmark is not a separate effects analysis but an integral part of assessing whether an agreement demonstrates a “sufficient degree of harm”.
Within this framework, counterfactual logic operates indirectly and in summary form. When conduct reduces competitive uncertainty or undermines the independence of commercial decisions, it is presumed to restrict competition that would have existed under autonomous decision-making. The comparison with the hypothetical scenario is not omitted; rather, it is implicitly integrated into the determination of the conduct’s “sufficient degree of harm”.
IV. Clear-cut v. Marginal cases
Jurisprudential developments indicate that the intensity of counterfactual analysis depends on the clarity of the agreement’s restrictive character.
In cases involving hardcore restrictions, such as price-fixing, market allocation, or the exchange of strategic information between direct competitors, case law presumes that experience is sufficient to establish a “sufficient degree of harm”. For example, in Case T-113/17, Crédit Agricole, the General Court confirmed that exchanging strategic information capable of reducing competitive uncertainty constitutes a restriction by object without necessitating an explicit and extensive counterfactual analysis.
In these instances, the counterfactual is nearly self-evident: without coordination, undertakings must determine their behaviour independently. The assessment of context is not omitted; rather, it operates in a summary form, as the nature of the conduct permits a presumed finding of restriction.
The situation differs when the practice falls outside the “hardcore” of traditional collusive behaviour or when the market displays specific characteristics, such as oligopolistic structures, high transparency, heavy regulation, or multi-sided platform features. These cases, presenting specific alternative explanations, such as price convergence resulting from structural market features, may generate reasonable doubt regarding the degree of harm. According to Budapest Bank, if such doubt is serious and substantiated, a ‘by object’ classification is not permitted.
V. Burden of proof and the duty to state reasons
Integrating counterfactual analysis into the ‘by object’ assessment does not alter the burden of proof. The European Commission or NCA retains the responsibility to prove an infringement under Article 101(1) TFEU. However, when a defendant presents specific, coherent, and substantiated alternative explanations for market functioning, the authority must consider them and provide explicit justification for their rejection.
This obligation arises from the requirement for a comprehensive contextual assessment and from general principles of EU law, including the principles of good administration, the right to be heard, and the right to effective judicial protection.
VI. Normative assessment
Modern jurisprudence alternates between two methodological approaches: a categorical approach, which focuses on inherent restrictions, and a contextual approach, which requires substantive analysis prior to classification.
The most doctrinally consistent interpretation of current case law is that a restriction ‘by object’ operates as a rebuttable presumption of harm. In clear-cut cases, this presumption is difficult to overturn. In complex or structurally unique markets, however, a substantiated counterfactual may generate reasonable doubt, necessitating a shift to an effects-based analysis.
VII. Conclusions
Counterfactual analysis does not constitute a distinct stage of proof for ‘by object’ restrictions. Instead, it is a functionally integrated element within the assessment of the legal and economic context.
Although summary assessment is appropriate in clear-cut cases, it becomes essential in marginal or complex cases where credible alternative market explanations exist. The ‘by object’ classification should not be reduced to a mere formalistic label; rather, it must function as a procedural tool that expedites proof only when anti-competitive effects are sufficiently evident based on established experience and specific market characteristics.
