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EU Law > 7 - Competition Law 1: Article 101 TFEU > Flashcards

7 - Competition Law 1: Article 101 TFEU Flashcards

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1
Q

How does the EU establish a single internal market?

A
  • By establishing the competition rules necessary for the functioning of the internal market.
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2
Q

What are the 2 basic complementary aims of EU?

A
  1. Promote competitive market economy

2. Prevent barriers to integration of the single internal market.

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3
Q

What happens if a market works efficiently and effectively?

A
  • Not possible to maintain artificially high or low prices in different parts of the market
  • Because goods will flow freely from low priced to high prices areas, price will level out.
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4
Q

Where is the primary and secondary legislation dealing with the prevention of distortion in the market?

A
  • Primary - Articles 101 - 109 TFEU.

- Secondary - regulations e.g. 1/2003.

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5
Q

What is the purpose of Article 101 TFEU?

A
  • Protect normal competitive working of single market

- By prohibiting all agreements between undertakings, decisions by associations of undertakings and concerted practices.

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6
Q

Hofner v Else v Macroton GmbH

A
  • Defined “undertakings” which are mentioned in Article 101 TFEU.
  • This case defined undertakings
  • “every entity in an economic activity, regardless of the legal status and the way it is financed.”
  • Said that a public employment agency that was engaged in the business of employment procurement = classified as an undertaking.
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7
Q

What are examples of undertakings for the purpose of EU competition law?

A
  • Individuals
  • Limited companies
  • Partnerships
  • Trade associations
  • Professions etc
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8
Q

Give an example of a case that stated that “undertakings” can lack a profit motive?

A
  • MOTOE v Ellinkoe
  • But this was dealing with Article 102 rather than 101.
  • ELPA was a non profit making body. Had the sole public power to grant the authorisation of motorcycle events in Greece.
  • Refused to grant authorisation of their rival organisations event.
  • Held: using its public powers to do this was an abuse of dominance under Article 102.
  • ELPA = undertaking because it was engaged in an economic activity and this was irrespective of their legal form and how they were financed.
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9
Q

Which case stated that an entity will NOT be considered to be an undertaking if they are exercising the official authority of the state?

A
  • Diego Cali v Figli Srl v Service Ecologici Porto De Genova.
  • Company that was given exclusive concession by a port authority to do anti pollution survaillence at an oil port.
  • Company was authorised to charge vessels using the port at tarriffs approved by the port authority.
  • Held: situations where an entity acts in exercise of official authority, had to be distinguished from those where it carries on economic activities of industrial / commercial nature by offering goods/ services on the market.
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10
Q

What are the 3 elements of Article 101(1) that have to be satisfied before the prohibition takes effect?

A
  1. Some form of collusion (meeting of minds)
  2. Agreement / decision or practice with actual or potential effect on trade between MS.
  3. Any agreement /decision or practice must have as its object or effect the prevention, restriction or distortion of competition within the single market.
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11
Q

What are the 3 forms of collusion identified in Article 101(1)

A
  • Agreements between undertakings
  • Decisions by associations of undertakings
  • Concerted practices
  • Don’t have to determine which type of collusion exists
  • Can involve a formal contract or an informal agreement or arrangement.
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12
Q

Which case confirmed that the TYPE of collusion does not have to be identified, just the fact that collusion has taken place?

A
  • Commission v ANIC Partecipazoni SpA
  • ANIC conduct was both an unlawful agreement and concerted practice
  • Court stated that it was unnecessary to establish into which category the behaviour fell
  • Article 101 distinguishes between these types of agreements.
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13
Q

Which case said that ‘agreement’ can also cover ORAL agreements?

A
  • Tepea v Commission

- Authority for the fact that collusion can include oral agreements

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14
Q

Tepea v Commission

A
  • Authority for the fact that collusion can include oral agreements
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15
Q

Hercules Chemicals NV v Commission

A
  • Sufficient that undertakings have expressed their joint intention to conduct themselves on the market in a specific way
  • ‘gentlemens’ agreements
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16
Q

Bayer AG v Commission

A
  • Must include more than 1 party
  • Unilateral behaviour or conduct by one undertaking only will generally not be found to amount to an agreement under Article 101(1)
  • Medicine whole salers had acquisced and this resulted in an agreement between the subsidiaries - the general court disagreed with this and this was upheld
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17
Q

Conduct which at first appears to be unilateral may still be found to amount to an agreement where one party has tacitly acquiesces to practices and measures adopted by another. Give a case example of this?

A
  • AC Trehand AG v Commission.
  • They were a firm that contributed actively and intentionally to a cartel between peroxide producers.
  • They stored documents and collected / distributed commercial information amongst their members
  • Held: they participated in the cartels agreement even though they were not an actual party to the written agreement between the members of the cartel
  • It was enough that the claimant actively contributed to the cartel and there was sufficiently definite and decisive causal link
  • Between the activity and the restriction of competition on the peroxide market.
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18
Q

Can formal decisions that are approved by the members of a trade association fall within the ambit of article 101(1)? Give an example of this.

A
  • Yes
  • If a trade association adopts a price list or sets minimum prices at which products must be sold
  • Then these decisions would likely be prohibited under Article 101(1).
  • Even non binding recommendations made by trade association can be found the be “decisions” and to fall within the ambit of Article 101(1).
  • E.g. Vereninging van Cemet v Commission
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19
Q

What happened in Vereninging van Cement v Commission?

A
  • Held: system of guide “target” prices adopted by a trade association for cement wholesalers in the Netherlands was prohibited by Article 101(1).
  • Regardless of the fact that association said its members remained free to calculate their own prices for individuals transactions.
  • Decisions that are approved by members of a trade association can fall within the ambit of Article 101(1).
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20
Q

NV IAZ International Belgium v Commission (ANSEAU-NAVEWA Conformity Label)?

A
  • Trade association for water suppliers
  • Was held to have breached Article 101
  • By entering into an agreement with certain other organisations to establish a system of conformity checks and labels for washing machines / dishwashers.
  • Had effect of making imports of washing machines impossible / difficult.
  • Recommendations hold weight and exert influence on competition.
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21
Q

What is considered to be a “concerted practice?”

A
  • Forms of cooperation
  • That do not amount to formal oral/ written agreement / decision.
  • Coordinated behaviour
  • Where there is little evidence of agreement other than the suspicious behaviour itself.
  • E.g. ICI v Commission (Dyestuffs)
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22
Q

ICI v Commission (“Dye Stuffs”) - what was the take home message?

A
  • Definition of concerted practices came from this case
  • Form of coordination between undertakings
  • Uniform increases in the prices of dyestuffs
  • Prices increases at a similar level on 3 occasions
  • Price increases were put into effect basically at the same time
  • Court had evidence that they had attended meetings together in Basel and London
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23
Q

What is the difference between concerted practices and parallel behaviour?

A
  • Parallel = when one undertaking takes steps e.g. lowering or raising pricing and others copy.
  • Not unlawful as long as it is not a result of cooperation between the parties.
  • This is normal feature of oligopolistic markets.
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24
Q

What clues have to be looked for when identifying a concerted practice?

A
  • Evidence of meetings between undertakings, that should be in competition and of identical /similar actions (espec pricing).
  • Documents uncovered
  • E.g. telephone meeting notes
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25
Q

What are the case facts of Dyestuffs?

A
  • Uniform increase in price of dyestuffs
  • Which had been made by several undertakings in the EU within a very short time period.
  • Commission - had no evidence of agreement but held that competitors were guilty of price-fixing through concerted practices
  • They got a fine.
  • Relied on evidence: similarity of rate and timing of the price increases.
  • Fact that there was informal contact between the companies
  • Similarity of instructions sent from parent companies to their subsidiaries.
  • Price raises had happened on 3 different occasions and generally related to the same products.
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26
Q

A Ahlstrom Oy v Commission

A
  • A! Ahlstrom: Behaviour is NOT always parallel!
  • Courts warned against assuming too easily that parallel behaviour is the result of a concerted practice
  • Parallel conduct cannot be regarded as furnishing proof of concertation unless this is the only plausible explanation for such conduct
  • Parallel pricing not in breach of article 101(1)
  • Treaty does not deprive economic operators of the right to adapt themselves intelligently to the anticipated conduct of their competitors
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27
Q

Societe Technique Miniere v Maschinebau

A
  • To actually breach article 101(1), agreement / decision / concerted practice must affect trade between MS.
    • The mere POTENTIAL to affect trade is sufficient.
  • Set out test to whether an agreement affects trade between Member States
  • “must be possible to foresee with a sufficient degree of probability on the basis of a set of objective factors of law that the agreement in question may have an influence on the pattern of trade between Member state.
28
Q

Brassiere de Haecht SA v Wilkin-Janssen

A
  • Case found that even the effect of a small number of agreements if taken collectively has been found to affect the single market.
  • Agreements between Belgian cafe and brewery.
  • Agreement - said that brewery would lend cafe equipment / money.
  • Cafe in return would get supplies from the brewery only.
  • Cafe was sued by brewery for getting their supplies from someone else.
  • Used Article 101 TFEU in defence
  • Brewery had many similar small arrangements
  • Held: agreements may combine to have a cumulative effect on competition and so existence of similar contracts was a consideration that could be taken into account.
29
Q

Etablissemenets Consten SARL & Grundig-Verkaufs GmbH

A
  • Example of a vertical agreement
  • Between manufacturer and distributor.
  • Court of justice rejected the argument that Article 101(1) only applies to horizontal agreements
  • No need to take into account actual effect of an agreement when determining if this agreement is prohibited
  • There was an exclusive distribution agreement
  • Grundig was a manufacturer of electronic appliances e.g. TV/radios.
  • Made an agreement with Consten, which set up a total ban on parallel imports / exports
  • Therefore was territorial protection.
  • Held: this agreement breached Article 101 TFEU.
  • It clearly placed limitations on the freedom of trade between MS.
30
Q

In competition law, what does the actual / potential effect on trade have to be?

A
  • Appreciable
  • And not “de minimis”
  • Etablissemenets Consten SARL & Grundig-Verkaufs GmbH
31
Q

What sort of agreements does Article 101(1) apply to?

A
  • Horizontal

- Vertical

32
Q

What are horizontal agreements?

A
  • Agreements between undertakings at the same level of industry
  • 2+ manufacturers, or 2+ wholesalers of goods
33
Q

What are vertical agreements?

A
  • Agreements between undertakings at different levels of trade / industry
  • Those between a producer + distributor or wholesaler.
  • May confer benefits on the single market by facilitating a wider distribution of goods throughout the EC
  • And are therefore less likely to be anti competitive.
34
Q

Give a case example of a VERTICAL agreement?

A
  • Consten SÀRL & Grundig-Verkaufs GmbH
  • Agreement between manufacturer + distributor
  • Court rejected the argument that Article 101(1) only applies to agreements.
35
Q

How did the courts interpret the words “object” and “effect” in the S.T.M case?

A
  • Stated that they need to be read disjunctively
  • So that it is first necessary to consider what the object is
  • Only if its not established that the object of agreement is to harm competition, it is necessary to consider whether this COULD have the effect of doing so.
36
Q

What is the ‘object’ of an agreement?

A
  • Determined by looking at an agreements PURPOSE in economic context (STM)
  • Intentions may be relevant, but it is not necessary for them to be taken into account (GSK)
  • Purpose is determined objectively
37
Q

GSK v Commission

A
  • When examining the object of an agreement
  • Intentions may be relevant but not necessary for them to be taken into account.
  • Purpose is determined objectively
38
Q

Competition Authority v Beef Industry Development Society Ltd

A
  • Plan to address over capacity in beef processing market, by reducing number of beef and veal processors.
  • To be achieved by agreements in which certain undertakings agreed to decommission their processing plants and to stay out of the market
  • Then they would be compensated by those undertakings that kept processors.
  • Held: in determining whether the object of an agreement was to restrict competition, it was irrelevant their intentions of restricting the competition / that the agreement actually persued other objectives that were positive.
39
Q

What was the conclusion in Consten v Grundig in regards to the effect of an agreement?

A
  • That there is no need to take into account the actual effect of the agreement
  • When determining whether that agreement is prohibited by reason of its object.
  • Follows from STM distinction between object and effect.
40
Q

Which case said that an agreement is capable of being prohibited on the basis of its object, where it is regarded by its nature as damaging competition?

A
  • Beef Industry Development Society.

- Therefore commission do not need to waste time proving that agreement prevents / restricts / distorts competition.

41
Q

Groupement des Cartes Bancaires v Commission

A
  • Commission does not need to devote time and resources to prove that an agreement is anti-competitive. There is the worry that the commission will just prove what they need to prove.
  • So in this case they emphasised that requirements for an infringement by object must be given a strict interpretation.
  • Infringement only found where it is a type that is so likely to have negative effects that there is no need to examine the actual effect of the agreement.
42
Q

What are examples of horizontal agreements which may be regarded as having their object the restriction of competition?

A
  • Agreement to fix prices
  • Share markets
  • Limit production output
  • Limit sales
  • Exchange price information or for collective
  • Exclusive dealing
43
Q

What are examples of vertical agreements which may be regarded as having their object the restriction of competition?

A
  • Agreement to fix minimum resale prices
  • To impose bans on parallel imports / passive selling
  • Ban on parrallel imports e.g. operates to prevent a distributor in one MS buying a product from anyone other than authorised dealer.
  • Passive selling = where there is no active marketing campaign or other promotional measures.
44
Q

What has to be proven if the object of an agreement is not restrict competition?

A
  • Necessary to prove that agreement would have the effect of restricting competition
  • Can be onerous task to find this.
45
Q

European Night Services v Commission

A
  • Provided guidance on how to assess the EFFECT of an agreement
  • This can be an onerous task.
  • Have to identify the relevant market within which the agreement operates.
  • Should know the economic context.
  • Should know “demand substitution” - which is the products that a consumer would consider buying if the product that they wanted to buy were not available.
46
Q

What is “demand substitution”?

A
  • The products that consumer would consider buying

- If the product that they wanted was not available.

47
Q

Where is the list of restrictions that are prohibited found?

A

Article 101(1) TFEU

48
Q

What is an exclusive distribution agreement? Why can its result end up being pro-competitive?

A
  • Introduction of new product might be too expensive
  • So only commercially effective way for a new player in market to join is entering into an agreement with undertaking already trading in that area.
  • Prevents other traders from selling product in the same territory. Because the company selling it will have prior knowledge etc.
49
Q

Societe Technique Miniere (STM CASE)v Maschinebau Ulm GmbH

A
  • Addressed the question of whether agreements with anti competitive elements should be treated as preventing / distorting competition.
  • If agreements that contain anti-competitive elements should be treated as preventing restricting or distorting competition even if they are capable of having a positive effect on competition
  • German manufacturer granted a French company exclusive rights to sell certain heavy machinery in France. Maintained that this was to open up a new market
  • Court of justice said that this was actually pro-competitive.
50
Q

What are the similarities between STM and Pronuptia?

A
  • Employed a similar approach
  • Exclusive distribution arrangement
  • This case = dispute in relation to a franchise agreement
  • A franchise of Pronuptia siad that they would follow certain rules re the operating and supply of the franchise.
  • Held: compatibility of franchise agreements depended on the provisions contained in them.
51
Q

Even if there is evidence of anti-competitive behaviour, when might it still be okay?

A
  • Rule of reason approach
  • If pro competitive effects outweigh
  • Court may decide that there has been no infringement of Article 101 because overall effect is to not to prevent / restrict/ distort competition.
52
Q

Why was the court involved in STM? Why was the rule of reason approach not just used?

A
  • Problem that German manufacturer faced had not been notified to the Commission.
  • At that time, agreement had not been notified to the commission.
53
Q

Metropole Television v Commission?

A
  • Held: there was a rule of reason defence under Article 101(1).
  • Said there was no obligation to weigh pro competitive effects against anti competitive effects of agreement in the context of Article 101(1).
  • Exercise would be more correctly done via Article 101(3).
54
Q

What are the 2 requirements of “ancillary restrictions”, which are any restrictions that are not directly related and necessary to the implementation of the main operation?

A
  • Two fold test
    1. Restriction has to be objectively necessary for implementation of the main operation under the agreement. This does not mean that the restriction has to be necessary for commercial success of the operation.
    2. Restriction has to be indispensable to the operations implementation in the sense that the main operation would be difficult/ impossible to implement without it.
55
Q

In which case were the details re ancillary restrictions confirmed and reinforce? What happened?

A
  • Mastercard v Commssion
  • Emphasised that ancillary restriction would be objectively necessary only where the main operation would not be possible to carry out in the absence of the restriction in question.
  • Would not suffice that operation is simply more difficult to implement or even less profitable without the restriction.
56
Q

What is the “de minimis” defence?

A
  • Agreement will not be prohibited by Article 101(1) if it does not have appreciable effect on
  • Competition
  • Inter state trade.
57
Q

Which case first established the de mimis defence?

A
  • Volk
  • German washing machine producer
  • Got an exclusive distributorship and guaranteed it absolute territorial protection against parallel imports.
  • Volk had negligible share in washing machine market. (onlu 0.2%)
58
Q

Explain what happened in the Expedia case in regards to use of the De Minimis defence?

A
  • The de minimis defence does NOT apply where the prevention, restriction or distortion of competition is the object of the agreement.
59
Q

How can the commission determine if agreement has insignificant effect?

A
  • Determine:
  • Relevant market
  • What market share the parties have within that market.
  • Market share not above 10% does not appreciably affect competition within the meaning of Article 101(1).
  • Vertical - does not exceed 15%.
  • These are just guidelines so even if the numbers are lower than these figures could still be held to be prohibited by Article 101(1).
60
Q

What happens if an agreement / decision / concerted practice which is prohibited by Article 101 (1) is breached?

A
  • Automatically void

- Unless it comes within ambit of Article 101(3)

61
Q

What does an agreement / decision / concerted practice have to do to come within the ambit of Article 101(3)?

A
  1. Improve production / good distribution or promote technical / economic progress.
  2. Allow consumers fair share of resulting benefit

Must not:

  1. Must only restrict competition in ways that are necessary to achieve the relevant pro-competitive ends
  2. Eliminate competition in relevant market substantially.
62
Q

What happened in the case of Transocean Marine Paint Association?

A
  • Allowed to have individual exemption under article 101(3)
  • Because the agreement enabled members to compete with larger producers of marine paint.
  • Production of the same paint in same packaging and trademark.
63
Q

How is Regulation 330/2010 a block exemption, and what does it do?

A
  • Categories of agreements that are exempt as long as they satisfy the rules within the exemption
  • Regulation 330/2010 exempts certain vertical agreements
  • These are agreements between undertakings that operate at different levels of the supply chain
  • This regulation exempts all vertical agreements
  • And then sets out the basic circumstances under which that exemption will not apply to individual vertical agreements terms.
64
Q

What happened in the case of Courage Ltd v Crehan?

A
  • Held: damages can be awarded by natinonal court
  • For losses caused by contract / by conduct which infringed article 101 TFEU.
  • Justified this on the basis of the need to ensure the effectiveness of competition law in order to protect the rights which it confers on individuals.
65
Q

Which case reinforced the findings of Courage ltd v Crehan?

A
  • Manfredi v Lloyd Adriatico Assicurazioni Spa
  • Held: anyone can claim compensation for harm
  • Where there is a causal relationship between that harm and an agreement or practice prohibited under Article 101 TFEU
66
Q

Where is the full right of compensation found (which directive?)

A
  • Article 3 Directive 2014/104.
67
Q

Which article provides for undertaking to be joint and severally liable?

A
  • Article 11(1)

EU Law (8 decks)

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