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EU Law B > Competition > Flashcards

Competition Flashcards

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1
Q

Art 101(1)

three requirments

Glaxo Spain

A
  • First, that there is an agreement between undertakings, a concerted practice or a decision of an association of undertakings;
  • Second, that that agreement, concerted practice or decision has as its object or effect the restriction of competition to an appreciable extent; and
  • Third, that trade between Member States must be capable of being affected, the purpose of that last requirement being solely to determine the application of Community law
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2
Q

EasyPay para 37

A

What is an undertaking?

“an undertaking is any entity engaged in an economic activity, irrespective of its legal status and the way in which it is financed.”

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3
Q

Federation Francaise

A

Undertakings can include non profit organisations.

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4
Q

FENIN v Commission

A

Public bodies do not fall within Art 101 in respect of the exercise of their public power.

There must be an “inseparable connection”. (EasyPay and Finance Engineering)

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5
Q

Wouters

A

Lawyers fall under “undertaking” as can be engaged in economic activity.

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6
Q

EasyPay and Finance Engineering

A

An exercise of public authority is not an undertaking unless there is some “inseparable connection”.

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7
Q

What is an agreement?

A

A genuine concurrence of wills between two or more independent undertakings irrespective of its form (oral, in writing) or its enforceability

  • Chemiefarma
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8
Q

Chemiefarma

A

A genuine concurrence of wills between two or more independent undertakings irrespective of its form (oral, in writing) or its enforceability

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9
Q

Can a gentleman’s agreement be caught by the prohibition?

A

A gentlemen’s agreement can be caught if it contains clauses restricting competition in the common market within the meaning of that article and its clauses amount to a faithful expression of the joint intention of the parties.

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10
Q

Bayer

A 
If a decision
by an undertaking constitutes unilateral
conduct on its part, that decision
escapes the prohibition in Article 101(1)
of the Treaty.
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11
Q

Bayer

A

An agreement “centres around the existence of a concurrence of wills between at least two parties… it constitutes the faithful expression of the parties’ intention”

If a decision
by an undertaking constitutes unilateral
conduct on its part, that decision
escapes the prohibition in Article 101(1)
of the Treaty.
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12
Q

Dyestuff

A

A concerted practise is:

  • “A form of coordination between undertakings which, without having reached a stage where agreement properly so called has been concluded, knowingly substitutes practical cooperation between them for the risk of competition”
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13
Q

T-Mobile para. 23

A

the definitions of ‘agreement’, ‘decisions by associations of undertakings’ and ‘concerted practice’ are intended, from a subjective point of view, to catch forms of collusion having the same nature which are distinguishable from each other only by their intensity and the forms in which they manifest themselves”.

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14
Q

T-Mobile

A

Communication operators had a single meeting and during this confidential information was exchanged, they had not reached an agreement but intended to cut the money paid to dealers. This is a concerted practise because they had a meeting, they had an exchange of information.

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15
Q

T-Mobile

A

There should be no direct or indirect contact between undertaking.

When assessing the object of an agreement, the intention of the parties is not an essential factor but may be taken into account.

In order to establish such an object, it is sufficient if the agreement has the potential to have a negative impact on competition

Communication operators had a single meeting and during this confidential information was exchanged, they had not reached an agreement but intended to cut the money paid to dealers. This is a concerted practise because they had a meeting, they had an exchange of information.

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16
Q

Suiker Unie v Commission

A

Art 101 precludes ‘any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market

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17
Q

Züchner v Bayerische Vereinsbank AG

A

‘Intelligent adaptation to market conditions’ is permitted but concerted practice is not..

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18
Q

Strictly unilateral conduct is not caught. However, two ways which it might be caught.

A

1)

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19
Q

Commission v Anic

A

The court of justice eases the commissions burden of proof significantly in the context of concerted practices by holding that it can presume that a concerted practice has been implemented, and there is no need to prove anti-competitive effects resulting from the concerted practice

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20
Q

T- mobile (object)

A
  • In assessing the object of an agreement, the intention of the parties is not an essential factor but may be taken into account (T-Mobile).
  • In order to establish such an object, it is sufficient if the agreement has the potential to have a negative impact on competition (T-Mobile)
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21
Q

GSK v Commission

A

proof of disadvantages for final consumer shall not be a prerequisite to establish such object

GSK does not like distributer to export to Spain market and reimport to UK, established two prices for domestic use and another in other destination where the price is higher. CJEU said no because they safeguard the internal market, cannot restrict internal market, general court errored in law saying that it is a prerequisite

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22
Q

Völk v Vervaeke

A

Unlike Art 34 TFEU (free movement of goods), there is a de minimis principle in Art 101 TFEU (this means that agreements of minor importance are not caught by the prohibition of Art 101

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23
Q

Consten and Grundig

A

Art 101 catches all agreements which have the restriction of competition as their object or effect even if they arguably increase trade.

Under a dealership agreement, Grundig supplied its electronic products to Consten for resale in france as its only French distributor. Under agreement, Consten makes minimum order and could not sell outside France. Other distributers coiuldnt sell Grundig items in France. This meant that Consten had absolute territorial protection in france. S101 applies to both horizontal and vertical agreements.

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24
Q

Glaxo Spain

A

an agreement containing a dual pricing clause resulted in higher price for drugs ordered for parallel trade had an anti-competitive object.

obvious restrictions of competition such as price-fixing, market-sharing or the control of outlets –Glaxo Spain

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25
Q

O2 v Commission

A

¬ Furthermore, the examination of conditions of competition is based not only on existing competition between undertakings already present on the relevant market but also on potential competition.
¬ what will happen in the absence of the agreement?

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26
Q

Question: Is there a “rule of reason” under Article 101 (1) TFEU?
(i.e. consideration of the pro and anti-competitive effects of an agreement in order to determine whether it is caught by the prohibition?)

A

A qualified NO.

O2 v Commission

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27
Q

Three issues must be addressed for 101 and 102

A

a) The concept of “trade between Member States”;
1) Cross-boarder element but distinct from geographic market
2) The notion of ‘may affect’; and
3 ) The concept of ‘appreciability’

¬ Below 5% market share and 40 million Euro turnover–outside of 101 even if they have as their object the prevention, restriction or distortion of competition.

¬ Not applicable to emerging market

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28
Q

Commission Notice, Guideline on the effect on trade concept [2004] OJ C101/81;

A

as long as X is below 5% market share and 40 million Euro turnover–outside of 101 even if they have as their object the prevention, restriction or distortion of competition.

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29
Q

De minimis doctrine (only relevant to art 101)

A

θ A “Safe Harbour”: Aggregate market share below.

¬ 10% for horizontal agreements;

¬ 15% for vertical agreements;

¬ 5% for parallel networks of agreements with cumulative foreclosure effect

30
Q

The de minimus doctrine does not cover:

A

It does not cover “hardcore restrictions”

¬ Agreements which have as their object the prevention, restriction or distortion of competition within the internal market.

¬ E.g. price fixing, division of market
See: Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the TFEU (De Minimis Notice) [2014] OJ C 291/01 (The “de minimis Notice” )

31
Q

Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the TFEU (De Minimis Notice) [2014] OJ C 291/01 (The “de minimis Notice” )

A

If operate with national authority, even if commission will not chase you because of de minimum rule, the national authority may chase you. Soft law, not binding on MS.

32
Q

Can NCAs and national courts pick up what Commission has left? Expedia C

A

• Art.101 (1) TFEU and 3(2) of Reg. 1/2003 must be interpreted as not precluding a national competition authority from applying Article 101(1) TFEU to an agreement between undertakings that may affect trade between Member States, but that does not reach the thresholds specified by the European Commission in its notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) TFEU (de minimis), provided that that agreement constitutes an appreciable restriction of competition within the meaning of that provision(para.39).

33
Q

Who bears burden of proof under art 101(3)

A

The initial burden of proof is upon the undertaking relying on Article 101(3).• . In such a case the Commission must refute those arguments and that evidence.

34
Q

Art 102 explain

A

The Commission must establish:
¬ The undertaking is dominant in a given market (must be a substantial part)
¬ It has abused such position
¬ Such abuse affects trade between Member States
¬ No objective justification

35
Q

Infringements by objective requirements

A

1) agreements which “by their very nature” are injurious to the proper functioning of normal competition”. - T - mobile.

  • Agreements that fix prices
    facitilate other forms of collusion with similar repercussions
    agreements that serve to partition the market.
36
Q

Commissions guidlines on art 101(3) on effect of agreements

A

The commission suggests that an economic appraisal will be carried out to determine whether an agreement has the effect of increasing prices or harming consumers in other ways. Some economic activity must be performed before determining that an agreement has anti-competitive effects, but uncertain how much.

37
Q

O2 v Commission

A

The Commission’s evidentiary burden is raised: it is insufficient for it to show that the agreement affects the econoimc freedm of one of the parties one has to demonstrate a causal link between the agreement and subsequent restrictions of competition.

38
Q

What are cartels?

A

It is primarily aimed at classic cartels, known as horizontal competition, but it is also designed to deal with restrictive agreements between manufacturers and retailers, known as vertical competition, which affects the availability of goods and services.

39
Q

Cartels

A

Typically, cartel members meet secretly to discuss prices or to exchange sales or trading information.

40
Q

Trefilenrope SARL v Commission

A

…for there to be an agreement within the meaning of…[Article 101(1) TFEU], it is sufficient for the undertakings in question to have expressed their joint intention to conduct themselves in the market in a particular way.

41
Q

T - Mobile

A

Court of Justice held that a single meeting between companies may constitute a concerted practice

42
Q

Horizontal agreements

A

are concluded between parties operating at the same level of the production/distribution chain, for example, between manufacturers or retailers.

43
Q

Vertical agreements

A

operate at different levels, for example, distribution agreements between a manufacturer and distributor.

44
Q

Société Technique Minière (STM)

A

Where the object of an agreement is not expressly the prevention, restriction or distortion of competition, the determination of its effect requires a market analysis

“Which may affect trade between MS”
scope on effect on trade between MS defined in STM. 101 applies whenever it is “possible to foresee with a sufficient degree of probability … that the agreement may have an influence, direct or indirect, actual or potential on trade between MS”. Not necessary to show that the agreement has already affected trade between MS.

45
Q

O2 (Germany) v Commission

A

the Court has established that it would be insufficient for the Commission or any other party alleging an infringement of Art 101 (1) to show that the agreement simply affects (limits) the economic freedom of the undertakings involved. Instead they must demonstrate a causal link between the agreement and a restrictive / distortive effect on competition.

46
Q

Glaxo Spain,

art 103

A

The initial burden of proof is upon the undertaking relying on Article 101(3). In certain cases, arguments and evidence provided by the undertaking may be of such a kind as to require the Commission to provide an explanation or justification, failing which it is permissible to conclude that the burden of proof borne by the person who relies on Article 101(3) TFEU has been discharged. In such a case the Commission must refute those arguments and that evidence.

47
Q

4 conditions for individual exemption

A

1) It must improve the production and distribution of goods or promote a technical and economic progress
2) consumers must receive a fair share of the benefits identified in (1)
3) The restrictions of competition must be necessary to achieve said benefits
4) the agreement must not eliminate competition on the market.

48
Q

CECED

A

sugguests that art 101(3) exemptions can take into account environmental impact.

49
Q

When is something dominant?

A

1) considering the market share

2) Additional factors.

50
Q

Hoffman-La Roche v Commission

A

Different structures of demand may mean that identical products are part of different markets.

51
Q

AKZO

A

Sugguested that if there is a market share of 50% this can give rise to the presumption of dominance.

52
Q

United Brands v Commission

A

‘The dominant position thus referred to [by Art. 102] relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers.’

53
Q

Dominant Position

PRESUMPTIONS

A

Above 50%: presumed dominant

Under 40%: dominance unlikely

54
Q

United Brands v. Commission

A

Brands fought to exclude other competitors. Fought to exclude other banana manufacturers from the EU market.

Other relevant factors are the relationship between the market shares of the undertaking concerned and of its competitors, especially those of the next largest, the technological lead of the undertaking over its competitors, the existence of a highly developed sales network and the absence of potential competition’.

CJEU sugguested that a price is excessive when it bears no reasonable relation to the economic value of the product.

55
Q

Italian Flat Glass

A

There is nothing in principle to prevent 2 companies joining to become jointly dominant – this is the case if there is an agreement by the jointly dominant firms, if this economic link is effected through an agreement then Art 101 will also be relevant.

56
Q

AKZO

A

Predatory pricing is an abuse of dominance. In this case they did it to eliminate a competitor.

this does not take into account hat below cost pricing can be pro competition when a firm is entering into a new product market.

57
Q

AKZO test

A

1) Prices below Average Variable Costs predatory – this will be regarded as predatory

Prices below Average Total Costs but above Average Variable Costs predatory if part of a plan to eliminate a competitor – the court in this situation looks at intention

58
Q

Oscar Bronner

A

Refusal to grant access to essential facilities abusive if (cumulatively):

1) the refusal to supply is possible to eliminate the undertaking seeking access,
2) access is indispensable (not merely desirable or convenient)
3) no actual or potential alternative
4) The firm has no objective justification to refuse

59
Q

United Brands

A

While such an undertaking in a dominant position must nevertheless be in a position to take steps that are reasonable and proportionate to protect its own commercial interests, such behaviour cannot be accepted if its purpose is specifically to strengthen that dominant position and abuse it, e.g. it cannot stop supplying a long-standing customer who abides by regular commercial practice, if the orders placed by that customer are in no way out of the ordinary.

60
Q

Microsoft

A

• The burden of proof of the existence of the circumstances that constitute an infringement of Article 102 is borne by the Commission. It is for the dominant undertaking concerned, before the end of the administrative procedure, to raise any plea of objective justification and to support it with arguments and evidence. It then falls to the Commission, where it proposes to make a finding of an abuse of a dominant position, to show that the arguments and evidence relied on by the undertaking cannot prevail and, accordingly, that the justification put forward cannot be accepted

61
Q

Before looking at whether an undertaking is ‘dominant’ it is necessary to determine the ‘relevant market’.

A

This has three aspects:
the product market
the geographical market
the temporal market

62
Q

Hoffman-La Roche v Commission

A

Very large market shared are evidence of the existence of a dominant position.

63
Q

United Brands v Commission

A

A market share of 40-45% showed dominance in a fragmented market where the nearest competitor had a market share of 16%.

64
Q

Abuse of domiannce examples

A

(1) Price Discrimination
* United Brands *Hoffmann La-Roche

2) Predatory pricing
Prices below Average Variable Costs predatory- Prices below Average Fixed Costs but above Average Variable Costs predatory if part of a plan to eliminate a competitor.
*AKZO

3) Rebates and discounts;
* Hoffmann La-Roche

4) Refusal to supply
¬ in order to exclude competitor from ancillary market
*Commercial Solvents

¬ in response to an attack on its commercial interest

*United Brands

¬ Refusal to supply and the essential facilities doctrine
*Oscar Bronner
Refusal to provide access abusive if:
(i) the refusal to supply is possible to eliminate the undertaking seeking access;
(ii) access is indispensable;
(iii) no actual or potential alternative; and
(iv) the firm has no objective justification to refuse

65
Q

Tetrapak

A

Art 101 and 102 operate independently. • Exemption under Art 101 does not mean that undertakings are immune from the application of Art 102:

66
Q

BRT v SABAM

A

ART 102 is directly effective

67
Q

Continental Can v Commission

A

To define product market you must look for:

those characteristics of the products by virtue of which they are apt to satisfy a need and are only limited interchangeable with other products.

1) satisfy a need
2) limited extent interchangeable

68
Q

United Brands

A

Suitability.

Demand substitutability requires consideration of to what extent a customer would be willing and, indeed, able to substitute the product in question for an alternative product.

In this case it was held that bananas are unique and no other fruit are acceptable substitutes.

69
Q

United Brands v Commission

A

Defined dominant position

A position of economic strength enjoyed by an undertaking which enables it to prevent effective competition between maintains on the relevant market

Position of dominance may enable the undertaking to affect competition. This could be done by using short-term price cuts.

Dominance is addressed in relation to relevant market.

70
Q

Establishing RPM (relevant product market)

A

1) Substitutability

71
Q

Hugin Kassaregister AB and Hugin Cash Registers Limited v Commission

A

Where a product has a number of range of uses, it is likely that relevant product market will be defined narrowly.

Company refused to supply spare parts to an independent company.

72
Q

Commission Notice on the Definition of relevant Market for the Purposes of Community Competition Law

A

RPM

If such a permanent, significant increase in relative price (5 – 10%) would result in customers substituting one product for another, the relevant market should be drawn to include both products. Example of soft drink, whether one would switch from orange juice to apple in rise to expense.

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