Competition - Collusion - Art 101 Flashcards
1
Q
Aims of EU Competition Law
A
- To promote a competitive market economy
- To prevent barriers to the integration of a single, internal market.
2
Q
Article 101 TFEU
A
Prohibits anti-competitive collusion between individuals, companies and other undertakings.
3
Q
Article 102 TFEU
A
Prohibits the abuse of a dominant person within a market.
4
Q
Regulation 1/2003
A
Modernisation Regulation – concerned with processes of enforcement of Art 101 and 102
5
Q
Regulation 330/2010
A
Grants block exemptions for ‘vertical agreements’ which would otherwise breach Art 101 TFEU
6
Q
Structure of Article 101 TFEU
A
7
Q
Key Elements of Art 101 TFEU
A
8
Q
Hofner v Else [1991]
Undertakings
A
- ‘Undertakings’ encompasses every entity engaged in an economic activity
-
regardless of
- the legal status of the entity and
- the way in which it is financed
-
regardless of
9
Q
MOTOE v Elliniko Dimosio [2008]
Undertakings
A
Undertakings can include organisations that lack a profit motive.
10
Q
Diego Cali [1997]
Undertakings
A
- An entity will not be considered to be an undertaking where it is exercising the official authority of the State.
- Company given exclusive concession by port authority of Genoa to monitor/clean up oil spillages. CoJ held as performing a regulatory function on behalf of the state. Wasn’t engaged in an economic activity in which services were being offered on the market. Therefore, not an undertaking.
11
Q
2 Problems with Article 101(1) TFEU
A
- Drafted so widely it catches a wide variety of contracts which contain some type of restraint.
- Contracts and agreements often complex – contain clauses that increase competition and clauses that restrict it.
- Interpretation of Art 101(1) and Art 101(3) entails balancing such factors and studying relevant market closely.
12
Q
3 types of Collusion under Article 101(1) TFEU
A
- Agreements between undertakings
- Decisions by associations of undertakings
- Concerted Practices
13
Q
Commission v ANIC [1999]
A
Not necessary for the Commission to identify precisely which form of collusion exists before deciding that a breach of Art 101(1) has taken place.
14
Q
Hercules Chemicals NV [1991]
Agreements between Undertakings
A
- “[I]t is sufficient if the undertakings… have expressed their joint intention to conduct themselves on the market in a specific way”
- Here, a gentleman’s agreement held to fall within Art 101
15
Q
Tepea [1978]
Agreements between Undertakings
A
Oral agreements between undertakings may fall within Art 101 TFEU
16
Q
AC Treuhand [2008]
Agreements between Undertakings
A
- Tacit acquiescence between undertakings falls within Art 101
- Consultancy firm contributing actively and intentionally to a cartel held to participate in their agreement even though wasn’t party to a written agreement with members of cartel.
17
Q
Bayer AG [2000]
Agreements between Undertakings
A
Unilateral conduct by an undertaking does not constitute an agreement within Art 101.
- Manufacturer of medicines held to have acted unilaterally when it imposed an export ban on French/Spanish wholesalers. Wholesalers had not acquiesced and there was no agreement between them and manufacturer.
18
Q
Vertical agreement
A
Agreements between undertakings at different levels of trade and industry
e.g. manufacturer and distributor, distributor and retailer
19
Q
Horizontal agreement
A
Agreements between undertakings at same level of trade and industry,
e.g. 2 manufacturers
20
Q
Associations of Undertakings
A
- Associations that undertake activities such as promotional campaigns, public education, market research, and setting of standards, e.g. Trade associations or Co-operatives.
- Decisions that fall within Art 101(1) include both binding and non-binding recommendations.
21
Q
Vereniging van Cementhandelaren [1972]
A
Non-binding recommendations by associations of undertakings can be restricted by Art 101.
- System of guide/target prices adopted by a trade association of cement wholesalers was restricted by Art 101. Notwithstanding contention by association that members were free to negotiate their own prices for transactions
22
Q
ANSEAU-NAVEWA [1983]
A
Non-binding recommendations by associations of undertakings can be restricted by Art 101.
- Recommendation by trade association for water suppliers that members take account of a system of conformity checks and labels for washing machines and dishwashers. Held this was prohibited by Art 101 as resulted in checks being carried out by members to determine whether machines were fitted with conformity label.
23
Q
ICI Ltd v Commission (Dyestuffs) [1972]
Evidence of concerted practice
A
Existence of a concerted practice may be inferred from the evidence.
- Prices raised by similar amounts on 3 occasions
- Rate of prices increases were the same
- Price increases were on the same products
- Occurred on almost the same day.
24
Q
ICI Ltd v Commission (Dyestuffs) [1972]
Concerted Practices
A
- “A form of co-ordination between undertakings which… knowingly substitutes practical co-operation between them for the risks of competition”
25
A. Ahlström Oy v Comm’n (Wood Pulp)
**Parallel behaviour** should **not be seen as evidence of a concerted practice** unless it provides the **only plausible explanation**
26
Société Technique Minière Test
Effect on Trade Between Member States
* Must be possible to **foresee** that the **agreement may have an influence**
* direct or indirect
* actual or potential
* on the **pattern of trade** between MSs
* **Consequently, the effect need only be indirect, and the mere potential to affect trade, will suffice.**
27
**Société Technique Minière [1966]**
**Object v Effect**
* Object and Effect are **alternative requirements** and **not cumulative**.
* Therefore, only have to prove that the **object** of the agreement is anti-competitive **OR** that the agreement will have an anti-competitive **effect**. Do not have to establish both.
* **Object should be considered first** as no need to examine the effect if the object is found to be anti-competitive
28
Société Technique Minière [1966]
Object
**Object** is **established** by looking at the **purpose in economic context**
29
Beef Industry Development Society [2008]
Object
* When establishing the object of an agreement, the purpose must be determined **objectively**, and **by its very nature damage competition**.
* Plan to reduce overcapacity in beef processing market by reducing number of beef and veal processors. To be achieved by **agreements where certain processors shut down their processing plants and agreed to stay out of the market in return for compensation by undertakings that were to remain in the market**. CoJ held object was to reduce competition and this was **patently anti-competitive**. Subjective reason to avoid a crisis by reducing overcapacity was irrelevant.
30
Grundig [1966]
Object
**No need to consider the actual effect of an agreement when determining whether that agreement is prohibited by reason of its object.**
31
Groupement des Cartes Bancaires [2014]
– the **requirements** for an **infringement by object** must be given a **strict interpretation**. **Negative effect** on competition **must be so likely** that there is **no need to examine actual effect.**
32
European Night Services [1988]
Effect
* Must take account of actual conditions in which agreement functions. In particular,
* **Economic context** in which undertakings operate
* **Products or services covered** by agreement
* **Actual structure of the market**
* **No need to take these into account, if there are obvious restrictions**.
33
Art 101(1) Black List
34
Purpose of Ancillary Restrictions
Defences
**Ancillary restrictions** deal with situations in which **an agreement promotes competition, but has anti-competitive aspects.**
35
Société Technique Minière [1966]
An **exclusive distribution agreement** with an undertaking in another MS **for the purpose of opening up a new market promotes competition** so is likely to be an **ancillary restriction**.
36
Pronuptia [1986]
**Franchise agreement** placing **restrictions** on the **freedom of both parties to compete** is an **ancillary restriction**.
* Franchise agreements **facilitate competition by enabling independent businessmen to establish themselves in the market**.
* **Anti-competitive elements** in franchise agreement **necessary to protect franchisor**.
37
Rule of Reason defence
To establish whether an agreement is an ancillary restriction, **weigh pro-competitive effect of an agreement against anti-competitive effect.**
Where **pro-competitive outweighs**, there has been **no infringement under para 1 of Art 101(1)** as **does not restrict, contort competition**.
38
Métropole Télévision [2001]
**Rule of Reason defence rejected by COJ.**
No obligation to weigh pro-competitive v anti-competitive under para 1. Should be considered under para 3.
**Need to consider ancillary restrictions**
39
Ancillary Restrictions Test
Metropole Television
* **Anti-competitive restrictions are lawful** where:
* **objectively necessary** to **allow a pro-competitive agreement to function** and be **given effect**.
* **Restriction is proportionate** in the sense that its duration and scope must not exceed what is necessary to implement the operation.
40
Mastercard v Commission [2014]
* **Ancillary restriction is objectively necessary** only **where** the **main operation would not be possible to carry out in the absence of the restriction in question**.
* Not suffice if it’s simply more difficult or less profitable.
41
Völk [1969]
*de minimis* principle
Defences
* An agreement will **not be prohibited** by **Art 101** where it **does not have an appreciable effect** on either **competition** or **inter-state trade**.
* German producer of washing machines had a **negligible** share of the market. COJ held that the **agreement**, considering the weak position of undertakings, would have an **insignificant effect** on the market, **and not be a breach** under **Art 101 TFEU**.
42
**Commission Notice on Agreements of Minor Importance (‘De Minimis Notice’)**
* **Horizontal agreements - Aggregate** market share must not exceed **10%** to be considered **insignificant**
* **Vertical agreements** - Market share of **each party** must not exceed **15%** to be considered **insignificant**
* **Soft law** so these are **not legally binding** and **guidelines only**.
43
Conditions for Individual Exemptions under Art 101(3)
* Agreement must satisfy these conditions:
* 1.) **Must improve production or distribution of goods** or **promote technical or economic progress**
* 2.) **Must allow consumers a fair share of resulting benefit** – e.g. wider choice of goods, better living conditions. Consumer refers to ultimate user and all parties down supply chain.
* Agreement must not:
* 3.) **Contain dispensable restrictions.** Restrictions must restrict competition only in ways that are **necessary** to **achieve the pro-competitive effect**
* **4.) Not substantially eliminate competition** in relevant market.
* Both sets of conditions must be met for **Art 101(3) to apply**.
44
Article 101(3): Exemptions
**Block exemptions** – apply to **specific categories of agreement**. If fall into this category, **have exemption**. **Provided for by secondary legislation**. If not, no exemption will be available.
**Individual exemptions** – apply where i**ndividual agreements satisfy the conditions in para 3 art 101 TFEU**. **Guidance** for how these conditions should be applied **provided by Commission Guidance on the Application of Art. 81(3)**
45
Structure of Block Exemptions
Regulation 330/2010
* Art 2 **exempts all vertical agreements**. The rest of the regulation sets out circumstances where the exemption will not apply.
* **Art. 3(1): Market share** – Whole agreement will lose exemption if market share of either party exceeds 30%
* **Hardcore restrictions** - Whole agreement loses exemption if its object is one of the restrictions contained in that article. E.g.
* **Restricting buyer’s ability to determine sale price** (Can set max/min price)
* **Restricting territory into which buyer may sell goods/services** (can restrict to exclusive territory or exclusive customer group)
* **Excluded restrictions** - Offending term only loses exemption when they contain one of the obligations in that article E.g.
* Non-compete oblligations
* Terms restricting buyer’s ability to trade post-agreement
46
Regulation 1/2003
The Modernisation Regulation
* System of **prior notification abolished** – no need to apply to Commission for exemption.
* **Individual exemption** if agreement satisfies Art. 101(3)
* **National Competition Authorities and national courts can enforce**
47
Fines under Regulation 1/2003
* **Para 2 Art 101** – **agreement prohibited** by Art 101(1) is **automatically void**.
* **Arts. 23 & 24 Regulation 1/2003** –
* Maximum fine for **infringing Art 101 or 102 TFEU is 10% of total overturn in previous business year**
* Maximum fine for **failing to co-operate with an investigation** **is 1% of total overturn in previous business year**
48
Courage Ltd v Crehan [2001]
Damages
**Damages can be awarded for losses caused by contract/conduct that infringed Art 101.**
49
Manfredi [2006]
Damages
* **Any individual can claim compensation** for harm suffered where there is a **causal link between harm and an agreement/practice prohibited by** **Art 101**.
50
Art 3 Directive 2014/104
**Right to full compensation now provided for by.**
51
Art 11 Directive 2014/104
Provides that all undertakings can be jointly and severally liable
