Competition Law Flashcards
What does Art 101 prohibit (4 definitional elements)? What is the status of a prohibited agreement?
- Agreements, decisions and concerted practices (i.e., COLLUSION)
- Between UNDERTAKINGS or by associations of undertakings
- Which may affect inter-state TRADE
- And have as their object or effect the prevention, restriction or distortion of COMPETITIVE in the common market
Art.101(2) - an anticompetitive agreement is legally void and therefore unenforceable?
What does the term “undertaking” include?
Includes any entity engaged in any economic activity, including non-profit organisations.
What does the term “agreement” refer to? Two kinds of agreements that do not qualify for purposes of Art. 101?
Any formal or informal concurrence of wills between two companies consisting of, at minimum, one company acting anti-competitively and another knowingly acquiescing (unilateral conduct is not an agreement, but falls within Art. 102).
Excludes (i) collusion between a parent and its subsidiary where the subsidiary has no real freedom to determine its course of action which is covered by Art 102; and (ii) collective agreements between employers and workers that pursue social policy objectives.
When does a recommendation by an industry body constitute a “decision” for purposes of Art.101?
Art. 101 covers decisions by associations or undertakings. A recommendation by an industry body will fall within this definition if
- Previously, recommendations have generally been FOLLOWED by members of the association and
- The recommendation will have a significant IMPACT on the competition in that market if implemented
What is a “concerted practice” (3 elements)? What 2 kinds of behaviour does the term exclude?
- A form of coordination between undertakings
- Where a proper agreement has not been concluded, but
- Practical cooperation is knowingly substituted for the risks of competition agreement.
Excludes (i) any behaviour which is a normal feature of the market; and (ii) merely adapting to existing or anticipated conduct of competitors without any direct or indirect contact between undertakings
When will collusion “affect inter-state trade”? Examples?
Where it appreciably distorts or has the potential to appreciably distort normal patterns of production and distribution of goods and services - e.g. exclusive distribution agreements, franchise exclusivity
What is the difference between vertical and horizontal collusion? 2 differences?
Vertical = within the supply chain (banning parallel imports, passive selling)
Horizontal - groups of companies in the same market (e.g. price-fixing, limiting sources of supply)
Horizontal is usually more distorting, and the de minimis thresholds are lower.
What are the defences to an assertion of anti-competitive agreement
- De minimis
- Art. 103(1)
- A block exemption
What is the de-minimis defence and 3 requirements does it impose? What is the effect of not meeting the de minimis threshold?
The defence operates where the allegedly anti-competitive behaviour has no appreciable effect on inter-state trade.
Para 8 NAOMI -
- COMBINED MARKET SHARE of the parties to the agreement is less than 10% (for horizontal agreements) or less than 15% of each of the relevant markets affected (for vertical agreements)
- No hardcore restrictions and
- The agreements are not intended to have an anti-competitive effect
If threshold is not met, cannot use defence - but the agreements are not automatically anti-competitive.
What defence is prescribed by Art. 101(3) (4 elements)?
An agreement is not anti-competitive if it
1. Improves the production and distribution of goods OR promotes technical and economic progress; AND
2. Allows consumers a fair share of the resulting benefit
and does NOT
3. Impose any restrictions which are not indispensable for achieving the permitted objectives or
4. Create the possibility of substantially eliminating the competition from the relevant market
What is the block exemption defence (2 elements)?
Reg 1/2003 - Created a block exemption from Art. 101 for vertical agreements where (i) none of the undertakings to the agreement have a market share greater than 30% and (ii) there are no hardcore offences (such as minimum resale price fixing, restriction on end-user sales)
What is one effect of the rule of reason in Art.101?
An agreement that seems anti-competitive may actually be pro-competition because it may be acceptable to give a firm time to break into a market and establish itself to compete effectively before it is ordered to open up
What does Art. 102 prohibit (4 definitional elements)?
- One or more undertakings
- With a dominant position in the market
- Abuse that position
- And the abuse may affect trade between member states in the common market or a substantial part thereof
What is the purpose of the Relevant Product Market analysis? What are the 3 relevant inquiries?
To define the relevant market in which the allegedly dominant undertaking is operating for purposes of Art. 102 by reference to the substitutability of products in that market - the more interchangeable products are, the less likely a product is to be dominant.
- Demand substitution - How willing would a consumer be to purchase another product if the product in question could no longer be obtained at the same price/quality? If price increases by 5-10% and customers do not switch, product is not interchangeable.
- Supply substitution - how easily could a competitor product a competing product?
- Any alternative methods to determine RPM - e.g. multiple product uses, spare parts market, whether product has different market strategies in different markets
What is the purpose of the Relevant Geographical Market analysis? What are the 2 possible definitions?
To define the relevant market in which the allegedly dominant undertaking is operating for purposes of Art. 102 by reference to the geographical area.
- Whole of the internal market or a substantial part of it; or
- Area in which the undertakings concerned are (i) involved in the SUPPLY AND DEMAND of products of services; (ii) in which the conditions of competition are sufficiently HOMOGENOUS for all traders; and (iii) these conditions are sufficiently different from NEIGHBOURING areas to the volume of trade in an area where the volume of trade in an area where trading conditions are the same for all traders
