EU - Competition I Flashcards
This flashcard deck was created using Flashcardlet's card creator
Art 3(3) TEU
The Union shall establish a highly-competitive social market economy
Art. 101 TFEU
Prohibition of business agreements that may affect trade between MS, and have as their object/effect the prevention, restriction or distortion of competition, e.g.
- price-fixing agreements
- limit or control production/sources of supply
Horizontal agreement
Agreements between competitors operating at the same level of the Market
Vertical agreements
Agreements between firms operating at different levels, e,g. supplier and distributor
Quinine Cartel
Oral/gentleman’s agreements are capable of being agreements contrary to Art. 101 TFEU
IAZ NV International Belgium
Agreements between trade associations may also breach Art. 101 TFEU, even if they are not legally binding
Wouters v Algemene
Regulatory rules promulgated by professional bodies may breach Art. 101 TFEU unless they are reasonable
Dyestuffs
- Concerted practices between undertakings that falls short of informal agreement, but which knowingly substitutes practical cooperation between them for risks of competition, will be capable of breaching Art. 101 TFEU
- Breach of Art. 101 will be assumed in cases of parallel conduct which produces conditions that would not occur but for collusion between undertakings
Suiker Unie
Contact between the parties and subsequent similar practice will be sufficient to constitute an agreement in breach of Art. 101 TFEU
Woodpulp
- Open pricing structures may rebut presumption of price fixing/cartel
- Agreements do not need to be subject to EU jurisdiction to affect intra-Community trade; they must just be implemented in EU
Hopner and Elser v Macrotron GmbH
An undertaking is any entity, whether a natural or legal person, engaged in economic activity
Centrafarm v Sterling
- There must be two undertakings for provisions of Art. 101 to apply
- Undertakings must be separate, i.e. parent/subsidiary companies or principal/agent are one undertaking
Consten and Grundig
- Court will look objectively at the terms of the agreement to determine if it distorts competition (intention of the parties is irrelevant)
- If agreement contains restrictions expressly prohibited under Art. 101(1) TFEU, it will automatically be deemed anticompetitive, e.g. partitioning internal market or price-fixing
- Agreements that may potentially affect intra-Community trade will still breach Art. 101 TFEU
- Impact of agreement on intra-Community trade does not have to be negative, i.e. reduce trade; increased trade is still deemed a distortion, and hence a breach of Art. 101 TFEU
STM v Maschinenbau Ulm
- Agreement may also breach Art. 101 if it has an anticompetitive effect in view of:
- nature/quantity of products concerned
- market shares of parties concerned
- isolated vs. network of similar agreements
- severity of clauses within agreement
- opportunities for competitors to import/export in parallel (e.g. ‘grey’ imports) - Agreement must affect, or be likely to affect, the pattern of trade between member states
- Art. 101(3) TFEU individual exemption may be used where the benefits of the breach outweigh the negative effects
Dutch Choice Cooperative
Agreement between national producers still affected intra-Community trade, because it sealed the market off to external competitors
Art. 101(2)
Any agreement found to breach Art. 101(1) TFEU is held to be automatically void, so
- entire agreement may be deemed void
- offending clauses may be severed by national courts, as Art. 101 is directly effective; but only if it is possible to retain substance of original agreement (Chemidus Waverin)
Exceptions permitting a breach
- Notice on Agreements of Minor Importance (NAOMI)
- No Appreciable Affectation of Trade (NAAT)
- Regulation 330/2010 (block exceptions for vertical agreements)
- Art. 101(3) TFEU (individual exemptions)
Notice on Agreements of Minor Importance (NAOMI)
- Horizontal agreements: combined market share must not exceed 10%
- Vertical agreements: neither party may have a market share in excess of 15% in any relevant market
- Network of agreements: threshold is set at 5% market share
N.B. If agreement contains expressly prohibited clauses, NAOMI will not excuse a breach
No Appreciable Affectation of Trade (NAAT)
- aggregate market share of parties may not exceed 5%
AND - horizontal agreements: aggregate turnover may not exceed €40m
- vertical agreements: supplier’s turnover may not exceed €40m
N.B. Agreements that contain express prohibition clauses will still be exempt from breaching Art. 101 TFEU
Regulation 330/2010 - Block Exemptions
For Regulation 330/2010 to apply, there must be:
- a breach of Art. 101 TFEU
- the agreement must be vertical (Art. 2(1))
- supplier’s market share must not exceed 30% (Art. 3(1))
- agreement does not contain any ‘blacklisted’ restrictions, e.g. territorial bans on sales, price-fixing (Art. 4(1))
Art. 101(3) TFEU
Individual exemptions will apply if the agreement:
- improves production/distribution of goods OR promotes technological/economic progress
AND
- allows consumers a fair share of the resulting benefit
- does not impose unnecessary conditions on either party
- does not eliminate other competition
N.B. Art. 101(3) TFEU admits existence of the breach, but claims benefits outweigh the negative effects
Volk v Vervaecke
An exemption under NAOMI or NAAT will apply where the breach is so minor (de minimis) as to have no noticeable impact on the market
Sanctions/options in the event of a breach
- investigation by Commission under Regulation 1/2003
- penalties of up to 10% of previous year’s global turnover
- injured third parties may sue for damages as Art. 101 TFEU has direct effect (BRT v Sabam)
- leniency notice if whistleblower comes forward/non-whistleblower cooperates fully (Hoffman La Roche)
- application for JR by parties concerned in the event of disagreement with Commissions findings (Art. 263 TFEU)
