EU Competition Law Flashcards
Aims of comp law
Promote competitive market
Enhance eu’s performance in the global sphere
Contribute to the integration if the internal market (eliminating barriers)
Objective of EU competition law
- constructed to ensure the maintenance of the common market
- help to achieve a single market of integration
- encourage economic activity amongst small and medium companies
- maximize efficiency by allowing the free flow of goods and resources
Who does Art 101 apply to?
Aimed at private bodies / undertakings not dealing with government or public sector
What is the purpose of Art 101?
Prevent any restrictive practices which may have an effect on competition in the EU - specific activities under (a) - (e)
Categories:
agreement of undertakings, decisions of undertakings associations and concerted practices that
Art 101(1) : prohibition
- nature of agreements – agreements between undertakings; decisions by associations of undertakings; concerted practices
- affect trade – between member states
- object or effect – prevention; restriction; distortion of competition
Art 101(2)
Any agreement or decisions prohibited pursuant to art 101 (1) shall be void
Art 101(3) : exemptions
4 cumulative conditions - not alternative but need to have them all to take measure out of art 101:
1) the agreement must contribute to the improving the production or distribution of goods or contributes to technical or economical progress
2) consumers may receive fair share if resulting benefit
3) negative condition- restrictions which are not indispensable to the attainment of these objectives
4) the possibility if eliminating competition in respect of a substantial part of the products in question
Art 102 TFEU
Involves one company abusing a strong position in the marketplace in which it was working
Applies where individual organizations have a near monopoly position or share an oligopolistic market with small number of other companies and taken unfair advantage of this position to the detriment of the market other companies and end consumers
Abuse of dominant position elements:
- market
- dominance
- abuse
- affect competition between MS
Hilti AG v Comission (1994)
Relevant product market is defined as in relation to characteristics are apt to satisfy need and are available to an extent to other products - market of nail guns - problem if Hilti was abusing dominant position in the market
Dominance
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 giving it the power to behave to an appreciable extent independent of competitors, customers and consumers
Tetra pack v Commission (1980)
Found that this company had dominant position in market in the design of carton packaging. There was a dominance in the market but justified by IP rights playing a role here.
Abuse
Dominance not enough need of abuse of dominant position - tetra pack case
Affect competition between MS
Case: British Leyland v Commission (1986)
Concerned excessive fees for certificate approval for left handed driver motor vehicle design without economic justification - court held : not necessary to establish specific effect on trade but evidence that potentially this type of certificate would affect trade between MS
Role of commission and task under art 105 and regulation 1/2003
Ensuring that competition in the EU is not distorted by companies setting up their own rules and obstacles to trade which the EU is trying to abolish through free movement of goods provisions
Commercial solvents v commission
-ECJ held that the prohibitions in 101 and 102 must be interpreted and applied in the light of art 3(d) which provides that the activities of the community shall include the institution of a system ensuring that competition is not distorted
Primary court in competition law
General court
Courage v Crehan
Stresses importance of competition law in political and constitutional order
Application of exemptions
Individual exemption– application to the comission for a decision as to whether the agreement falls within art 101(3) – REMOVED BY REG 1/2003
Comfort letter – informal opinion from the commission that the agreement does not breach art 101 – ALSO REMOVED BY REG 1/2003
Block exemption blanket exemptions in certain industries passed by regulation- saves commission time by allowing a blanket exemption in industries where it is recognized that the majority of agreements should be exempted for example certain types of vertical agreements
Secondary legislation
1/2003
Changed the existing system of individual notification and comfort letters (exemptions) – made article 101(3) directly effective and it allowed companies to resolve any problems in national courts of MS
- abolition of the practice of notifying business agreements to the commission
- empowerment of national competition authorities and courts
- European competition network
ICI v commissions (dyestuffs)
Court of justice defined a concert practice as a form of coordination between enterprises that had not gone to the level of true contractual agreement but has cooperated for the risks of competition.
Intro to comp law question
Generally mentioned in art 3(d)TFEU it refers to establishing competition rules necessary for the functioning of the internal market
Sugar cartel case
Established the meaning of a concerted practice which was the action that allows competitors to fix a position in the knowledge of what others are going to do
Consten case
Established that
- Art 101 could apply to vertical agreements
- in this case it was the agreement that harmed the single European market by an attempt to repartition along national boundaries
Examples of what is prohibited under Art 101
- direct or indirect fixed purchase prince or selling prices
- limits or controls to production, markets, technical development or investment
- share markets or sources of supply
- putting trading partners at a disadvantage by applying dissimilar conditions to equivalent transactions with other partners
- make contracts subject to the acceptance of other parties supplementary obligations
Exemptions from Art 101
If an agreement fulfills these 4 conditions then not to be declared void
1) agreement contributes to the improving production of distribution of goods
2) the agreement allows consumers a fair share of the benefit
3) agreement does not impose conditions that are not necessary
4) agreement does not allow undertakings to eliminate a substantial amount of competition
Previous three ways of gaining an exemption
Individual exemption
Comfort letter
Block exemption
- regulation 1/2003 made art 101(3) directly effective and removed the comfort letter exemption and individual exemption
Art 102 requirements
- an undertaking
- a dominant position
- abuse of that dominant position
- effect on trade between member states
If all of these are present then there is a breach of art 102
United brands case (Chiquita Bananas)
Abused their dominant position in the market in regards to sales of bananas - charging different prices and sometimes refusing to sell;
Bananas were different enough from other fruit to not be cross substitutable therefore narrow market
Definition of dominant position – position of economic strength which allowed for:
- dominant undertaking to hinder effective competition
- undertaking to act independently of its competitors and consumers
In order to establish market need to look at two things
Relevant product market: similarity of your product to other products and the ability to substitute your product for other similar products
Geographical market: need to consider how large a geographical area the company operates in - must be common market or substantial part of it
