EU Law 3 Flashcards

Question

Article 102 TFEU Cases

Answer 1

1. United Brands v Commission - United Brands sold bananas and said the relevant product market was fruit but the EU Commission said bananas were seeds so the relevant product market was bananas, rather than fruits. Where goods or services have a high degree of interchangeability, they are within the same product market. Charging an excessive price because it has no reasonable relation to the economic value of the product supplied constitutes abuse. Note: many companies try to make their product market as broad as possible but Commission tries to narrow it down to show market dominance. 2. Napier Brown-British Sugar - Company tried to argue that the geography market was very wide and across the whole of the EU but CJEU said its relevant geographic market was only the UK. Note: time is also relevant 3. British Airways v Commission - CJEU looks for a big difference between the top company and ones down below. British Airways had 40% of the market and the next biggest was Virgin Atlantic which only had 5%. This was market dominance. 4. British Leyland v Commission - an undertaking can abuse its position through unfair prices or trading conditions. The car company charged more for left-handed driven cars than right-handed driven cars, which was abuse. 5. Volvo v Eric Veng - limiting production, markets or technical development. Volvo refused to release details on how their car parts were made and limited the market of second-hand replacement car parts so only Volvo could fix their cars. 6. British Airways v Commission - British Airways discriminated between trading partners when it came to how much commission travel agents would receive from British Airways. 7. Hoffman la Roche - making contracts with extra obligations. Hoffman la Roche tied in the companies for the long-term which was an unnecessary part of their contract. - SSNIP Test: what is the effect of a small but significant non-transitory increase in price on the market share on a product?

Answer 2

1. Craig and de Burca pointed out the uncertainty regarding whether the phrase “one or more undertakings” also covered oligopolistic markets, where a number of structurally independent firms operate in a parallel manner. 2. CJEU in Hoffman La Roche appears to reject this idea. Unilateral behaviour by a single firm occupying a dominant position was distinguished from interactive behaviour by a number of independent firms, which made up an oligopoly. 3. Italian Flat Glass case: structurally independent firms can occupy a collectively dominant position, such that certain types of oligopolistic behaviour can be caught by Article 102 TFEU. It is possible that 2 or more independent economic entities can be united by economic links making them hold a dominant position. Example is holding certain licenses that gives such power. The Court must analyse the market and the circumstances relied on. 4. Compagnie Maritime Belge - to find a collective dominant entity, the courts look for economic links or factors connecting the undertakings concerned, how they present themselves on the market, the structure of the market, the nature and terms of an agreement and how it is implemented. 5. Grencor - broader economic links may be sufficient to find collective dominance. If there is no contrary evidence, a large market share is a strong indicator of collective dominance. 6. Airtours - to find collective dominance, there must be transparency to monitor common policy between the undertakings, mechanisms to deter departure from the common policy and inability of competitors and consumers to erode the advantages of the common policy. Mechanisms to deter departure from the common policy alone is enough (IMPALA). 7. Viho - a parent and subsidiary will be treated as a single undertaking under Article 101 TFEU.

Answer 3

1. Hoffman la Roche - Abuse is when the behaviour of an undertaking in a dominant position influences the structure of the market, and weakens the competition, and uses methods different to normal competition to hinder competition in the market. Note: Scholars like Lang argue that abuse of dominance should be distinguished from normal competitive strategy. 2. Michelin - Abuse of a dominant position refers to conduct which, given the nature of the market concerned, could have the effect of hindering the remaining competition on that market. Here, the applicant gave their customers rebates from turnover from sales once a target was met. This put pressure on dealers to sell Michelin tyres. This had the effect of tying dealers to the applicant was it was not a transparent system. 3. Gilette - Abuse of dominant position can involve engaging in commercial activity that would be perfectly lawful behaviour on the part of a non-dominant undertaking. United Brands - The argument is this deprives them of the right to engage in such conduct since They have a special responsibility not to disturb market competition. 4. Akzo - EU Commission accused Akzo of predatory pricing after a smaller company complained. CJEU said abuse is based on objective criteria, stating that prices below average variable costs (AVC) are abusive. Prices above AVC but below average total costs may be abusive only if they are part of a plan to eliminate a competitor. Labour costs here were fixed which many argue is variable. Here, there was no objective justification for maintaining the low prices without competing quotations. Note: Many economic commentators question whether challenging predatory pricing of dominant undertakings may do more harm than good to consumers since there is a fine line between vigorous competition and predation. It may encourage them to raise prices and not engage with competitors unless absolutely necessary. 5. Commerical Solvents - Article 102 TFEU may apply even where a firm decides to integrate vertically and produce the finished product itself. Refusal to supply to a new customer will be abuse if the dominant undertaking controls an essential facility. Craig and de Burca point out that a rational firm will only seek to enter a downstream market where they are confident that they can produce the products more efficiently than their competitors. 6. Microsoft v. Commission - that only in exceptional circumstances would refusal to share IP rights amount to abuse. Something subject to IP protection must be shared: Where refusal would be for a product essential to exercise a particular activity on a neighbouring market, where refusal would exclude any effective competition on that neighbouring market, where the refusal prevents the appearance of a new product for which there is potential consumer demand.

Answer 4

- Article 106 seeks to strike a balance between allowing the state to play a role in the marketplace and ensuring that the competitive conditions of the market are not distorted. - Undertakings entrusted with the operation of services of general economic interest (SGEI) are subject to the Treaties. CJEU has interpreted this strictly (Ahmed Saeed). This may apply to unprofitable but publicly necessary services, e.g. regional air routes (Corbeau). - Article 106(2) excludes the application of Article 106 where it would be liable to obstruct undertakings that perform services in the general economic interest from performing their tasks (Commission v Netherlands). - The MS does not have to demonstrate that the grant of exclusive rights was the least restrictive means of achieving the objective pursued. - The exception is interpreted strictly (British Telecom) but is easier to satisfy where the SGEI is assigned exclusive rights but must accept unprofitable service obligations (Corbeau). - The exception applies as long as the development of trade would not be affected in a way that is contrary to the interests of the EU, showing that the interest of the EU supersede the interests of MS.

Answer 5

1. France v Commission and Saachi - Article 106(1) applies to (a) public undertakings and (b) “undertakings to whom the State has entrusted special or exclusive rights.” - CJEU approved the definition of the term “public undertaking” as one over which the State could exercise dominant influence. - This influence is presumed where the State held a major part of the subscribed capital, controlled the majority of the votes or could appoint more than half of the members of its administrative managerial or supervisory body. So, Artcle 106(1) applied to the Italian Broadcasting Authority since it was represented in its governing organ and could intervene in its activities. It was both public and retained a statutory monopoly. - Craig and de Burca says a nationalised industry that is privatised but retains a protected monopoly would be a company granted exclusive or special rights by the state under Article 106 TFEU. - MS must remove measures contrary to EU competition laws but the CJEU has has come very close to regarding the grant of exclusive rights as per se abusive (Hofner & Elsa). 2. Hofner & Elsa - German jobseekers were put in touch with state-licensed job agencies that had exclusive territorial rights in certain areas. By exercising exclusive rights, the agencies could not avoid infringing Article 102 TFEU. Germany had breached Article 106, since the state agencies would infringe Article 102 by exercising them. 3. Merci - CJEU mentioned that the undertakings enjoying exclusive rights under procedures laid down by the national rules were, as a result, induced to engage in abuse of a dominant position. Craig and de Burca point out that this means you could say that granting exclusivity leads to a temptation to price abusively so exclusive rights are illegal. 4. Traco - Modern Approach. You assume a prima facie breach of Article 106(1) where there is a grant of exclusive rights but you consider whether exclusivity may be objectively justified on the basis of Article 106(2). The exclusive right to carry post was given to Poste Italiana, violating Art. 102, and thus infringing Art 106.

Answer 6

- During the early years of the EU, MS were reluctant to reluctant to allow mergers to be regulated at EU level. - In British American Tobacco and Continental Chan, the CJEU used Article 101 and 102 TFEU respectively to regulate mergers. - In1989, legislation was finally adopted for merger control through Regulation 4064/89. - This Regulation was upgraded and mergers with a European dimension are now controlled by Regulation 139/2004.

Answer 7

1. The market power of the merger company must be assessed in terms of the product and geographical market. Aerospatialle Case argued that if the market is defined too narrowly there is an near-automatic finding of dominance. 2. "Commission Notice on the definition of relevant market for the purposes of Community competition law" shows how the Commission defines the relevant product market according to the principle of transparency. Commission looks at the products' characteristics, prices and intended use. 3. Commission carries out an analysis based on based on the concept of substitutability on the supply side and the demand side. They look at price variations in the recent past, studies on how demand is affected, the views of customers and competitors, consumer preferences and barriers to switching products. 4. The investigations identify the suppliers, customers and consumers to calculate the total market size and the market share of each supplier. 5. Airtours v Commission - if there is a claim of collective dominance, the Commission assesses the market to see if competition is significantly impeded by the undertakings. 6. Continental Cans - the Courts try not to define the market too narrowly. Product substitutability also plays a big role in this assessment (Tetra Pak). 7. Regulation 139/2004 has definitions used by the Commission and the CJEU applies the law in the same way. The CJEU does the same tests independently and is willing to correct errors of the Commission's assessment.

Answer 8

- Applies to “concentrations” (defined at Article 3) with a “Community dimension” (defined by reference to the thresholds in Article 1(2) or Article 1(3)). - “One-stop shop” principle: EU Commission is responsible for reviewing all mergers with an EU dimension, subject only to a review before the EU courts (Articles 21(2) and 21(3)). - 2004 Regulation brought changes to the merger control regime which were substantive, procedural and jurisdictional.

Answer 9

- Change in substantive test to be applied in the analysis of proposed mergers. - Before there was a dominance test, now there is a Significant Impediment to Effective Competition (SIEC) test. This is a hybrid of the dominance test and the Significant Lessening of Competition (SLC) test initially contained in the legislative proposal. - The test is a step away from static analysis of pre- and post-merger levels of competition and brings a focus on dynamic changes in competition. - It aims to provide merging firms with enhanced guidance so that they are in a position to anticipate the competitive issues raised by a proposed transaction – and also enables the Commission to assess transactions based on likely impact on consumer welfare.

Answer 10

- A concentration under Article 3(1)(a) applies to full mergers where two previously independent undertakings merge to become one new undertaking and Article 3(1)(b) applies to situations where persons who control one undertaking acquire “control” of another undertaking (Arjomari-Prioux/Wiggins Teape and Northern Telecom/Matra Telecommunications). - A concentration may also cover joint ventures to see if it is compatible with the common market. For example, two undertakings combine to engage in research and development/a project, or two competitors create a new entity. Debates on whether joint ventures should be regulated by Article 101 TFEU or Regulation 139/2004. - Behavioural aspects are covered by Article 2 of Regulation 139/2004 while the structural aspects are covered by Article 3(4) of the Regulation. - Does the joint venture have as its object or effect the coordinate of competitive behaviour of undertakings?

Answer 11

- Changes in deadlines to allow greater flexibility for Commission decisions, investigations, remedy proposals – and for companies filing merger notifications. - Increased the cap on fines and periodic penalty payments levied up to 1% of aggregate turnover for failure to supply sufficient and correct information and up to 5% of average daily aggregate turnover of the parties. - Introduced a pre-notification process to determine allocation of jurisdiction between the Commission and National Competition Authorities. This improves the effectiveness of the “one stop shop” principle, which is particularly important post-2004 enlargement. - EU Commission issued the Horizontal Merger Guidelines (2004), which outline the Commission’s view on non-coordinated and coordinated effects, and the Non-Horizontal Merger Guidelines (2008).

Answer 12

- Concept of coordinated effects followed a series of decisions where the Court considered proposed mergers and collective dominance under Article 102 TFEU. -

Answer 13

- Concept of coordinated effects followed a series of decisions where the Court considered proposed mergers and collective dominance under Article 102 TFEU. 1. Grencor - CFI upheld the Commission’s finding that the proposed merger would lead to collective dominance as between Grencor and another firm. CFI held that, particularly in the case of a duopoly, a large market share is, in the absence of contrary evidence, “a strong indication of the existence of a collective dominant position”. Structural links were NOT necessary for a finding of collective dominance. Broader economic links may be sufficient. 2. Airtours - to find collective dominance, there must be transparency to monitor common policy between the undertakings, mechanisms to deter departure from the common policy and inability of competitors and consumers to erode the advantages of the common policy. Mechanisms to deter departure from the common policy alone is enough (IMPALA). 3. Sony/BMG II Merger - EU Commission had previously cleared the Sony/BMG merger in 2004 because they were unable to find any evidence of coordinated effects. CFI annulled this decision. 4. Ryanair/Aerlingus Merger - EU Commission examined the non-coordinated effects of the merger. It would have combined the two leading airlines in Ireland, which are each other’s biggest competitor in the Irish market. EU Commission relied on its own evidence, including significant investigation, interviewing passengers at Dublin airport about their decision-making process when flying out of Ireland. This negated Ryanair’s main argument that it operated in a market of its own. For its customers the alternative to Ryanair was not to travel on another airline, but not to travel at all. The merger was prohibited.

Answer 14

- Article 4 allows the undertakings to inform the Commission (by way of reasoned submission) that the concentration may significantly affect competition in a market within a Member State which presents all the characteristics of a distinct market should therefore be examined, in whole or in part, by that Member State. - The reasoned submission is passed on to all Member States. Provided that the “chosen” Member State does not disagree with the proposition, the case may be referred to that Member State, where national competition law will apply to it. - Article 4 also allows undertakings to notify the Commission by way of reasoned submission, that the concentration should be examined by the Commission. - Article 9 allows the Commission to refer a merger to a MS authority.

Answer 15

EU Commission’s 2014 White Paper touched on possible improvements 1. Bringing acquisitions of noncontrolling minority shareholders into EU merger control assessments 2. streamlining case referrals 3. Exclude certain, non-problematic transactions from the Commission’s review - No. 1 responds to the concern that the Commission and National Competition Authorities should ensure that merger investigations are conducted in a manner which is more thorough and more firmly grounded in economic reasoning. - It acknowledges that market activities external to the principal transaction in question may have effects deleterious to competition in the market. - It support the spirit of the consumer welfare analysis underlying the SIEC test and the objective that the consumer be protected from anti-competitive effects of concentrations. - No. 2 builds on the 2004 Regulation procedural changes and seeks to further strengthen the due process guarantees built into merger proceedings. The Commission would have European Economic Area (EEA)-wide competence to review a transaction received via post-notification referral, with the aim of avoiding parallel reviews by the Commission and national competition authorities. - Both possible improvements are in the category of incremental change as opposed to any radical overhaul of the merger control regime as it is currently constituted, based primarily on the 2004 Regulation and the development of case law outlined above. - No. 3 would reduce costs and administrative burdens on businesses.

Answer 16

- Gender inequality started off as an economic concern because France thought it would be at a competitive disadvantage if equal work for equal pay did not apply at the same level of protection across MS. - Now, EU law protects against discrimination in many areas. - Articles 21 and 23 of the Charter of Fundamental Rights prohibits discrimination. - Article 157 TFEU is equal pay for equal work. It is a dual economic and social claim. - Trade unions can support workers bringing a case. - Recast Directive sheds light on it and defines direct and indirect discrimination. Harassment and victimisation is not allowed. Indirect discrimination may be justifiable. - Article 4 of Recast Directive is that there shall be no indirect or direct discrimination to pay based on sex. - "But for" test is used for direct discrimination -but for the sex, the employer would not have discriminated against them. It uses comparisons.

Answer 17

1. MJELR v WRC - all bodies of MS like the WRC must have regard to EU equality law so they can disapply contrary national law. 2. Defrenne v Sabena - Direct effect of Art 157 was first recognised. Now, there is an Equal Pay Directive. 3. Allonby - CJEU adopted a wide meaning of worker to prevent MS from reclassifying people as self-employed to avoid the equal pay for equal work provision. 4. Defrenne I - a scheme of both public and private pension did not constitute pay, neither does social security payments. Article 2 of Recast Direct further defines pay including direct or indirect cash or benefit-in-kind. Pay also includes maternity leave, travel allowance and redundancy. 5. Bilka - CJEU extended the concept of “pay” to cover a supplementary occupational pension scheme. 6. Social Security Directive: MS can have different retirement ages for men and women for social security pensions. 7. Danfoss and Article 19 of Recast Directive - where it is difficult to prove direct discrimination, that burden of proof may shift to employer instead. Here, the employer calculated wages and bonuses in a way that they would not know how it was allocated. Onus is on employer once employee shows that pay discrepancies exist. 8. Land Brandenburg - all rights connected with employment contracts must be ensured during statutory maternity leave.

Answer 18

Where differences (in pay) are based on non-gender factors and are likely to benefit one sex over another, it could be indirect discrimination. - Framework Directive exempts: Public security, maintaining public order, preventing crimes, protecting health and rights. 1. Jenkins - part time workers received less remuneration but sex discrimination was found to exist as women were more likely than men to be part time workers in that business. 2. Monika Botel - paid leave or overtime for attending training courses is Pay that Part time workers were not automatically entitled to. Women were more likely to work part time so it was an indirect discrimination. 3. Enderby - Argument that speech therapists did equal work to pharmacists but were paid differently. Since speech therapists were more likely to be women, this was discrimination that had to be justified based on objective criteria not related to sex. 4. Art 15 of Directive 2006/54 - when a woman returns from maternity leave (or man from paternity) they are entitled to return on the same conditions and benefit from any improvements. This includes maternity-related illnesses (Brown). 5. Herrerro - maternity leave should be taken into account when calculating seniority for the purposes of pay and promotions.

Answer 19

1. Bilka - discrimination may be objectively justified if the employer's measures to a real need on the part of the undertaking, are appropriate to achieving the objective pursued, and are necessary to achieve that objective, and where the differential treatment is based on objective factors, like length of service and experience. 2. Rinner-Keuhn - justification must be assessed in light of all the relevant circumstances. If a justification would tend to favour men more than women then the practice will still be discriminatory. 3. B.F. Cadman - if a complainant raises serious doubts as to whether the length of service as a criterion for increased wages served a legitimate aim, then the burden shifts to the employer to prove that it does. 4. Association belge des Consommateurs Test-Achats - Female drivers usually paid lower insurance reduced premiums than their male counterparts. Since actuarial and statistical factors regarding sex were habitually relied upon in the provision of insurance services when Directive 2004/113/EC was adopted, the EU was entitled to implement the rule of unisex premiums and benefits in a gradual manner. Now, insurers must base their calculations on other relevant risk factors and statistics that are not gender-specific unless it is clear and specific to an insurance product, which is narrowly interpreted. 5. Male Midwives Case - CJEU endorsed the limited access for men in the midwife profession due to the personal sensitivities involved in the relationship between a midwife and a patient. 6 Kalanke - CJEU did NOT like the idea that where candidates of both genders were equally qualified and short-listed for a job, priority should be given to the underrepresented group.

Answer 20

- Article 19 TFEU prohibits discrimination on many grounds - sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. - Article 19 TFEU extends the EUs power to legislate in the field of equal treatment generally. - It led to the Race Directive 2000/43 to combat direct or indirect discrimination and harassment based on race and ethnic origin. Under Article 2, an instruction to discriminate also constitutes discrimination. It applies to (inter alia) the public and private sectors, employment, self-employment, all vocational training, work experience and working conditions. It extends to social protection, healthcare, social advantages and education. - It does NOT apply to national immigration laws discrimination necessary because of the nature of the job or for positive discrimination (Lommers). - Framework Directive 2000/78 covers religion, belief, disability, age and sexual orientation discrimination. Discrimination must be positive discrimination or it must be objectively justified by a legitimate aim and the means should be appropriate and necessary. Using actuarial calculations to set the age of entitlement for occupational social security schemes is allowed if objectively justified, appropriate and necessary. 1. Barber v. Guardian - it was contrary to EU law to maintain different retirement ages for male and female workers for occupational pension schemes were concerned. 2. Mangold - A Directive applied, even before the expiry of the deadline for transposition and even if Germany had an extension of time to implement the Directive since non- discrimination on grounds of age is a general principle of Community law. This might extend to other discrimination. Chalmers writes the Court adopts a strict standard of review when Member States seek to depart from the general obligation not to discriminate.