EU law - Week 5B Flashcards
Is “agreement” (oral, formal or gentlemen’s) necessary for there to be a violation of Article 101(1)? Which case is it?
- When there is a concerted practice, it was irrelevant for illegality under Art 101 TFEU that there was no agreement.
- ICI Ltd v Commission Dyestuffs case (manufacturers raised prices at the same time)
What is the difference between oral, formal and gentelemtns agreement?
Oral and formal are binding, gentlemen not
What is the difference between oral, formal and gentlemen’s agreements?
- Formal agreement is written down binding agreement between two concerned parties
- Oral agreement is spoken binding agreement between two concerned parties
- Gentlemen’s agreement is not legally binding only according to social or moral practice.
Does a status as a public corporation exclude it from the scope of entities bound by EU competition rules (undertakings)? Which case?
- Höfner & Elser, par. 21 -23 reemphasizes the position of the law that public status (and public financing) is irrelevant for determining whether or not an entity is an undertaking. What matters is the function performed and whether it constitutes economic activity. As pointed out in para 22, a function that is not necessarily carried out by public entities [and is therefore not an essential State task] falls within economic activity.
- All entities engaged in economic activity are undertakings bound by EU competition rules. (Art 106 TFEU reinforces this by making clear EU competition rules also apply to public enterprises subject to conditions in Art 106TFEU for bodies operating services of general economic interest like the Dutch Railways). The UvA by leaving its non-profit public (and thus non-economic) “ordinary” task of educating (Dutch) students and offering education on the market - entering into the commercial service market of giving trainings to Dutch lawyers (in competition with other service providers) would most likely be seen as an undertaking within the meaning of EU competition law.
How does the Court of Justice define a “dominant position”? Which article and cases?
Article 102 TFEU
- …a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained in the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately its consumers.’- United Brands v Commission (ECJ,1978, para 65)
- …power to behave independently without taking into account [interests of] other competitors, purchasers or suppliers … [Because of the dominant entity’s] … share of the market or … availability of technical knowledge, raw materials or capital…[or other resources]” - Continental Can Co. v Commission (1973)
What is the first step that has to be taken before it can be established if there is a dominant position?
1st step- Defining the Market
- “…The objective of defining a market in both its product and geographical dimension is to identify those actual competitors of the undertakings involved which are capable of constraining those undertakings behaviour and preventing them from behaving independently of effective competitive pressure …market definition makes it possible to calculate market shares that would convey meaningful information regarding market power for purposes of assessing dominance …” – Commission notice 97/C 3722/03 of 1997
- Put simply, defining the market in both its product and geographical dimension
enables us to first establish the type of product as well as geographical location (+range of competitors) within which an undertaking is said to have dominance (eg market for bananas in the Benelux part of the EU, or market for bananas in Amsterdam since art 102 TFEU refers to dominance in the EU internal mkt or a substantial part of it). Once the product+geographical market (as well as range of competitors) is established, then it can be investigated whether the undertaking actually has dominance amongst the competitors in that market and then whether it actually abused that dominant position
How to establish the 2 elements of the first step of establishing the market in order to understand if the entity has dominant position?
FOR EXAMPLE:
- - Product market:
- 2 possibilities for defining product mkt =1. the product and all products that can be a substitute for it (if it has substitutes) or 2. the product alone (if the ECJ finds it has no substitutes)
- Thus in United Brands case, the ECJ examined whether the product market was:
1. Market for fresh fruits? (wider definition: banana + substitutes, if it has any) (Idea behind this wider definition: bananas are not distinct/special but can be interchanged/substituted with other fruits), OR
2. Market for bananas? (narrower definition) (idea: banana has features that makes it a distinct market from other fruits)
- Conclusion of ECJ: The relevant market was the market for bananas since banana was not easily interchangeable/substituted
■ Geographical market
- Area where conditions of competition (e.g., production and packaging costs) are the same for all traders, eg Benelux (para. 44, 57 United Brands)
What is the second step that has to be taken before it can be established if there is a dominant position?
- Once the product and geographical market has been determined: is the undertaking in question holding a dominant economic position?
- Mainly look at market shares (simplified):
► 60% = dominance
► 45% - 60% = could be dominance (mainly look at market shares of the undertaking’s competitors)
► less than 45% : no dominance
- But you can also look additionally at other factors that give the company economic strength/dominance, eg:
- “… availability of technical knowledge, raw materials or capital…” Continental Can v Commission(1973)
- “ …UBC’s resources for & methods of …packaging…displaying its product through which it “ …attained a privileged position by making Chiquita the premier banana brand name …” - United Brands (1978), paras 69,94
Who are the addressees of Article 106 of the TFEU?
Para 1: Member States
Para 2: undertakings entrusted with operation of services of general economic interest
Para 3: Commission
Under what conditions can State aid be said to exist, according to Art 107 TFEU and the Altmark case?
To qualify for state aid: para 75
Which 4 conditions must be fulfilled to characterize a government subsidy as compensation and to exempt it from the application of Art 107 TFEU (and the Altmark case)?
To not qualify for state aid: Para 88-93
- First, the recipient undertaking must actually have public service obligations to discharge,and the obligations must be clearly defined.
- Second, the parameters on the basis of which the compensation is calculated must be established in advance in an objective and transparent manner. (8)
- Third, the compensation cannot exceed what is necessary to cover all or part of the costs incurred in the discharge of public service obligations, taking into account the relevant receipts and a reasonable profit for discharging those obligations.
- Fourth, where the undertaking is not chosen pursuant to a public procurement procedure which would allow for the selection of the tenderer capable of providing those services at the least cost to the community, the level of compensation needed must be determined on the basis of an analysis of the costs of a typical undertaking, well run and adequately provided with means.
Was United Brands in violation of EU law? Which one?
Art 102.
- What was the product market? Did United Brands have a dominant position? And did it abuse the position? (note without actual abuse, no violation of Art 102 TFEU)
- Basic Facts
- United Brands main supplier of bananas in Europe mainly using the Chiquita brand:
1. Forbade distributors in the Benelux + Germany, Ireland and Denmark from reselling its bananas while green (the infamous green banana clause – para 155).
2. Refused to supply to one distributor: Th. Oleson (para. 163)
3. Charged a selling price which differed according to the member State where customers established (dissimilar prices for equivalent transactions) (para. 208).
4. Imposed unfair prices (prices excessive in relation to economic value of product) on distributors other than Scipio. (para 235)
Who enforces EU competition law?
- Formerly the exclusive jurisdiction of the Commission (i.e centralized enforcement based entirely on EU law rules)
- Game changer: Regulation 1/2003 of 16 Dec. 2002 on Implementation of the Rules on Competition. The Regulation (and complementary EU legislation) made possible the following additional (decentralized) means of enforcement, additional to centralized, i.e EU/Commission enforcement:
- National Competition Authorities (NCA): given power to enforce EU competition rules (alongside national competition law). An undertaking can appeal an NCA decision before a national administrative court which if necessary can request a preliminary ruling from ECJ to assist it in arriving at its judgment.
- Private law enforcement, i.e individuals/entities entitled to bring civil law claims for damages caused by anti-competitive behaviour in breach of EU law (codification of the Courage v Crehan situation).
