Horizontal agreements - Cartels

Question 1

Single and continuous infringement

Answer 1

Undertakings bear responsibility, even though they may not be involved in every aspect of the infringement
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Three conditions
1. Existence of an overall plan pursuing a common objective
2. Intentional contribution of the undertaking to that plan
3. Awareness of the offending conduct of the other participants
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Implications
- Each undertaking is responsible for the conduct of the other undertakings
- The Commission will not be time-barred when imposing fines

Question 2

Public distancing from a cartel

Answer 2

If an undertaking wishes not to be liable for the acts of a cartel, it must publicly distance itself from the cartel
- Must be expressed firmly and unambiguously
- Not enough to just not abide by the outcome of the meeting
- Mere attending the meeting creates presumption for involvement in the cartel
- The other cartelists are not in doubt about the intention to withdraw
- No requirement of whistleblowing

Question 3

Cartel

Answer 3

Horizontal agreement between competitors
- Usually involve procedures for monitoring and sanctioning

In practice, indirect evidence is accepted, so-called ”circumstantial evidence”
- Absence of another plausible explanation.

Classic cartels
- Price agreements
- Market sharing
- Limitiations on output
- Bid rigging

Question 4

Horizontal price fixing

Answer 4

Any agreement that directly or indirectly distorts price competition
- Agreement not to offer discounts
- Agreements on recommended prices and maximum prices
- Information exchanges on price

Key principle: Firms must determine their conduct and pricing independently
- Information on prices will affect the behaviour of competitors

Object infringement

Question 5

Price signalling

Answer 5

No direct agreement or concerted practice between undertakings, nor systematic exchange of information, but signalling of future intentions through public channels

The Commission have tried cases, but haven’t been able to prove that there have been a meeting of minds

Question 6

Article 101(3) on price fixing

Answer 6

Unlikely that price-fixing agreements will satisfy art. 101(3)

No block exemptions

Question 7

Horizontal market sharing

Answer 7

Either geogarphical or by customers

All imaginable types of market sharing are caught!
- Protection of home markets against imports
- Allocating specific territories or customer groups
- Pay for delay –> paying potentiel competitors to stay out of the market

Object infringement

Art. 101(3)
- Unlikely to satisfy due to the single market imperative

Question 8

Quotas and other restrictions on production

Answer 8

Reduced output entails higher prices

Often involves different mechanisms to control and allocate quotas
- Exchange of information regarding production and sales, typically to a trade association
- Compensation payments if overproduction

Some agreements can be beneficial to competition
- Specialisation agreements, joint production, R&D agreements

Art. 101(3)
- Can be exempted under special circumstances –> Specialisation or R&D

Question 9

Collusive tendering

Answer 9

Actual or potentiel competitors collaborate on the response regarding a tender
- Bid rigging

Question 10

Agreements relating to terms and conditions

Answer 10

Can restrict competition

Can also be legitimate due to the benefits for the customer
- Standard contracts makes it easier for the customer to compare

Question 11

Exchanges of information

Answer 11

Key principle –> Every undertaking must indepedently determine its market conduct
- Exchange of information related to strategic/commercially sensitive information reduces uncertainty and increases transparency
- Uncertainty on the market is reduced, which enables competitors to adabt to one another
- Entails risks of collusion or coordination

Two types of exchanges of information:
Exchange of information as part of a horizontal cooperation agreement:
- Shall be assessed in the context of the agreement and can be BER-“ered” (specialisation and R&D).

Exchange of information as part of a cartel.
- Deemed to be anti-competitive and thus strictly prohibited.

Some types of information is more sensitive
- Prices
- Production and sales
- Costs
- Commercial strategies

Increases risk
- Future and current information
- Less aggregated information

Risk falls
- Information is already public

By object
- Exchange of information regarding future pricing and quantities.
- Reduces uncertainty of the foreseeable conduct of competitors

By effect
- High market transparency
- High market concentration
- High barriers to entry
- Low degree of innovation
- Similar companies
- Stable supply and demand
- Homogenous products