W8 - Art 101

Question 1

Art 101

Answer 1

prohibits: ‘all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market’
Non-exhaustive examples (hardcore restrictions) set out in Art 101 (a-e)

Question 2

Agreement

Answer 2

Covers all types of commercial contracts - can be written or verbal

• informal arrangements incl gentlemen’s agreements (that are not binding) could be prohibited (Quinine Cartel)
• concerted practices are wider than an agreement (aka parallel behaviour) - includes situations where an undertaking deliberately co-ordinates its behaviour with that of another undertaking (Dyestuffs)
• BUT oligopoly aka co-ordination could be explained by other things => not a concerted practice (Woodpulp)

Question 3

Horizontal agreements

Answer 3

= between parties at the same level of the supply chain (Quinine Cartel)

Risk of cartels

Question 4

Vertical agreements

Answer 4

= agreement between parties at different levels of the supply chain (Consten and Grundig)

Question 5

Between undertakings

Answer 5

Covers virtually all legal or natural persons carrying on economic or commercial activities - agreement should be between two or more separate undertakings (parent-subsidiary/ two with same parent does not count)

Or associations of undertakings - need not be legally binding to be caught (IAZ NV International); may include regulatory rules by professional bodies if not reasonable (Wouters)

Question 6

Object or effect

Answer 6

Art 101(1)(a-e) => hardcore restrictions; automatically anti-competitive by object

• object is objective test (Consten and Grundig) which is about gravity and obviousness (Cartes Bancaires)
• sufficient if MAY impact competition even if not done by senior staff (Dole Fresh Fruit) => no need to take into account concrete effects (Expedia)
• effect judged by looking at the market the agreement will operate in and the power/role of the parties in that market (STM v MU)

Question 7

Effect on trade between MSs

Answer 7

• any agreement capable of influencing pattern of trade (STM v MU)
• establish cross-border element (Commercial Solvents)
• MAY include agreements between parties based in same MS if eg banned from selling goods outside the MS (Cooperative Stremsel) - at any rate will likely be caught by NCAs
• MAY include agreements between parties based outside the EU if implemented within the EU (Woodpulp)
• examine whether it forms a part of a network of similar agreements which together might have an effect on trade (Brasserie du Haecht)

Question 8

Art 101(2)

Answer 8

Any agreement or decision in breach of 101(1) is automatically void unless it satisfies one of the exemptions

Question 9

Exemptions

Answer 9

• NAOMI
• NAAT
• Block exemption on vertical restraints (Regulation 330/2010)
• Art 101(3): two positive and two negative requirements through self-assessment BUT hard to fulfil if terms of agreement are clearly anti-competitive
• argument that there is no appreciable effect on trade/competition because they have a small market share (de minimis; Volk) => notices (BUT not binding on MSs (Expedia))
• Notices require the calculation of the relevant market (RPM and RGM)

Question 10

NAOMI

Answer 10

Notice on Agreements of Minor Importance:

• horizontal => aggregate market share not more than 10%
• vertical => share by each party not more than 15%
• networks => 5%

BUT object/hardcore restriction => cannot be covered

Question 11

NAAT

Answer 11

Non-Appreciable Affectation on Trade:

• horizontal/vertical => aggregate market share not more than 5%
• horizontal => aggregate turnover of parties not exceed 40 m Euros
• vertical => turnover of supplier not exceed 40m Euros
• May apply even if object/hardcore restrictions involved BUT NCAs may still take action under national competition laws

Question 12

Block exemption on vertical restraints

Answer 12

Regulation 330/2010

• definition of vertical agreement (art 1(1)(a))
• does not apply where market shares of either party exceeds 30% in relevant markets (art 3(1))
• hardcore restrictions listed in art 4

Question 13

Conclusion

Answer 13

• Remove/amend offending clause (English Law- offending clauses can only be severed if remaining agreement still reflects accurately the agreement originally reached by the parties - Chemidus Wavin)
• not lawfully allowed to enforce infringing clause within the agreement
• Advise client of penalties

Question 14

Consequence of infringement

Answer 14

Regulation 1/2003:

• NAOMI applies: EU Law applies but no breach
• NAAT applies: EU law not applicable but national law can still apply
• Css may fine them up to 10% of their worldwide turnover in the preceding business year (art 23) - factors eg duration/gravity and co-operation w Css taken into account
• Immunity from fines to first cartel member to come forward
• NCAs may also investigate and impose a fine
• art 101 and 102 have direct effect (BRT v Sabam) and => national courts play a role (Garden Cottage Foods)
• any 3rd party which has suffered a loss could claim damages (Courage v Crehan)