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Competition Law 1: Collusion (What are undertakings? (Hofner & Elser -…
Competition Law 1: Collusion
Article 101 TFEU
Structure
Para 1 - Prohibits anti-competitive collusion
Three key elements
Collusion
Agreement between undertakings
Decision by an association of undertakings
Concerted practice
Which may affect trade between MS
And which has as its object or effect...
The prevention, restriction or distortion of competition within the internal market
Para 2 - Legal effect - void in law
Para 3 - Exemptions - where enhances competition
Article 101(3) - exemptions
Block
Exempt categories of agreements etc.
Provided for by secondary legislation
Reg 330/2010 - Art 2(1) - vertical agreement is exempt unless...
3(1) - market share of either party exceeds 30%
4 - hardcore restrictions - whole agreement loses exemption
5 - excluded restrictions - offending term only loses exemption
Another exception in the Regulation applies
Individual
Agreement individually satisfied Art 101(3)
Guidance provided by Commission Guidance on the Application of Art 81(3)
Positive obligations
Must improve production or distribution of goods
Must allow consumers a fair share of the resulting benefit
Negative obligations
Restrictions must be indispensable
Not substantially eliminate competition
What are undertakings?
Hofner & Elser - encompasses every entity engaged in an economic activity, regardless of...
Legal status
Way it is financed
Diego Cali - but not where exercising the official authority of the State
Agreements between undertakings
Hercules Chemicals NV - "It is sufficient if the undertakings have expressed their joint intention to conduct themselves on the market in a specific way"
Includes...
Formal written contracts
Oral agreements - Tepea
Gentlemen's agreements - Hercules Chemicals
Tacit acquiescence - AC Treuhand
Does not include unilateral conduct - Bayer AG
Vertical - undertakings at different levels of trade and industry
Horizontal - at same level of trade and industry
Decisions by associations of undertakings
Associations include...
Trade associations
Cooperatives
Decisions include non-binding recommendations
Vereniging van Cementhandelaren
ANSEAU-NAVEWA
Concerted practices
ICI Ltd v Commission (Dyestuffs) - "A form of coordination between undertakings which knowingly substitutes practical cooperation between them for the risks of competition"
May be inferred from evidence
However - A. Ahlstrom Oy v Commission (Wood Pulp)
Parallel behaviour doesn't necessarily constitute concerted practice
Unless it is the only plausible explanation
Affect inter-state trade
Société Technique Miniére - may have an influence on the pattern of trade between MS
Direct or indirect
Actual or potential
Object or effect = prevention, restriction or distortion of competition within the internal market
101(1) examples - 'the black list'
a) Price fixing - directly or indirectly
b) Limiting or controlling production
c) Sharing markets or sources of supply
d) Applying dissimilar trading conditions
e) Imposing supplementary obligations - 'tie-ins'
Société de Miniére - read 'object or effect' disjunctively
Object
Société de Miniére - look at purpose in economic context
Beef Industry Development Society - purpose determined objectively - must by its very nature damage competition
Groupement des Cartes Bancaires - strict interpretation = negative effect must be so likely that no need to examine actual effect
Effect
European Night Services
Take account of actual conditions in which agreement functions - unless obvious restrictions
Economic context
Products or services covered
Actual structure of market
Defences
Ancillary restrictions
Restrictions necessary for pro-competitive objectives
Société de Miniére
Pronuptia
Métropole Télévision
No rule of reason defence
But ancillary restrictions lawful
Any restriction which is directly related and necessary to the implementation of main operation
#
Directly related
Subordinate to main operation and has an evident link with it
Necessary
Objectively necessary for main operation and duration and scope must not exceed what is necessary
De Minimis
Volk - Insignificant effect on the market = no breach
Commission Notice on Agreements of Minor Importance ('De Minimis Notice')
Horizontal agreements - aggregate market share must not exceed 10%
Vertical agreements - market share of each party must not exceed 15%
Enforcement
Previously Reg 17/62
Must give Commission prior notification
Individual exemption only once Commission decides agreement satisfies 101(3)
Only Commission can grant individual exemption
Now Reg 1/2003
System of prior notification abolished
Individual exemption if agreement satisfies 101(3)
National Competition Authorities and national courts can enforce
Fines - Reg 1/2003 Art 23&24
Damages
Courage Ltd v Crehan
Manfredi
Directive 2014/104