Please enable JavaScript.
Coggle requires JavaScript to display documents.
Restrictive Agreements Art.101 TFEU - Coggle Diagram
Restrictive Agreements
Art.101 TFEU
Field of Application
Art.101(1)
scope
parties → undertakings (
Höfner
)
Condition of plurality (at least two independent undertakings)
(Consten Grundig
)
Loss of autonomy: An action that regulates behaviour between the parties -> meeting of the minds = collusion
any form: all agreements
behaviour
Agreements (broad)
very broad! difficult for the Commission to prove
What you need to prove = concurrence of will between multiple parties to engage in behaviour
Doesn’t have to have to be a contract
Can also be a “gentlemen’s agreement”
Can also be tacit collusion = competitors agree to a strategy without explicitly saying so
Horizontal Agreement
Same level of distribution chain
Vertical Agreement
Different level of the distribution chain
E.g., between a producer and a distributor, or between a supplier and a customer
Hybrid
Hub-and-spoke cartels and dual distribution
Contains both vertical & horizontal relationships
Info passes through the common distributor / producer, rather than publicly
Decisions by associations
ability, in fact if not in law, to influence members' conduct
e.g. resolution laying down standard terms on which members are required to do business, non-binding price recs
Concerted practices
contact but no contract’ - exchange of info enough
Need psychological element, feeling obliged to follow
Concerted practice = “a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition”
E.g. informally sharing price-setting information
Issue: parallel behaviour v concerted practices
parallel behaviour: not sufficient proof of concerted practice
object or effect → prevention, restriction or distortion of competition
object or effect = prevention, restriction or distortion of competition within internal market
object OR effect -> also ineffective agreement/practice
Object
: easier to prove as no need to investigate actual effects (inherently anti-competitive measure)
determined based on experience:
Maxima Latvija
Super bock
assess: content of its provisions, its objectives and the economic and legal context of which it forms a part
take into consideration the nature of the goods or services affected, as well as the actual conditions of the functioning and structure of the market or markets in question.
Horizontal: Fix prices, Exchange information that reduces uncertainty about future conduct, Share markets
Limit output, Limit sales, Collective exclusive dealing, Pay competitors to delay the launch of competing products
Vertical: impose fixed or min resale prices, impose export bans, selective distribution agreements
Effect
: requires analysis of market conditions etc (measure not inherently anti-comp, but efefcts might be)
De Minimis: not within 101 scope if aggregate market shares held by all participating undertakings do not exceed, on any of the relevant markets
10 % for agreements between actual or potential competitors
15 % for agreements between non-competitors
10 % for mixed horizontal/vertical agreements or if unclear
5 % if cumulative effects (unlikely if - 30 % of relevant market covered by parallel agreements)
[or market shares not exceeded by +2% during 2 successive calendar years]
prevention, restriction, distortion of competition collective term : ‘restriction of competition’
economic rather than legal assessment
necessary condition : autonomy of (one of the) parties to the agreement/practice is curtailed
Exception: ancillary restraints
if you have a restriction of competition that is ancillary to an agreement that is allowed under CL -> then it is allowed
zB.: valid franchise agreement; in this agreement it does say a small clause "if you conclude this franchise agreement there will not be any other franchise in the close proximity of your shop -> restriction in itself is a restriction of competition; but because it is necessary for the broader agreement, that is actually allowed under CL; it is fine;
Must be
directly related, cannot be random;
necessary (objectively + proportionate)
EU dimension → trade between Member States may be affected
Sanction
art.101(2)
Exception
art.101(3)
exceptions based on art.101(3) and rule of reasons
possible for restrictions by object AND effect
Why: balance needed between economic advantage from the cartel versus societal interests in competition
System:
Reg 1/2003: self-assesment of agreements by undertakings
Conditions
Objective (economic) efficiencies
“this improvement must in particular show appreciable objective advantages of such a character as to compensate for the disadvantages which they cause in the field of competition”
A fair share of the benefits to consumers
Article 101(3) Guidelines: consumers of the parties to the agreement + fully compensated
Indispensability
“(i) the restrictive agreement as such must be reasonably necessary in order to achieve the efficiencies, and
(ii) the individual restrictions of competition that flow from the agreement must also be reasonably necessary for the attainment of the efficiencies.”
No elimination of competition
Block Exemption Regulations
Regulation 17 and 1/2003
not really important
VBER Reg 2022/720
umbrella exemption with blacklist
global structure: exemption art. 2, threshold art. 3, restrictions arts. 4-5
no reference to sustainability
Art 4 -> hardcore restrictions; if you include any one of those in your agreement -> YOUR ENTIRE Agreement is excluded from the save haven of the VBER;
Art 5 - excluded restrictions; if you include those -> only THIS restriction will be excluded from the VBER but the rest of the agreement will be okay;
treshold in Art 3
market threshold (30% market share for both the supplier AND the distributor; because we are vertical -> so along the supply chain)
if you fall under the treshold you are in the save haven; BUT if you include any restrictions that are listed in Art 4 OR Art 5 -> you fall OUTSIDE of the block exemption again;
Wouters
Major shift in interpretation of Article 101(1) TFEU facts: Lawyer in Ams who wanted to merge it with accounting firm – NL bar did not allow it due to impartiality concerns NL court saw that it was a restriction on comp by the bar but did not check art 101(3) exceptions (did not yet have direct effect) but declared that there was a legitimate objective (impartiality) which made it lawful
Restrictions on competition don’t violate Article 101 TFEU if they: are necessary
proportionate
to reach a legitimate objective
:!:rule of reason now for comp law
Wouters never really confirmed until 2023 – but stated that it was not applicable
Court never defined a legitimate objective or how necessity and proportionality should be assessed
4 conditions:
There is no restriction by object
The restrictions must pursue a legitimate objective
The restriction is necessary to reach that objective
The restriction is proportionate (e.g. does not eliminate all competition).
Since Wouters and Meca-Medina it has never been successfully applied
Often used to argue that sustainability agreements could fall under it -> if comp is restricted for sustainability reasons this is a legitimate objective to fall outside of art.101
Horizontal Guidelines (new from 2023) reintroduced chapter on sustainability agreements
List of agreements always outside the scope of Article 101 TFEU
: If an agreement does not affect the parameters of competition, it is unlikely to fall within the scope of Article 101 TFEU
non-exhaustive examples
To comply with legally binding treaties, agreements or conventions
When focussing on internal conduct of undertakings E.g. companies agree to only using recycled paper
Agree To set up a database to share information about suppliers and distributors
To organize industry-wide awareness campaigns
CJEU Wouters? HGL para 529: “agreements that restrict competition cannot escape the prohibition laid down in Article 101(1) TFEU simply by referring to a sustainability objective”
vague, no direct reference
Relaxation of burden of proof in Article 101(1) TFEU
General relaxation for standard of proof
if the company can prove that the restriction genuinely pursues a sustainability objective, they will assess this as a restriction ‘by effect’ footote 372
NOT when it entails price fixing, market sharing, customer allocation or limitation of output or innovation or the sustainability objective is uncertain
Specific relaxation for sustainability
standardization agreements
= agreements that specify the requirements that producers, traders, manufacturers, retailers or service providers in a supply chain may have to meet in relation to possibly a wide range of sustainability metrics
E.g. standardisation of packing for more efficient transport
Its a restriction by object if
Passing on the costs to consumers
Putting pressure to refrain from marketing non-compliant products
Limit technological development
=> Otherwise effect based analysis
Soft safe harbour if transparent procedure, freedom to chose to enter agreement &go beyond standards ... + combined market share max 20%
Changes to Article 101(3) TFEU
Benefits of the agreement must also be passed on to cus