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Competition
Law

Article 101 TFEU


Introduction
(the What, the Why, the
How, the Who and the Where?)
Competition puts businesses
under constant pressure to
offer the best possible range
of goods at the best possible
prices - if they do not
consumers have the choice to
buy elsewhere.

In a free market, business should


The “What” be a competitive game with
consumers as the beneficiaries.

Sometimes companies try to


limit competition. To preserve
well-functioning product
markets, authorities like the
European Commission must
prevent or correct anti-
competitive behaviour.
A set of rules of the Treaty

• Prohibits agreements between companies


which restrict competition (art. 101 TFEU)
• Prohibits abuses of dominance (art. 102 TFEU)
• Imposes a merger control system (reg.
139/2004)
• Imposes a state aid control system (art. 107 et
seq. TFEU)

The “What” Many other instruments:

• Regulations (1/2003), soft law


(Communications, Notices, etc.)

A significant risk for businesses

• Fines (Intel, €1,060,000,000)


• Remedies (structural and behavioral)
• Damages (Courage and Crehan (C-453/99)
The “Why”

Article 3(3) TEU: The Union shall


Competition is deemed to increase Competition rules are needed to
work for [the creation of] “a highly
economic welfare help achieve market integration
competitive social market economy
• leads to efficient allocation of • Steiner and Woods note that
resources competition law is pivotal to the
• protects consumers and smaller internal market as if restrictions on
firms from larger firms with free movement of goods and
greater economic power services which must be removed
• Dynamic efficiency (optimal prices by Member States could be
and trading terms) replaced by restrictive agreements
between private parties, the
internal market would not be
achieved.
• Member States may protect
domestic operators with subsidies
• Wording of the TFEU:
agreements, abuses and mergers
are “incompatible with the
Internal market”, rather than
unlawful
The “How”

EU competition law is primarily enforced EU competition law is also enforced in


by specialized administrative agencies the context of ordinary litigation before
at the European – the Commission – and courts (provisions with direct effect)
the national levels – Competition and
Consumer Protection Commission
(CCPC)
Rationale: Need for expert knowledge; Main interest: Courts may award
constant monitoring of markets and injunctive relief (suspension, etc.) as well
investigations cannot be carried out by courts; as damages. Courts may also have
need to devise policy orientations, which falls
jurisdiction over other legal aspects of a
beyond the remit of courts; ability to focus on
case (IP, corporate, etc.)
priorities (cases that matter) and build market
expertise
The “How”
European
Commission:
executive body
(with legislative
role)
• The Powers European Courts European Council
(ECJ / General and European College of
• Defined in Regulation 1/2003 Legal service
Court): judicial Parliament: Commissioners
• Investigations (dawn raids bodies legislative roles
etc.)
• Infringement decisions
• Fines
• Settlements (art. 9)
• Remedies
• Interim measures
• Constraints
• Commission also proposes
legislation in other areas
• the Commission monitors:
• agreements between companies that restrict
competition – cartels or other unfair arrangements in
which companies agree to avoid competing with each
other and try to set their own rules
• abuse of a dominant position – where a major player
tries to squeeze competitors out of the market
The “How” • mergers (and other formal agreements whereby
companies join forces permanently or temporarily) –
legitimate provided they expand markets and benefit
consumers
• efforts to open markets up to competition
(liberalisation) – in areas such as transport, energy,
postal services and telecommunications. Many of
these sectors used to be controlled by state-run
monopolies and it is essential to ensure that
liberalisation is done in a way that does not give an
unfair advantage to these old monopolies.
• financial support (state aid) for companies from EU
governments – allowed provided it does not distort fair
and effective competition between companies in EU
countries or harm the economy
• cooperation with national competition authorities in
EU countries (who are also responsible for enforcing
aspects of EU competition law) – to ensure that EU
competition law is applied in the same way across the
EU. The Irish authority is called the Competition and
Consumer Protection Commission (CCPC).
Interplay with NPC (article 11, R1/2003)

Interplay with national courts (article 15, R1/2003)

Annulment proceedings (Article 263, 261 and 256 TFEU )

The “How”
• EU competition rules applies to “undertakings”
• Article 101 TFEU however does not define the term
‘undertaking.’
• However, the term has been defined broadly by the
Commission and the CJEU:
• In Polypropylene (Decision 86/398, [1988] 4
CMLR 347) the Commission held that the term
was not confined to those entities which
possessed legal personality, but covered any
entity engaged in commercial activity.
• “any entity engaged in economic activity,
regardless of the legal status of the entity and the
way in which it is financed” (Hofner C-41/90)
• “Any activity consisting in offering goods and
The “Who” services on a market is economic activity”

• Wide coverage
• corporations, partnerships, trade associations, state-
owned corporations and cooperatives.
• But “political” exclusions (e.g., social security services
- see Poucet and Pistre C-160/91 – French social
security offices administering sickness and maternity
insurance schemes were not undertakings) => need to
be in exchange of economic consideration
If this requirement is not satisfied, then the
EU competition rules apply to practices
matter remains within national competition
which affect trade between Member States
law.

A test was established in the SPM case - the


requirement will be met where it was
• The fact that an agreement concerns only
possible to ‘…foresee with a sufficient degree
the marketing of products or services in a
of probability on the basis of a set of
single Member State does not mean that
objective factors of law or of fact that the
trade between Member States cannot be
agreement in question may have an
affected (Commission Decision Re Eirpage
influence, direct or indirect, actual or
Limited [1991] OJ L306/22).
potential, on the pattern of trade between
Member States’.

The “Where”
Main focus of this course:

Article 101 TFEU –


Article 102 TFEU –
applies to the conduct
applies to the conduct
of two or more
of a single undertaking.
undertakings (firms);

Competition
Law Rules

Both articles require that the


allegedly prohibited conduct be
(i) restrictive of competition
and have (ii) an effect on trade
between Member States.
Traditional approach:
• Certain types of agreements had to be notified to the European Commission and the Commission
alone could apply Article 101 TFEU.
• However, the Commission was under-resourced and called for the system to become more
decentralised

• Council Regulation (EC) No.1/2003 was introduced in December 2002 giving national courts and
national competition authorities’ power to apply Articles 101 and 102 TFEU in their entirety.
• Now the onus is on businesses themselves to ensure their practices are in conformity with
competition law as the prior notification system has been abolished.
• Likewise, the Court of Justice engagement in economic analysis was traditionally limited, with the
Commission and Court avoiding in-depth economic analysis (see Consten and Grundig below)
however since Regulation 1/2003 there has been a sea-change with the Commission engaging
economists and establishing the post of chief economist with its Directorate General for
Competition (DG COMP).
• The Commission’s has retained extensive powers in the area of fines. It takes into account the
gravity and duration of the infringement. One recent and high profile example: Microsoft European
Commission imposed a €561 million fine on Microsoft for failing to comply with its commitments to
offer users a browser choice screen enabling them to easily choose their preferred web browser.
Microsoft failed to roll out the browser choice screen with its Windows 7 Service Pack 1 from May
2011 until July 2012 which affected 15 million Windows users in the EU.
Article 101 TFEU
Article 101 TFEU

§1 – The Prohibition Rule

Are prohibited as incompatible with the internal market:

“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 (…)”
§2 – The Rule of Nullity

Any agreements or decisions prohibited pursuant to this Article shall be automatically


null and void

§3 – The Exception Rule

§1 may be declared inapplicable to agreements which :


1. “contribute to improving the production or distribution of goods or to promoting
technical or economic progress,
2. allow consumers a fair share of the resulting benefit,
and which do not:
3. impose on the undertakings concerned restrictions which are not indispensable;
4. afford such undertakings the possibility of eliminating competition”
15
Requirements

• Article 101(1) TFEU requires three


questions to be examined:
(i) whether there is an agreement, decision
or concerted practice between or
observed by undertakings;
(ii) whether competition within the
common market may be prevented,
restricted or distorted and
(iii)whether inter-state trade may be
affected.
• Agreements
amongst rivals
to fix prices,
limit output,
share markets
(customers),
limit
investments
Cartels
• “Cancer of
market
economies”
(Monti),
“Ultimate
evil of
antitrust”
(Scalia)
Three
consequences
Cartels Sanctions => Heavy fines
• × 2010=> six LCD panel
producers a total of €648 925
000 for operating a cartel which
harmed European buyers of
television sets, computers and
Legal qualification => Policy priority for other products
• × 2008 => Commission fines four
“Hardcore restriction” => Commission (wide car glass manufacturers a total
lack of anticompetitive investigation powers, of €1 383 896 000 for unlawful
effect and intent are no incentives devices market sharing
defenses (leniency), etc. • × 2007 => Otis, KONE, Schindler
and ThyssenKrupp fined €992
million for operating cartels for
the installation and
maintenance of lifts and
escalators in Belgium, Germany,
Luxembourg and the
Netherlands
Key case: Dansk Rørindustri A/S (C-189/02 P)

Cartel meeting organised by large competitors; small competitors


participated but remained silent and did not implement the anti-competitive
agreements.

“it is sufficient for the Commission to show that an undertaking participated


Cartel in meetings at which anti-competitive agreements were concluded, without
manifestly opposing them, to prove to the requisite standard that the
undertaking participated in the cartel.
prohibition
Where participation in such meetings has been established, it is for that
undertaking to put forward evidence to establish that its participation in
those meetings was without any anti-competitive intention by
demonstrating that it had indicated to its competitors that it was
participating in those meetings in a spirit that was different from theirs.

In that regard, a party which tacitly approves of an unlawful initiative,


without publicly distancing itself from its content or reporting it to the
administrative authorities, effectively encourages the continuation of the
infringement and compromises its discovery. That complicity constitutes a
passive mode of participation in the infringement which is therefore capable
of rendering the undertaking liable in the context of a single agreement.“
• Broadly interpreted to include both formal and
informal agreements (“gentlemen’s agreements)
once there is a “meeting of minds”.
• Agreements can be horizontal and vertical:

• A horizontal agreement is one between two or


more competitors at the same level in the market,
for example between two suppliers or two
distributors.
• A vertical agreement is one between two parties
at different levels in the production chain, for
example between a wholesaler and retailer or
between a manufacturer and a distributor.

Agreements
Agreements between competitors
which do not purport to restrict
competition, but that may have
anticompetitive effects

Joint ventures, strategic alliances, etc.


Horizontal aiming at making new products,
achieving economies of scale, savings
agreements on purchases, synergies, etc.

May nonetheless have anticompetitive


effects (coordination through cost-
harmonization, exchange of sensitive
information, etc.)
In Quinine Cartel (Cases C- 41,44 and 45/69) a number of
firms agreed to fix prices and divide the market in quinine
(a white, bitter, slightly water-soluble alkaloid having
needlelike crystals used in medicine in the treatment of
resistant forms of malaria).

An agreement was made covering trade with non-


member states, and a less formal gentleman’s agreement
was made which extended the arrangement to sales
within the common market.
Horizontal
agreements The applicants argued that the gentleman’s agreement
did not constitute an agreement within the meaning of
Article 101(1) TFEU.

CJEU disagreed stating that the gentleman’s agreement


‘…amounted to the faithful expression of the joint
intention of the parties to the agreement with regard to
their conduct in the Common Market.’ Thus it was
contrary to Article 101(1) TFEU.
Horizontal agreements
• In Polyproplylene, the Commission found an agreement in place between firms in the petrochemical
industry, which had continued over a number of years, despite the agreement being oral, non-legally
binding and containing no formal sanctions for its breach.
• According to the Commission, an agreement exists: ‘[I]f the parties reach a consensus on a plan which
limits or is likely to limit their commercial freedom by determining the lines of their mutual action or
abstention from action in the market.’

• Ferriere Nord T-143/89 - General Court held in that in establishing an infringement of Article 101(1)
TFEU, the only relevant question was whether it participated with other undertakings having the object
or effect of restricting competition and whether the agreement was liable to affect trade between
Member States.

• In Bayer T-41/96 the General Court explained that in order for there to be an agreement within the
meaning of Article 101(1) TFEU, it is sufficient that the undertakings in question should have expressed
their joint intention to conduct themselves on the market in a specific way and it was sufficient for this
to be the expression of the parties’ intention to behave on the market in accordance with its terms,
without its having to constitute a valid and binding contract under national law.
• Thus agreement within the meaning of Article 101(1) TFEU centres around the existence of a meeting of
minds of at least two parties, the form of which is irrelevant, so long as it constitutes the faithful
expression of the parties’ intention.
• Commission v. ANIC Partecipazioni SpA C-49/92P CJEU: patterns of conduct by several undertakings may
show a single and complex infringement- part agreement and part concerted practice i.e. not mutually
exclusive.
• An activity that intends to co-
ordinate the activities of its members
and has anti-competitive effects,
Horizontal without the need for an actual
agreement e.g. NV IAZ International
agreements: Belgium v. Commission C-96/82 –
even a non-binding recommendation
Decisions from a trade association normally
followed by its members could
constitute a decision under Article
101(1) TFEU.
Horizontal agreements: Concerted Practices

COLLUSIVE BEHAVIOUR BETWEEN FIRMS COVERS SITUATIONS WHERE ALL PAPER DEFINITION OF ‘CONCERTED PRACTICE’
WHICH HAVE AN ANTI-COMPETITIVE OBJECT EVIDENCE OF COLLUSION HAS BEEN CANNOT BE STRETCHED SO FAR THAT IT
OR EFFECT. DESTROYED. CATCHES RESPONSES OF FIRMS WHICH ARE
SIMPLY A RATIONAL RESPONSE TO THE
MARKET.
Horizontal agreements: Concerted Practices

If firm A raises the price above the


equilibrium other firms will keep
their price stable and take some
Thus note the functioning of
of firm A's market share. If firm A
oligopolies where there are only a
reduces their price below the
few firms. Each firm will react to
market equilibrium price, others
what others do.
will follow them down and all of
the firms market share will remain
constant.
Examples – washing powder Oligopolistic markets, made up of
market, operating systems for a few sellers, contain high barriers
smartphones and computers: to entry and where product
Apple iOS and Google Android differentiation is low. Oligopolistic
dominate smartphone operating markets can lead firms to engage
systems, while computer in parallel pricing not as a result
operating systems are of collusion but due to the mutual
overshadowed by Apple and interdependence of firms within
Windows the market.
• In Imperial Chemical Industries v. Commission (Dyestuffs) C-48/69
CJEU defined a concerted practice as “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.”
• This was in the context of producers of a type of dye increasing their
prices at around the same time and by the same amount. The firms
argued their behaviour was the result of the oligopolistic nature of the
market BUT CJEU held that while parallel behaviour may not, by itself,
be identified with a concerted practice “it may however amount to
Definition of strong evidence of such practice if it leads to conditions of
competition which do not correspond to the normal conditions of the
Concerted market, having regard to the nature of the products, the size and
number of the undertakings and the volume of the said market.”
(para.66)
Practice
• It held at para. 109 that although this conduct “may well have been an
attractive and risk-free objective for the undertakings concerned, it is
hardly conceivable that the same action could be taken
spontaneously at the same time, on the same national markets and
for the same range of products.”
• In conclusion, the Court held at para. 113:
• “The general and uniform increase on those different markets
can only be explained by a common intention on the part of
those undertakings, first, to adjust the level of prices and the
situation resulting from competition in the form of discounts, and
secondly, to avoid the risk, which is inherent in any price
increase, of changing the conditions of competition.”
• SO, was contrary to Article 101 (1) TFEU.
Evidence of a concerted practice can be direct,
e.g. shared plans or minutes of meetings, or
indirect, e.g. comparable behaviour.

It is not necessary for there to be an actual plan


in place

Components • (Suiker Unie v. Commission, Cases C- 40-48, 50, 54-56, 111,


113 & 114/73 (the Sugar Cartel case) where CJEU found
of Concerted that the competing undertakings who had contacted each
other to remove any uncertainty as to their future conduct
Practice engaged in a concerted practice.
• “Although … this requirement of independence does not
deprive economic operators of the right to adapt
themselves intelligently to the existing and anticipated
conduct of their competitors, it does…strictly preclude
any direct or indirect contact between such operators,
the object or effect whereof is either to influence the
conduct on the market of an actual or potential
competitor or to disclose to such a competitor the
course of conduct which they themselves have decided
to adopt or contemplate adopting on the market.”
• The burden of proving a concerted practice (or
indeed, any infringement of Article 101 (1) TFEU) lies
with the Commission.
• It is not always easy to identify a concerted practice:
Wood Pulp Cartel (Cases C89, 104, 114, 116-7, 125-
9/85) here the Commission contended that a large
number of producers of wood pulp had engaged in
Components concerted practices on price announcements.
of • The Commission did not consider the market to be
oligopolistic in nature as there were a large number of
Concerted firms operating in it.
Practice • It considered that the fact that they had charged
similar prices and altered them in the same manner
and at the same time to be proof of itself that they
were acting in concert.
• However, the CJEU annulled a significant part of
the Commission’s finding, holding that parallel
conduct cannot be regarded as proof of
concertation unless such a finding is the only
plausible explanation for the conduct.
• Under Article 101 TFEU, firms are not precluded from
adapting their behaviour intelligently to that of their
competitors.
• A concerted practice is caught by Article 101 (1) TFEU
even in the absence of anticompetitive effects on the
market (Huls AG v. Commission C-199/92P)
Guidelines on the
applicability of Article 101 of
the Treaty on the
Functioning of the European
Horizontal Union to horizontal co-
cooperation operation agreements
agreements • Joint production
• Joint purchasing
• Joint commercialisation
• Standardisation
• Exchange of information
• Agreements between two parties at different levels in the production
chain such as wholesaler and retailer or manufacturer and distributor –
are subject to competition restraints.
• Very many types
• Standard supply-purchase relationships => Arcelor Mittal/Coca-Cola
• Distribution agreements (exclusive distribution, selective
distribution, etc.) => Nike/Footlocker
• Craig and De Búrca at 982-83 looks at the reasons for vertical
agreements:
• A manufacturer will have to decide how to market its product. It
may decide to establish its own retail outlets; to establish a joint
venture with a company that has expertise in the retailing area;
to sell its products through any outlet which is willing to stock
Vertical them; to sell through certain specialized shops, because the
product requires sales expertise in the area or to sell though
certain retail outlets, each of which will be given exclusive rights
agreements to distribute the product in a geographical area, either because
retailers will only take the goods on these terms, or because this
will maximise total sales. This list is by no means exhaustive.
• Steiner and Woods at p.674 note that while overall distribution
agreements contribute to consumer welfare by ensuring the efficient
distribution of goods and services and by encouraging non-price
competition and improved quality of customer services, they can have
negative effects
• dividing up markets; softening competition between suppliers
and competitors by reducing intra-brand competition and
reducing intra-brand competition between distributors of the
same brand. Some, however, are necessary to enable distribution
arrangements to function properly (covered by Article 101(3)
TFEU and thus exempt OR fall under Vertical Restraints Block
exemption (see below)).
Types of Distribution Agreement : Exclusive Distribution

WHERE SUPPLIER AGREES TO SELL ITS PRODUCTS ONLY TO IN CONSTEN AND GRUNDIG (CASES C-56 AND 56/64) A
ONE DISTRIBUTOR FOR RESALE IN A PARTICULAR TERRITORY DISTRIBUTION AGREEMENT WAS ENTERED INTO BY GRUNDIG,
AND DISTRIBUTOR USUALLY PROHIBITED FROM ACTIVELY A GERMAN ELECTRONICS MANUFACTURER AND CONSTEN,
SELLING PRODUCTS INTO OTHER EXCLUSIVELY ALLOCATED THE EXCLUSIVE DISTRIBUTOR FOR GRUNDIG’S PRODUCTS IN
TERRITORIES I.E. TERRITORIAL EXCLUSIVITY. FRANCE. GRUNDIG AGREED NOT TO SUPPLY OTHER DEALERS
IN FRANCE AND IMPOSED RESTRICTIONS ON ITS DEALERS IN
OTHER MEMBER STATES ON EXPORTING ITS PRODUCTS INTO
THE FRENCH TERRITORY. YET ANOTHER FRENCH COMPANY
SOURCED GRUNDIG’S PRODUCTS SOLD IN OTHER MEMBER
STATES AND STARTED SELLING IN FRANCE. THE COURT OF
JUSTICE HELD:
Types of Distribution Agreement: Exclusive Distribution

Article 101 refers to all agreements which


The agreement clearly had as its object the distort competition within the common market
prevention, restriction or distortion of and does not lay down any distinction
competition. The absolute territorial protection between agreements made between
isolated the French market contrary to purpose competitors operating at the same level or
of the internal market; between non-competing persons operating at
different levels;

Therefore it is possible that an agreement


Competition may be distorted not only by between economic operators at different levels
agreements which limit it as between the may affect trade between Member States and
parties but also by agreements which prevent at the same time have as its object or effect
or restrict the competition which might take the prevention, restriction or distortion of
place between one of them and third parties; competition, thus falling under the prohibition
of Article 101(1).
In Société Technique Minière v.
Maschinenbau Ulm C56/65 the
Court set out a number of factors to
Types of be taken into account in assessing
whether an agreement fell within
Distribution Article 101(1) TFEU:
Agreement: • the nature and quantity of products covered
Exclusive by the agreement;
• the importance of the supplier and
Distribution distributor with respect to the relevant
markets;
• the isolated nature of the agreement or its
place in a series of agreements;
• the degree of territorial protection offered
by the agreement and the opportunities
allowed for parallel imports and exports.
Types of Distribution Agreement: Selective Distribution

Usually used to distribute final branded


Restriction on resale not a restriction on
These limit distributors of a product to products – generally of a kind sold in a
active selling to another territory but a
ensure that they meet quality thresholds specific type of environment which is
restriction on sales to non-authorised
by restricting dealers on basis of suited to their characteristics – generally
distributors leaving only appointed
selection criteria linked to the nature of high end and value luxury goods
dealers and final customers as potential
the product. (perfume, cosmetics, luxury clothing) or
buyers,
complex high-tech goods.

Supplier does not have complete


The qualitative criteria must not go
discretion in deciding to set up selective
beyond what is necessary: L’Oréal
distribution system and such a system
Risk – reduction of intra-brand C31/80 (where requirements that
will not breach Article 101(1) provided
competition and softening of distributors guarantee a minimum
that dealers are chosen on the basis of
competition and facilitation of collusion turnover and hold minimum stocks
objective criteria of a qualitative nature
between suppliers and buyers. exceeded requirements of selective
relating to the technical qualifications of
distribution system and in breach of
the dealer and his staff and suitability of
Article 101(1)).
his trading premises: Metro-SB C-26/76.
The most relevant restrictions of competition
Restriction by “Object“: it
is not necessary that
competition is effectively
restricted / that anti-
competitive practice has
been implemented
The Object
or Effect of
Restriction by “Effect”: it is
Preventing, not necessary that the
parties intended a restriction
Restricting, of competition

or Distorting
Competition
”restriction of competition”
not definable
• CJEU: per Consten and Grundig and Société Technique Minière v.
Maschinenbau Ulm requirement of an ‘object or effect’ is an alternative
and not cumulative test i.e. If the parties have the object of distorting
competition this is sufficient to breach Article 101 TFEU and it will not be
necessary to also show arrangement has the effect of distorting competition.

The Object • In GlaxoSmithKline Services Unlimited and Ors. v. Commission (C-501, 513,
515 and 519/06) CJEU held it was not necessary to show that consumers
were disadvantaged for an agreement to breach Article 101 because of its
object. The case concerned differential pricing agreement made with
or Effect of •
Spanish wholesalers for the sale of certain drugs. CJEU held that:
Re Article 101 and in a case involving the pharmaceutical sector, an
agreement between producer and distributor which might tend to restore
Preventing, the national divisions in trade between Member States might be such as to
frustrate the Treaty’s objective of achieving the integration of national
markets through the establishment of a single market; That there is nothing

Restricting, •
in Article 101 to indicate that only those agreements which deprive
consumers of certain advantages may have an anti-competitive object;
That Article 101 aims to protect not only the interests of competitor or of

or Distorting consumers, but also the structure of the market and, in so doing,
competition as such. Thus for a finding that an agreement has an anti-
competitive object, it is not necessary that final consumers be deprived of

Competition •
the advantages of effective competition in terms of supply or price.
The case law shows that where the anti-competitive nature of an
agreement is not evident from its object, then the Court will be required to
go further and consider its effects. Competition must be assessed in the
specific circumstances of each market rather than in the abstract (Delimitis v.
Henninger Brau C-234/90)
All agreements between business people to
Thus an agreement will not be caught by
some extent curtail each other’s freedom of
Article 101(1) TFEU if it does not have an
action in the marketplace and not all are
appreciable impact on competition or on
capable of preventing, restricting or distorting
inter-state trade.
The De competition in a noticeable way.

Minimis
Doctrine
• This is known as the “de minimis doctrine”
established in Völk v. Vervaecke C-5/69 -Völk
manufactured less than one per cent of the
• In Miller C-19/77 the defendant had a 5%
washing machines produced in Germany and
market share. This was viewed as sufficiently
CJEU held that even absolute territorial
large to prevent it from being able to use the
protection granted to the producer’s exclusive
de minimis doctrine.
distributor for Belgium and Luxembourg would
not infringe Article 101(1) TFEU if it did not
appreciably restrict competition.

• Now the Commission publishes notices to


provide guidance – the latest- the 2001 de
• Article 3 of Regulation 1/2003 provides that
minimis notice provides that agreements
when behaviour affects trade between
between undertakings with a combined market
Member States, a national competition
of below a certain threshold will not fall under
authority or court must apply EU competition
Article 101(1) TFEU – in the case of competitors
law as well as national competition law.
that is a share of below 10%, in the case of
non-competitors it is 15%.
Exemption • Article 101(3) TFEU allows agreements whose beneficial
results outweigh their anti-competitive effects to be
granted an exemption. An agreement caught under Article
under Article 101(1) TFEU may be exempted under Article 101(3) TFEU if
four conditions are met. These are:
101(3) TFEU: • – it must improve the production or distribution of goods
or promote technical or economic progress;
The • – consumers must receive a fair share of the resulting
benefit;
Exemption • – it must only contain restrictions which are indispensable
to the attainment of the agreement’s objectives;
from the • – it cannot lead to the elimination of competition in
respect of a substantial part of the products in question.
Article 101(1) • • The exemption under Article 101(3) TFEU requires all
four conditions to be met and if any of these is not met
TFEU then the exemption may be refused: per Metropole
Television (T-528/93)

Prohibition • • Under Regulation 1/2003 Regulation, the provisions of


Article 101(3) TFEU can be applied by national courts.
Block Exemptions
The Commission is given the power under Article 101(3) TFEU to declare the provisions of
Article 101(1) TFEU inapplicable to a category of agreements. This avoids the need for
undertakings to make individual notifications to the Commission. These exemptions to
categories or “blocks” are known as “block exemptions”.
• This is a highly technical area of EU within themselves however these are the primary
block exemptions. •
– Regulation 2658/2000: specialization agreements
– Regulation 2659/2000: research and development agreements
– Regulation 772/2004: technology transfer agreements
– Regulation 1218/10: specialisation agreements
– Regulation 330/10: single block exemption for vertical restraints
• Regulation 330/10 applies to all agreements containing vertical restraints, and is broad,
covering unfinished goods, and agreements between multiple parties. It is innovative as it is
based on a market share test (where parties have combined market share of up to 30% they
have a “safe harbour” ie agreements entered into between parties automatically exempt
from Article 101(1) TFEU unless known as “hard-core restrictions”
Until the introduction of Regulation 1/2003,
any undertaking wishing to avail of an
individual exemption under Article 101(3)
TFEU had to notify the agreement to the
Commission.

Under Article 1 of Regulation 1/2003, an


Individual agreement, decision or concerted practice
caught by Article 101(1) TFEU which
satisfies the conditions of Article 101(3)
Exemptions ‘…shall not be prohibited, no prior decision
to that effect being required.’

This removes the option of seeking an


individual exemption from the
Commission.