EU - Competition I

Question 0

Art 3(3) TEU

Answer 0

The Union shall establish a highly-competitive social market economy

Question 1

Art. 101 TFEU

Answer 1

Prohibition of business agreements that may affect trade between MS, and have as their object/effect the prevention, restriction or distortion of competition, e.g.

• price-fixing agreements
• limit or control production/sources of supply

Question 2

Horizontal agreement

Answer 2

Agreements between competitors operating at the same level of the Market

Question 3

Vertical agreements

Answer 3

Agreements between firms operating at different levels, e,g. supplier and distributor

Question 4

Quinine Cartel

Answer 4

Oral/gentleman’s agreements are capable of being agreements contrary to Art. 101 TFEU

Question 5

IAZ NV International Belgium

Answer 5

Agreements between trade associations may also breach Art. 101 TFEU, even if they are not legally binding

Question 6

Wouters v Algemene

Answer 6

Regulatory rules promulgated by professional bodies may breach Art. 101 TFEU unless they are reasonable

Question 7

Dyestuffs

Answer 7

1. Concerted practices between undertakings that falls short of informal agreement, but which knowingly substitutes practical cooperation between them for risks of competition, will be capable of breaching Art. 101 TFEU
2. Breach of Art. 101 will be assumed in cases of parallel conduct which produces conditions that would not occur but for collusion between undertakings

Question 8

Suiker Unie

Answer 8

Contact between the parties and subsequent similar practice will be sufficient to constitute an agreement in breach of Art. 101 TFEU

Question 9

Woodpulp

Answer 9

1. Open pricing structures may rebut presumption of price fixing/cartel
2. Agreements do not need to be subject to EU jurisdiction to affect intra-Community trade; they must just be implemented in EU

Question 10

Hopner and Elser v Macrotron GmbH

Answer 10

An undertaking is any entity, whether a natural or legal person, engaged in economic activity

Question 11

Centrafarm v Sterling

Answer 11

1. There must be two undertakings for provisions of Art. 101 to apply
2. Undertakings must be separate, i.e. parent/subsidiary companies or principal/agent are one undertaking

Question 12

Consten and Grundig

Answer 12

1. Court will look objectively at the terms of the agreement to determine if it distorts competition (intention of the parties is irrelevant)
2. If agreement contains restrictions expressly prohibited under Art. 101(1) TFEU, it will automatically be deemed anticompetitive, e.g. partitioning internal market or price-fixing
3. Agreements that may potentially affect intra-Community trade will still breach Art. 101 TFEU
4. Impact of agreement on intra-Community trade does not have to be negative, i.e. reduce trade; increased trade is still deemed a distortion, and hence a breach of Art. 101 TFEU

Question 13

STM v Maschinenbau Ulm

Answer 13

1. Agreement may also breach Art. 101 if it has an anticompetitive effect in view of:
   - nature/quantity of products concerned
   - market shares of parties concerned
   - isolated vs. network of similar agreements
   - severity of clauses within agreement
   - opportunities for competitors to import/export in parallel (e.g. ‘grey’ imports)
2. Agreement must affect, or be likely to affect, the pattern of trade between member states
3. Art. 101(3) TFEU individual exemption may be used where the benefits of the breach outweigh the negative effects

Question 14

Dutch Choice Cooperative

Answer 14

Agreement between national producers still affected intra-Community trade, because it sealed the market off to external competitors

Question 15

Art. 101(2)

Answer 15

Any agreement found to breach Art. 101(1) TFEU is held to be automatically void, so

• entire agreement may be deemed void
• offending clauses may be severed by national courts, as Art. 101 is directly effective; but only if it is possible to retain substance of original agreement (Chemidus Waverin)

Question 16

Exceptions permitting a breach

Answer 16

• Notice on Agreements of Minor Importance (NAOMI)
• No Appreciable Affectation of Trade (NAAT)
• Regulation 330/2010 (block exceptions for vertical agreements)
• Art. 101(3) TFEU (individual exemptions)

Question 17

Notice on Agreements of Minor Importance (NAOMI)

Answer 17

• Horizontal agreements: combined market share must not exceed 10%
• Vertical agreements: neither party may have a market share in excess of 15% in any relevant market
• Network of agreements: threshold is set at 5% market share

N.B. If agreement contains expressly prohibited clauses, NAOMI will not excuse a breach

Question 18

No Appreciable Affectation of Trade (NAAT)

Answer 18

• aggregate market share of parties may not exceed 5%
  AND
• horizontal agreements: aggregate turnover may not exceed €40m
• vertical agreements: supplier’s turnover may not exceed €40m

N.B. Agreements that contain express prohibition clauses will still be exempt from breaching Art. 101 TFEU

Question 19

Regulation 330/2010 - Block Exemptions

Answer 19

For Regulation 330/2010 to apply, there must be:

• a breach of Art. 101 TFEU
• the agreement must be vertical (Art. 2(1))
• supplier’s market share must not exceed 30% (Art. 3(1))
• agreement does not contain any ‘blacklisted’ restrictions, e.g. territorial bans on sales, price-fixing (Art. 4(1))

Question 20

Art. 101(3) TFEU

Answer 20

Individual exemptions will apply if the agreement:
- improves production/distribution of goods OR promotes technological/economic progress
AND
- allows consumers a fair share of the resulting benefit
- does not impose unnecessary conditions on either party
- does not eliminate other competition

N.B. Art. 101(3) TFEU admits existence of the breach, but claims benefits outweigh the negative effects

Question 21

Volk v Vervaecke

Answer 21

An exemption under NAOMI or NAAT will apply where the breach is so minor (de minimis) as to have no noticeable impact on the market

Question 22

Sanctions/options in the event of a breach

Answer 22

• investigation by Commission under Regulation 1/2003
• penalties of up to 10% of previous year’s global turnover
• injured third parties may sue for damages as Art. 101 TFEU has direct effect (BRT v Sabam)
• leniency notice if whistleblower comes forward/non-whistleblower cooperates fully (Hoffman La Roche)
• application for JR by parties concerned in the event of disagreement with Commissions findings (Art. 263 TFEU)