EU law
Working group 1
Art. 101 TFEU: the prohibition on cartels.
1. Are the actors involved undertakings?
1.1 Definition of undertaking?
1.2 Exceptions?
2. What is the conduct? (an agreement, a concerted practice, or a decision by an
association of undertakings)
2.1 If there is an agreement, is this horizontal of vertical?
3. Is the undertakings conduct collusive by object or eMect?
3.1 De Minimis rule
4. Does the undertaking collusive conduct aMect trade between MS in an
appreciable manner?
4.1 NAAT guideline
5. Are there any exceptions to the prohibition on cartels?
6. Are there any exemptions for collusive agreements?
Undertakings
Definition undertaking (Hofner and Elser case):
- Every entity engaged in an economic activity, regardless of the legal status of the
entity and the way in which it is financed.
- Economic activity: oMering goods or services on the market, or the activity could
at least be carried on by a private undertaking in order to make profits.
In the Hofner and Elser case is stated that the fact that employment procurement is
normally done via public agencies does not aMect the economic nature of that activity.
Exceptions:
1. The exercise of public powers (SAT vs. Eurocontrole case): the CJEU decided in
this case that Eurocontrol’s activities do not constitute an economic activity
because these activities are typically those of a public authority. A private body is
not an undertaking when it is engaged in the public interest task that is
fundamental to the functioning of the state.
2. Non-commercial activities (Poucet and Pistre case): sickness funds and
organizations involved in the management of the public social security system,
fulfil an exclusively social function. These activities are non-profit and therefore
no economic activity. So, these companies are not an undertaking.
, 3. Art. 101 TFEU does not apply in a relationship between an undertaking that is a
parent company and an undertaking that is a subsidiary company where the two
are seen to form a single economic unit.
Are these undertakings colluding either in the form of an agreement, a
concerted practice, or a decision by an association of undertakings?
1) an agreement: a faithful expression of the intention of the parties to the agreement. If
there is a concurrence of wills among the parties, there might be an agreement. Its form
is not important. It can be a contract, a gentleman’s agreement or an oral
understanding.
- Horizontal agreements: agreements between undertakings that are competing at
the same level of the commercial chain. For example: two supermarkets are
making an agreement for the same price).
- Vertical agreements: agreements between undertakings at diMerent levels of the
commercial chain. For example: Coca-Cola and a supermarket are making an
agreement for the same prices).
Consten and Grundig case: there is a distinction between inter-brand (competition
between producers of diMerent brands) and intra-brand (competition between
producers of the same brand). This case said that competition is capable of being
distorted by agreements as between parties, but also by agreements that relate to
limitations on competition between contracting (third) parties, such as competitors and
consumers.
Agreements only exist through the consent between the parties. There must be
concurrence of two wills. But this is not always that simple. Sometimes it seems like a
party is making an agreement on its own (unilateral agreement), but the other party has
tacitly accepted the conduct (called: acquiescence).
- Bayer case: for a unilateral conduct to still qualify as an agreement, there must
be acquiescence, meaning that the other party must have expressly of tacitly
consented. So, if distributors comply silently or do not protest and simply follow
Bayer’s restrictions, that could be seen as an agreement.
Delimitis case: Mr. Delimitis was the owner of a pub. He had a clause with a brewery,
that stated that Delimitis had to purchase a minimum quantity of beer per year. If he
didn’t do this, he got a penalty. Delimitis got a penalty and complaint by the commission
that the agreement aMected trade between member states. The commission stated that
if you consider al similar contracts on the relevant market, and you see that those
contracts do not collectively have the eMect of preventing new national or foreign
competitors from entering that market, then those contracts do not fall under the article.
,2) concerted practices: forms of coordination between competitors in a market that do
not necessarily involve a formal contract but do reduce competition. This can involve
behaviour resulting from direct or indirect communication. Example: companies that
regularly share confidential price information and then coordinate their prices without
explicit agreements.
- Suiker Unie case: each undertaking must independently determine its policy on
the market including the choice of the persons and undertakings to which he
makes oMers or sells. Undertakings are allowed to adapt themselves intelligently
to the existing and anticipated conduct of their competitors. What is not allowed,
is any direct or indirect contact between operators. An important element of
concerted practice is the causal connection between the concerted action and
the practices which were adopted.
- The ICI v. Commission case: the court found that the three identical price
increases (parallel behaviour) by major suppliers in a short time frame, where
strong evidence of a concerted practice. Although there was no formal
agreement, the coordination was evident from their behaviour.
3) decisions of associations of undertakings: decisions made by an association of
undertakings (onderneming vereniging) (such as a trade association/branch organisatie)
is a collective decision or policy adopted by a group of undertakings through an
association that may restrict competition. For example: a trade association imposing a
minimum price on its members.
- Wouters case: the NOVA adopted a rule prohibiting lawyers from cooperating
with accountants. First is determined if the NOVA is a decision of associations of
undertakings. Yes, the ECJ found that the NOVA is an undertaking. Those rules
would fall outside the scope of the article, if they could be reasonably be
considered to be necessary to ensure the proper practice of the legal profession
as it is organized. The ECJ held that the restriction could be justified.
Is the conduct collusive?
Object: refers to the content of the collusion. It does not matter if the collusion has an
eMect on competition or not. The purpose of the conduct is to suMiciently harm the
competition.
- Cartes Ban Caires case: the Commission said that the payment card fees and
rules were set up to benefit the big banks and make it harder for new banks to
enter. There was a restriction by object. That means that the content of the
agreement/cooperation itself harms competition, without the need to examine
the actual eMects. To determine whether there is a restriction of competition by
object, regard must be had to the content of its provisions, objectives and the
economic and legal context of which it forms a part. It is also necessary to take
, into consideration the nature of the goods or services aMected, was well as the
real conditions of the functioning and structure of the market in question.
EMect: the actual competitive situation, so the eMect of the conduct of an undertaking.
- John Deere case: in this case there was a trade association with a register with
information. The Court found that this was a restriction by eMect. The sharing of
information through the register could have a restrictive eMect.
De Minimis Rule: if there is no noticeable eMect on competition, art. 101 TFEU does not
apply.
- Horizontal agreements (between competitors): does not exceed 10% of market
shares.
- Vertical agreements (not between competitors): does not exceed 15% of market
shares.
A<ect trade between member states
Consten and Grundig case: the Court stated that the agreement is capable of
constituting a threat, either direct or indirect, actual of potential, to freedom of trade
between member states in a manner which might harm the attainment of the objectives
of a single market between states.
- STM case says the same thing as the Consten and Grundig case.
It was later decided that this definition was too broad. So, the court introduced the NAAT
Guideline.
- NAAT Guideline (paragraph 18, 24, 36 and 53): 53: art. 101 TFEU is not applicable
if the market share of the parties within the Union do not exceed 5% and do not
exceed 40 million euro.
Exceptions
1. Relationship parent company and a subsidiary undertaking.
2. When the economic sector in which the collusion takes place is so heavily
regulated by the state that there is no competition to restrict. Ladbroke racing
case: the case concerned the French gambling sector which was heavily
regulated by the state. Only certain organizations (such as the PMU) were legally
permitted to organize bets on French horse races. Because the law already
closed the market to other companies, any agreement between the authorized
organizations could not further restrict competition. Therefore, the court ruled
that art. 101 TFEU does not apply, because there was no competition to restrict.
Working group 1
Art. 101 TFEU: the prohibition on cartels.
1. Are the actors involved undertakings?
1.1 Definition of undertaking?
1.2 Exceptions?
2. What is the conduct? (an agreement, a concerted practice, or a decision by an
association of undertakings)
2.1 If there is an agreement, is this horizontal of vertical?
3. Is the undertakings conduct collusive by object or eMect?
3.1 De Minimis rule
4. Does the undertaking collusive conduct aMect trade between MS in an
appreciable manner?
4.1 NAAT guideline
5. Are there any exceptions to the prohibition on cartels?
6. Are there any exemptions for collusive agreements?
Undertakings
Definition undertaking (Hofner and Elser case):
- Every entity engaged in an economic activity, regardless of the legal status of the
entity and the way in which it is financed.
- Economic activity: oMering goods or services on the market, or the activity could
at least be carried on by a private undertaking in order to make profits.
In the Hofner and Elser case is stated that the fact that employment procurement is
normally done via public agencies does not aMect the economic nature of that activity.
Exceptions:
1. The exercise of public powers (SAT vs. Eurocontrole case): the CJEU decided in
this case that Eurocontrol’s activities do not constitute an economic activity
because these activities are typically those of a public authority. A private body is
not an undertaking when it is engaged in the public interest task that is
fundamental to the functioning of the state.
2. Non-commercial activities (Poucet and Pistre case): sickness funds and
organizations involved in the management of the public social security system,
fulfil an exclusively social function. These activities are non-profit and therefore
no economic activity. So, these companies are not an undertaking.
, 3. Art. 101 TFEU does not apply in a relationship between an undertaking that is a
parent company and an undertaking that is a subsidiary company where the two
are seen to form a single economic unit.
Are these undertakings colluding either in the form of an agreement, a
concerted practice, or a decision by an association of undertakings?
1) an agreement: a faithful expression of the intention of the parties to the agreement. If
there is a concurrence of wills among the parties, there might be an agreement. Its form
is not important. It can be a contract, a gentleman’s agreement or an oral
understanding.
- Horizontal agreements: agreements between undertakings that are competing at
the same level of the commercial chain. For example: two supermarkets are
making an agreement for the same price).
- Vertical agreements: agreements between undertakings at diMerent levels of the
commercial chain. For example: Coca-Cola and a supermarket are making an
agreement for the same prices).
Consten and Grundig case: there is a distinction between inter-brand (competition
between producers of diMerent brands) and intra-brand (competition between
producers of the same brand). This case said that competition is capable of being
distorted by agreements as between parties, but also by agreements that relate to
limitations on competition between contracting (third) parties, such as competitors and
consumers.
Agreements only exist through the consent between the parties. There must be
concurrence of two wills. But this is not always that simple. Sometimes it seems like a
party is making an agreement on its own (unilateral agreement), but the other party has
tacitly accepted the conduct (called: acquiescence).
- Bayer case: for a unilateral conduct to still qualify as an agreement, there must
be acquiescence, meaning that the other party must have expressly of tacitly
consented. So, if distributors comply silently or do not protest and simply follow
Bayer’s restrictions, that could be seen as an agreement.
Delimitis case: Mr. Delimitis was the owner of a pub. He had a clause with a brewery,
that stated that Delimitis had to purchase a minimum quantity of beer per year. If he
didn’t do this, he got a penalty. Delimitis got a penalty and complaint by the commission
that the agreement aMected trade between member states. The commission stated that
if you consider al similar contracts on the relevant market, and you see that those
contracts do not collectively have the eMect of preventing new national or foreign
competitors from entering that market, then those contracts do not fall under the article.
,2) concerted practices: forms of coordination between competitors in a market that do
not necessarily involve a formal contract but do reduce competition. This can involve
behaviour resulting from direct or indirect communication. Example: companies that
regularly share confidential price information and then coordinate their prices without
explicit agreements.
- Suiker Unie case: each undertaking must independently determine its policy on
the market including the choice of the persons and undertakings to which he
makes oMers or sells. Undertakings are allowed to adapt themselves intelligently
to the existing and anticipated conduct of their competitors. What is not allowed,
is any direct or indirect contact between operators. An important element of
concerted practice is the causal connection between the concerted action and
the practices which were adopted.
- The ICI v. Commission case: the court found that the three identical price
increases (parallel behaviour) by major suppliers in a short time frame, where
strong evidence of a concerted practice. Although there was no formal
agreement, the coordination was evident from their behaviour.
3) decisions of associations of undertakings: decisions made by an association of
undertakings (onderneming vereniging) (such as a trade association/branch organisatie)
is a collective decision or policy adopted by a group of undertakings through an
association that may restrict competition. For example: a trade association imposing a
minimum price on its members.
- Wouters case: the NOVA adopted a rule prohibiting lawyers from cooperating
with accountants. First is determined if the NOVA is a decision of associations of
undertakings. Yes, the ECJ found that the NOVA is an undertaking. Those rules
would fall outside the scope of the article, if they could be reasonably be
considered to be necessary to ensure the proper practice of the legal profession
as it is organized. The ECJ held that the restriction could be justified.
Is the conduct collusive?
Object: refers to the content of the collusion. It does not matter if the collusion has an
eMect on competition or not. The purpose of the conduct is to suMiciently harm the
competition.
- Cartes Ban Caires case: the Commission said that the payment card fees and
rules were set up to benefit the big banks and make it harder for new banks to
enter. There was a restriction by object. That means that the content of the
agreement/cooperation itself harms competition, without the need to examine
the actual eMects. To determine whether there is a restriction of competition by
object, regard must be had to the content of its provisions, objectives and the
economic and legal context of which it forms a part. It is also necessary to take
, into consideration the nature of the goods or services aMected, was well as the
real conditions of the functioning and structure of the market in question.
EMect: the actual competitive situation, so the eMect of the conduct of an undertaking.
- John Deere case: in this case there was a trade association with a register with
information. The Court found that this was a restriction by eMect. The sharing of
information through the register could have a restrictive eMect.
De Minimis Rule: if there is no noticeable eMect on competition, art. 101 TFEU does not
apply.
- Horizontal agreements (between competitors): does not exceed 10% of market
shares.
- Vertical agreements (not between competitors): does not exceed 15% of market
shares.
A<ect trade between member states
Consten and Grundig case: the Court stated that the agreement is capable of
constituting a threat, either direct or indirect, actual of potential, to freedom of trade
between member states in a manner which might harm the attainment of the objectives
of a single market between states.
- STM case says the same thing as the Consten and Grundig case.
It was later decided that this definition was too broad. So, the court introduced the NAAT
Guideline.
- NAAT Guideline (paragraph 18, 24, 36 and 53): 53: art. 101 TFEU is not applicable
if the market share of the parties within the Union do not exceed 5% and do not
exceed 40 million euro.
Exceptions
1. Relationship parent company and a subsidiary undertaking.
2. When the economic sector in which the collusion takes place is so heavily
regulated by the state that there is no competition to restrict. Ladbroke racing
case: the case concerned the French gambling sector which was heavily
regulated by the state. Only certain organizations (such as the PMU) were legally
permitted to organize bets on French horse races. Because the law already
closed the market to other companies, any agreement between the authorized
organizations could not further restrict competition. Therefore, the court ruled
that art. 101 TFEU does not apply, because there was no competition to restrict.
