Question 1
‘European Competition Law needs to encourage more collaboration between
undertakings by way of horizontal agreements and less competition, than it currently
does.’
Critically evaluate this statement with reference to the Court of Justice of the
European Union’s case law on interpretation of Article 101 TFEU and relevant
academic authorities.
In recent years, horizontal agreements (HA) between undertakings have proven
to be effective and desirable in the internal market. 1 Similarly, Competition Law
recognises that HA can lead to considerable economic benefits, such as saving
costs, increasing investments and enhancing product quality. 2 However, there is
cause for concern when undertakings work together to strengthen their position
in the market. As we will see, this has adverse effects on competition. This essay
will firstly, unpin the elements of Article 101 Treaty on the Functioning of the
European Union3 (TFEU), secondly, the interaction between competition and HA
will be considered, before finally analysing the Commission’s approach. The
impetus of Article 101 is simple; to curtail agreements between two or more
undertakings, decisions by associations of undertakings and concerted practices
which may affect trade between Member States (MS) and which have as their
object or effect the restriction of competition. 4 NOTE - (1) refers to Article 101(1)
and (3) refers to Article 101(3).
The Components of (1)
The term "undertaking" is not defined in the Treaty, despite its centrality. Rather,
Höfner5 elucidated that “every entity engaged in economic activity” 6 does so as
an undertaking. This includes individual persons offering goods or services on a
1 Richard Whish, ‘Legitimate Competitor Collaboration in Times of Crisis’, (15 June 2020),
<https://www.youtube.com/watch?v=NVkkNrTjbew> accessed on 28 October 2022
2 Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to
horizontal co-operation agreements, [2011] C 11/01, paragraph 2
3 Consolidated Version of the Treaty on the Functioning of the European Union, [2012] C 326/88, Article 101
(1)
4 ibid
5 Case C-41/90 Höfner and Elser v Macrotron GmbH [1991] ECR I-1979, paragraph 21
6 ibid
, market where they bear financial risk attached to the performance of those
services.7
It is crucial to identify what constitutes an ‘agreement’. A vital element of an
agreement is the ‘existence of a concurrence of wills’, 8 between the parties.
Evidence must be founded upon the joint expression of the undertaking's
intention to conduct themselves on the market in a specific way. 9 A simple
‘gentleman's agreement’ or an oral understanding, are construed as agreements,
even though neither is legally binding nor in writing. 10 A HA is defined as
agreements between actual or potential competitors who operate at the same
level of production or distribution in the market. 11
A decision of associations of undertakings is usually where a trade association
will issue a set of instructions to its members or make an agreement with its
members, for example, to fix prices on certain products. This damages
competition as it can allow dominant undertakings to maintain/grow their
dominant position and as a by-product set up a barrier to entry, restricting
potential competitors.
A concerted practice involves a knowing substitution of practical cooperation for the
risks of competition.12 This does not require an actual plan 13 as the Hüls presumption
provides that common contact between undertakings implies that conduct will
follow.14 Julian argues that competition authorities struggle to find direct evidence of
illicit agreements as the participants hold ‘secret meetings in smoke-filled rooms.’ 15
7 Case C-35/96 Commission v Italy (customs agents) [1998] ECR I-3851
8 Case T-41/96 Bayer v Commission, EU:T:2000:242
9 Case 41/69 ACF Chemiefarma v Commission of the European Communities, ECR [1970] 661
10 Monika A.Gorska, ‘Concurrence of wills – a necessary ingredient of an agreement restricting competition:
Case comment to the judgment of Court of Competition and Consumer Protection of 8 February 2011 – ZST
Gamrat S.A. v President of the Office of Competition and Consumer Protection (Ref. No. XVII Ama 16/10)’
(2012), Vol 5(6) Yearbook of Antitrust and Regulatory Studies, 289-295
11 n2, [1]
12 Case 48/69 ICI v Commission, EU:C:1972:70, paragraph 64
13 Case 40/73 etc Suiker Unie v Commission, EU:C:1975:174
14 Case C-199/92 P etc Hüls AG v Commission, EU:C:1999:358, paragraph 163
15 Julian M. Joshua and Sarah Jordan, ‘Combinations, Concerted Practices and Cartels: Adopting the Concept
of Conspiracy in European Community Competition Law Symposium on European Competition Law’ (2004) 24
Nw. J. Int'l L. & Bus, 675
‘European Competition Law needs to encourage more collaboration between
undertakings by way of horizontal agreements and less competition, than it currently
does.’
Critically evaluate this statement with reference to the Court of Justice of the
European Union’s case law on interpretation of Article 101 TFEU and relevant
academic authorities.
In recent years, horizontal agreements (HA) between undertakings have proven
to be effective and desirable in the internal market. 1 Similarly, Competition Law
recognises that HA can lead to considerable economic benefits, such as saving
costs, increasing investments and enhancing product quality. 2 However, there is
cause for concern when undertakings work together to strengthen their position
in the market. As we will see, this has adverse effects on competition. This essay
will firstly, unpin the elements of Article 101 Treaty on the Functioning of the
European Union3 (TFEU), secondly, the interaction between competition and HA
will be considered, before finally analysing the Commission’s approach. The
impetus of Article 101 is simple; to curtail agreements between two or more
undertakings, decisions by associations of undertakings and concerted practices
which may affect trade between Member States (MS) and which have as their
object or effect the restriction of competition. 4 NOTE - (1) refers to Article 101(1)
and (3) refers to Article 101(3).
The Components of (1)
The term "undertaking" is not defined in the Treaty, despite its centrality. Rather,
Höfner5 elucidated that “every entity engaged in economic activity” 6 does so as
an undertaking. This includes individual persons offering goods or services on a
1 Richard Whish, ‘Legitimate Competitor Collaboration in Times of Crisis’, (15 June 2020),
<https://www.youtube.com/watch?v=NVkkNrTjbew> accessed on 28 October 2022
2 Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to
horizontal co-operation agreements, [2011] C 11/01, paragraph 2
3 Consolidated Version of the Treaty on the Functioning of the European Union, [2012] C 326/88, Article 101
(1)
4 ibid
5 Case C-41/90 Höfner and Elser v Macrotron GmbH [1991] ECR I-1979, paragraph 21
6 ibid
, market where they bear financial risk attached to the performance of those
services.7
It is crucial to identify what constitutes an ‘agreement’. A vital element of an
agreement is the ‘existence of a concurrence of wills’, 8 between the parties.
Evidence must be founded upon the joint expression of the undertaking's
intention to conduct themselves on the market in a specific way. 9 A simple
‘gentleman's agreement’ or an oral understanding, are construed as agreements,
even though neither is legally binding nor in writing. 10 A HA is defined as
agreements between actual or potential competitors who operate at the same
level of production or distribution in the market. 11
A decision of associations of undertakings is usually where a trade association
will issue a set of instructions to its members or make an agreement with its
members, for example, to fix prices on certain products. This damages
competition as it can allow dominant undertakings to maintain/grow their
dominant position and as a by-product set up a barrier to entry, restricting
potential competitors.
A concerted practice involves a knowing substitution of practical cooperation for the
risks of competition.12 This does not require an actual plan 13 as the Hüls presumption
provides that common contact between undertakings implies that conduct will
follow.14 Julian argues that competition authorities struggle to find direct evidence of
illicit agreements as the participants hold ‘secret meetings in smoke-filled rooms.’ 15
7 Case C-35/96 Commission v Italy (customs agents) [1998] ECR I-3851
8 Case T-41/96 Bayer v Commission, EU:T:2000:242
9 Case 41/69 ACF Chemiefarma v Commission of the European Communities, ECR [1970] 661
10 Monika A.Gorska, ‘Concurrence of wills – a necessary ingredient of an agreement restricting competition:
Case comment to the judgment of Court of Competition and Consumer Protection of 8 February 2011 – ZST
Gamrat S.A. v President of the Office of Competition and Consumer Protection (Ref. No. XVII Ama 16/10)’
(2012), Vol 5(6) Yearbook of Antitrust and Regulatory Studies, 289-295
11 n2, [1]
12 Case 48/69 ICI v Commission, EU:C:1972:70, paragraph 64
13 Case 40/73 etc Suiker Unie v Commission, EU:C:1975:174
14 Case C-199/92 P etc Hüls AG v Commission, EU:C:1999:358, paragraph 163
15 Julian M. Joshua and Sarah Jordan, ‘Combinations, Concerted Practices and Cartels: Adopting the Concept
of Conspiracy in European Community Competition Law Symposium on European Competition Law’ (2004) 24
Nw. J. Int'l L. & Bus, 675
