Law of the European Union
Topic: Prohibition of Cartels/EU Competition Law
Notion of Undertaking
CJEU (functional approach): Any single economic entity
engaged in economic activities irrespective of its legal status
and regardless the way in which it is financed (Case C-41/90,
Höfner and Elser)
1. Single economic entity
a. Irrespective of its legal status
- Natural persons (freelance professionals)
- Liberal Professions (medical specialists, lawyers (Case C-
309/99, Wouters)
- State or state entity
b. Regardless the way in which it is financed
2. Economic activity
- ‘Any activity of offering goods and services on a given
market’
- Not the same as exercising public law authority: An
activity, which necessarily has to be provided by the State.
Note: The nature of the activity matters as distinct from the
nature of the body performing the activity
- The final consumer will never constitute an undertaking
(purchasing goods)
Prohibition of Cartels – Article 101 TFEU
Structure of Article 101 TFEU
- Article 101(1) TFEU: Scope of applications and conditions
establishing a cartel
- Article 101(2) TFEU: legal consequence
- Article 101(3) TFEU: exemptions
Criteria:
1. Are the actors undertakings?
2. Is the actors’ conduct covered by Article 101(1) TFEU?
3. Is the actors’ conduct collusive?
4. Is the collusive conduct affect trade between Member
States in an appreciable manner?
5. Does the collusive conduct fall within an exception to the
scope of Article 101(1) TFEU?
, Is the actors’ conduct covered by Article 101(1) TFEU?
- Agreement: Concurrence of wills
o Formal agreement (contract)
o Informational agreement: so long as there is a
concurrence of wills, constituting the faithful
expression of the parties’ intention, its form is
unimportant (‘gentlemen’s agreement’)
- Does it matter than an undertaking, which was present in
a meeting where an agreement was concluded, does not
participate in the agreement?
o No, there must be a public distancing; other: tacit
acceptance
- Does it matter whether the undertakings involved are at
different levels of the economy?
o No, vertical agreements are covered agreements
o Vertical: Chain between manufacturer and final
consumer
o Limited harmfulness: Vertical restrains on intra-brand
competition can encourage inter-brand competition
o Jointed Cases 56/64 and 58/64, Consten and
Grundig
Decision of Association of Undertakings
- GC, Case T-193/02, Piau
1. Is there an association of undertakings?
o Bar association
o Visa (COM, COMP/29.373, Visa International and
Mastercard)
2. Content of the decision must be considered as
streamlining the economic activity of the undertakings
covered by the association
o Non-binding recommendations are covered
- If neither agreement nor decisions of an association of
undertakings: Concerted Practice
Concerted Practice
- No clear definition of the term – Evolution of case law
- Jointed Cases 40/75 to 48/75, Suiker Unie (Sugar case)
, o Any direct or indirect contact between economic
operators, the object or effect of which is either to
influence the conduct on the market of actual or
potential competitors or to disclose to such
competitors the future conduct on the market that
they have decided or contemplate to adopt
- Conditions for the existence of a concerted practice:
1. Concentration: An act of coordination has taken place
2. Practice: Subsequent conduct (market behaviour) of
the undertakings involved (that is contrary to the normal
competitive process)
3. Causal link between concertation (coordination) and
practice (market behaviour)
Concerted Practice: Art of coordination
- Coordination: Sharing information through direct or indirect
contact
- Types (examples):
Direct contact: exchange of information (not only related to
prices)
o Reciprocal knowledge of future decisions for the
control of deliveries of sugar
o Participation can be based on evidential
circumstances and also on logical deduction from
other proven facts
o Pre-pricing communications
Indirect contact: the information are not directly exchanged
by competitors but they are in some ways received by
them
o Publication of information
o Information transferred through an intermediary
(‘hub’)
To be distinguished from: purely parallel behaviours
o Independent action: adapting the undertaking’s
conduct to that of their competitors
o BUT: purely parallel behaviour on the market is not
prohibited
Prohibition of Cartels: Scope and Conditions, Article 101(1)
TFEU
1. Are the actors undertakings?
, 2. Is the actors’ conduct covered by Article 101(1) TFEU?
a. Concurrence of wills: agreement
b. Obligation to follow: decisions of associations
c. Absence of (a) and (b) but presence of exchange of
individualised commercially sensitive information
non rebutted by the undertakings involved:
Concerted Practice
3. Is the actors’ conduct collusive?
Collusion
- Restriction by object (also called: ‘hardcore restrictions’):
agreement or collusive behaviour that, by its very nature,
can be regarded as being injurious to normal competitive
conditions: The violation is presumed
o No need to consider the actual effects of the
behaviour on competition
o Examples are given in Article 101(1) (a) – (e) TFEU:
-Price-fixing
-Limiting output
-Sharing the market
- Restriction by effect: concrete effect of the agreement on
the market, results in the restriction of the competition: The
violation must be proven, no presumption of violation
o Anti-competitive effects have to be proven by the
COM/NCA
o Example: Beer supply agreements
Restriction by effect: Effect-based analysis
1. Determination of the relevant market
2. Examination whether there is concrete possibility for new
competitors to enter the market or for existing ones to
expend
o Based on number of competitors on the market,
saturation of the market, brand loyalty
o If no denial of access: no restriction by effect
3. Significant contribution of the conduct to the barrier to
market access
o Comparison between the current market situation
and a hypothetical one without the conduct under
review
Topic: Prohibition of Cartels/EU Competition Law
Notion of Undertaking
CJEU (functional approach): Any single economic entity
engaged in economic activities irrespective of its legal status
and regardless the way in which it is financed (Case C-41/90,
Höfner and Elser)
1. Single economic entity
a. Irrespective of its legal status
- Natural persons (freelance professionals)
- Liberal Professions (medical specialists, lawyers (Case C-
309/99, Wouters)
- State or state entity
b. Regardless the way in which it is financed
2. Economic activity
- ‘Any activity of offering goods and services on a given
market’
- Not the same as exercising public law authority: An
activity, which necessarily has to be provided by the State.
Note: The nature of the activity matters as distinct from the
nature of the body performing the activity
- The final consumer will never constitute an undertaking
(purchasing goods)
Prohibition of Cartels – Article 101 TFEU
Structure of Article 101 TFEU
- Article 101(1) TFEU: Scope of applications and conditions
establishing a cartel
- Article 101(2) TFEU: legal consequence
- Article 101(3) TFEU: exemptions
Criteria:
1. Are the actors undertakings?
2. Is the actors’ conduct covered by Article 101(1) TFEU?
3. Is the actors’ conduct collusive?
4. Is the collusive conduct affect trade between Member
States in an appreciable manner?
5. Does the collusive conduct fall within an exception to the
scope of Article 101(1) TFEU?
, Is the actors’ conduct covered by Article 101(1) TFEU?
- Agreement: Concurrence of wills
o Formal agreement (contract)
o Informational agreement: so long as there is a
concurrence of wills, constituting the faithful
expression of the parties’ intention, its form is
unimportant (‘gentlemen’s agreement’)
- Does it matter than an undertaking, which was present in
a meeting where an agreement was concluded, does not
participate in the agreement?
o No, there must be a public distancing; other: tacit
acceptance
- Does it matter whether the undertakings involved are at
different levels of the economy?
o No, vertical agreements are covered agreements
o Vertical: Chain between manufacturer and final
consumer
o Limited harmfulness: Vertical restrains on intra-brand
competition can encourage inter-brand competition
o Jointed Cases 56/64 and 58/64, Consten and
Grundig
Decision of Association of Undertakings
- GC, Case T-193/02, Piau
1. Is there an association of undertakings?
o Bar association
o Visa (COM, COMP/29.373, Visa International and
Mastercard)
2. Content of the decision must be considered as
streamlining the economic activity of the undertakings
covered by the association
o Non-binding recommendations are covered
- If neither agreement nor decisions of an association of
undertakings: Concerted Practice
Concerted Practice
- No clear definition of the term – Evolution of case law
- Jointed Cases 40/75 to 48/75, Suiker Unie (Sugar case)
, o Any direct or indirect contact between economic
operators, the object or effect of which is either to
influence the conduct on the market of actual or
potential competitors or to disclose to such
competitors the future conduct on the market that
they have decided or contemplate to adopt
- Conditions for the existence of a concerted practice:
1. Concentration: An act of coordination has taken place
2. Practice: Subsequent conduct (market behaviour) of
the undertakings involved (that is contrary to the normal
competitive process)
3. Causal link between concertation (coordination) and
practice (market behaviour)
Concerted Practice: Art of coordination
- Coordination: Sharing information through direct or indirect
contact
- Types (examples):
Direct contact: exchange of information (not only related to
prices)
o Reciprocal knowledge of future decisions for the
control of deliveries of sugar
o Participation can be based on evidential
circumstances and also on logical deduction from
other proven facts
o Pre-pricing communications
Indirect contact: the information are not directly exchanged
by competitors but they are in some ways received by
them
o Publication of information
o Information transferred through an intermediary
(‘hub’)
To be distinguished from: purely parallel behaviours
o Independent action: adapting the undertaking’s
conduct to that of their competitors
o BUT: purely parallel behaviour on the market is not
prohibited
Prohibition of Cartels: Scope and Conditions, Article 101(1)
TFEU
1. Are the actors undertakings?
, 2. Is the actors’ conduct covered by Article 101(1) TFEU?
a. Concurrence of wills: agreement
b. Obligation to follow: decisions of associations
c. Absence of (a) and (b) but presence of exchange of
individualised commercially sensitive information
non rebutted by the undertakings involved:
Concerted Practice
3. Is the actors’ conduct collusive?
Collusion
- Restriction by object (also called: ‘hardcore restrictions’):
agreement or collusive behaviour that, by its very nature,
can be regarded as being injurious to normal competitive
conditions: The violation is presumed
o No need to consider the actual effects of the
behaviour on competition
o Examples are given in Article 101(1) (a) – (e) TFEU:
-Price-fixing
-Limiting output
-Sharing the market
- Restriction by effect: concrete effect of the agreement on
the market, results in the restriction of the competition: The
violation must be proven, no presumption of violation
o Anti-competitive effects have to be proven by the
COM/NCA
o Example: Beer supply agreements
Restriction by effect: Effect-based analysis
1. Determination of the relevant market
2. Examination whether there is concrete possibility for new
competitors to enter the market or for existing ones to
expend
o Based on number of competitors on the market,
saturation of the market, brand loyalty
o If no denial of access: no restriction by effect
3. Significant contribution of the conduct to the barrier to
market access
o Comparison between the current market situation
and a hypothetical one without the conduct under
review
