Competition law
EU Competition law aims to protect fair competition between businesses in the EU’s
internal market and promote economic integration among member states. It ensures that
competition is not distorted or restricted to the detriment of consumers. The point of
competition law is creating working markets so consumers and other market operators
can compete against each other in order to achieve the best price for the most
innovative product. Competition refers to the rivalry between businesses to attract
customers through better prices, quality, or innovation.
Key provisions:
Article 101 TFEU: Prohibits cartels and anti-competitive agreements between
undertakings.
Article 102 TFEU: Prohibits the abuse of a dominant market position.
Article 107 TFEU: Prohibits state aid to specific undertakings by Member States.
Article 101 TFEU -> Prohibits cartels and anti-competitive agreements between
undertakings.
Article 101 (1) and (2) TFEU have direct effect and thus can be relied upon before any
national court.
The article prohibits anti-competitive collusions between undertakings, also known as
‘cartels’; a form of illegal behaviour that has been the most dangerous anticompetitive
practice.
The article consists of three paragraphs:
1. Rule prohibiting anticompetitive agreements;
2. Consequences of anticompetitive behaviour;
3. Possibility for exemptions for behaviour that follow under 1.
Article 101 prohibits anti-competitive collusions between undertakings. There are four
conditions for the application of the prohibition mentioned in Article 101(1) TFEU:
- Are the actors involved undertakings?
An undertaking revolves around the activity of the economic operator and not its legal
or institutional form. Two things are important. Firstly, the legal personality of the entity
and the way in which it is financed are not relevant for the definition of undertaking.
Secondly, the undertaking must be engaged in economic activity. In other words, it is
function rather than form that dictates whether or not an entity qualifies as an
undertaking. Check Höfner & Elser (Par. 21).
An activity can be considered economic if there is the offering of buying or selling goods
and services on a given market and the activity could at least in principle be carried on
by a private undertaking in order to make profits. This functional concept of
undertaking broadens the scope of competition rules to include entities that may
formally not be regarded as companies.
There are two exceptions to the concept of economic activity:
1. Exercise of public powers exception. Check SAT v. Eurocontrol (Par. 30).
2. Exception for non-commercial activities meaning solidarity-based activities. Check
Poucet & Pistre (Par. 18 + 19).
1
, - Is the actor's conduct covered by Article 101(1) TFEU?
For the application of Article 101 TFEU there must be some form of collusion. The
collusion can have the form of agreements, decisions of undertakings or concerted
practices.
Agreements;
An agreement requires a concurrence of wills. It does not matter which form the
agreement has. As long as there is a concurrence of wills, constituting the faithful
expression of the parties’ intention.
Horizontal agreements are agreements between undertakings that are competing
with each other at the same level of the commercial chain. Vertical agreements are
agreements between undertakings at different levels of the commercial chain. Inter-
brand competition means competition between different brands. Intra-brand
competition is competition between sellers of the same brand. Brands can set rules that
limit competition between their own stores, for example by specifying the areas where
they are allowed to sell. Within its text, Article 101 does not make a distinction between
horizontal and vertical agreements, and it seems to generically cover both types. Check
Consten & Grunding.
The notion of an 'agreement' ends where one party unilaterally imposes its will on the
other. The distinction between tacit acceptance and unilateral imposition is sometimes
unclear and the Court has struggled to draw this line clearly within Union law. An
agreement may be hidden as an ‘apparently unilateral behaviour’. An ‘apparently
unilateral measure’ also can be regarded as an agreement within the meaning of article
101 TFEU. Check Bayer (Par. 69 + 71).
Decisions of associations of undertakings;
You ask yourself the question if there is an obligation for the undertakings to follow. An
association of undertakings usually consists of undertakings of the same general type
and makes itself responsible for representing and defending their common interests vis-
à-vis other economic operators, government bodies and the public in general. An
example is the Nederlandse Orde van Advocaten. Check Wouters (Par. 64).
Concerted practices;
This concept was designed as a safety net to catch all forms of collusive behaviour falling
short of an agreement. It can be seen as coordination between undertakings which is not
consensually agreed. It is a coordination without a formal agreement. Check Suiker Unie
(Par. 173 + 174) and ICI v. Commission (Par. 64).
2
,You ask yourself the question if there is a coordinated behaviour based on an exchange
of individualised commercially sensitive information. To answer this question, you can
check three conditions:
1. Act of coordination has taken place;
2. Has resulted in a certain market behaviour;
3. Causal link.
Tacit collusion or coordination will often be the result of an oligopolistic market
structure (market structure with few key players). When there are very few
undertakings in the market, the strategic behaviour of each market player is known to
the others and depends on the behaviour of the others. They therefore act in parallel. A
price increase by one of the undertakings would have an effect on its market share or
that of others and therefore it would be more logical to raise prices in parallel. The crucial
question here is whether such parallel behaviour is actually used to eliminate uncertainty
as to each other’s conduct regarding the amount, subject-matter, date, and place of the
price changes/ increases.
However, not all parallel behaviour between undertakings is considered concerted
practice. Parallel behaviour that directly follows from market forces is not caught by
article 101 TFEU.
- Is the actor's conduct collusive?
For an agreement, decisions of undertaking or concerted practice to violate Article 101
TFEU, it must prevent, restrict or distort competition. The influence that a collusive
practice might exert on competition can be either by object or by effect. According to the
CJEU, object or effect represents alternative requirements.
Restriction by object -> Does the purpose of the conduct reveal in itself a sufficient
degree of harm to competition? Restriction by object means that the purpose of the
collusion itself harms competition, without needing to look at the effects. This is
prohibited by definition as a hardcore restriction. The conduct must be directly aimed
at restricting competition. Examples include price-fixing, output limits (reducing the
number of products that are available), market sharing, and clauses granting exclusive
territorial protection to a distributor.
Restriction by effect -> Does the conduct restrict actual or potential competition
situation that would have existed in the absence of the conduct? The agreement resulted
in restricting competition although it was not its aim or object. Check John Deere (Par.
92) for an example; the sharing of information through the register was not considered a
hardcore restriction but could have a restrictive effect.
Article 101 TFEU is not applicable where the impact of the collusion on competition is not
appreciable (noticeable). This is called the minimis rule. Minor market imperfections
will be tolerated. To check this, an assessment is required. This assessment is written in
the De Minimis Notice (Par. 8). This checks if the effect on competition is beyond ‘de
minimis’. If the market shares from the De Minimis Notice are exceeded, the collusion is
considered restrictive by effect and article 101 TFEU is violated.
- Does the undertaking's collusive conduct affect trade between Member States
in an appreciable manner?
3
, Article 101 TFEU applies only to anti-competitive collusion by undertakings which may
potentially affect the trade between Member States in general. If this condition is not
fulfilled, the article does not apply as there is no cross-border element present. To meet
the requirement of the cross-border element, it is necessary to establish when the trade
is affected in an appreciable manner. Check Consten & Grundig and STM. Later the
CJEU made the NAAT-Guideline (Par. 52) from this caselaw.
- Does the collusive conduct fall within an exception to the scope of Article 101
TFEU?
There are four exceptions on which article 101 TFEU does not apply:
1. The relationship between parent and subsidiary companies forms a single
economic entity, so there is no collusion between different undertakings, and
the prohibition of Article 101 TFEU does not apply.
2. The economic sector in which the collusion takes place is so heavily regulated
by the state that there is no competition to restrict. Check Ladbroke Racing (Par.
33).
3. The collusion between undertakings is intended to ensure proper professional
practice, without going beyond what is necessary. Check Wouters (Par. 100 +
109).
4. Collective (labour) agreements pursuing a social policy objective do not fall under
Article 101 TFEU if two conditions are met. The conduct is fulfilling a social
function. Check Albany (Par. 59).
If the four conditions of Article 101 paragraph 1 TFEU are met and there is no reason for
exceptions, then, in principle, there is a prohibited cartel. Yet, the agreement may still be
exempted. There are two types of exemptions possible under Article 101 TFEU:
1. Block exemption based on exemption regulations;
The EU has block exemption regulations for certain categories of agreements to provide
legal certainty. Article 103 TFEU empowers the Council to set these rules. Most block
exemptions depend on market share thresholds. The Commission can always withdraw a
block exemption for an individual case. An example is Regulation 1217/2010, which
grants an exemption for horizontal Research & Developments agreements with a
combined market share up to 25%.
2. Individual exemption based on article 101 paragraph 3 TFEU;
The third paragraph of Article 101 TFEU provides an exemption rule which is also known
as the individual exemption. Through the exemption, the provision of paragraph 1 may
be declared inapplicable when four cumulative conditions are met.
- The cooperation resulting from the agreement must contribute to better
production or distribution of goods, or to technical or economic progress. This
condition is met as soon as the agreement provides clear benefits, such as
improved distribution, new products, environmental protection, or increased
employment.
- Consumers must be at least compensated for any harm caused by the restriction
of competition. The term ‘consumers’ includes both industrial customers and end
users. The stronger the competition, the more likely benefits will be passed on to
consumers.
4
EU Competition law aims to protect fair competition between businesses in the EU’s
internal market and promote economic integration among member states. It ensures that
competition is not distorted or restricted to the detriment of consumers. The point of
competition law is creating working markets so consumers and other market operators
can compete against each other in order to achieve the best price for the most
innovative product. Competition refers to the rivalry between businesses to attract
customers through better prices, quality, or innovation.
Key provisions:
Article 101 TFEU: Prohibits cartels and anti-competitive agreements between
undertakings.
Article 102 TFEU: Prohibits the abuse of a dominant market position.
Article 107 TFEU: Prohibits state aid to specific undertakings by Member States.
Article 101 TFEU -> Prohibits cartels and anti-competitive agreements between
undertakings.
Article 101 (1) and (2) TFEU have direct effect and thus can be relied upon before any
national court.
The article prohibits anti-competitive collusions between undertakings, also known as
‘cartels’; a form of illegal behaviour that has been the most dangerous anticompetitive
practice.
The article consists of three paragraphs:
1. Rule prohibiting anticompetitive agreements;
2. Consequences of anticompetitive behaviour;
3. Possibility for exemptions for behaviour that follow under 1.
Article 101 prohibits anti-competitive collusions between undertakings. There are four
conditions for the application of the prohibition mentioned in Article 101(1) TFEU:
- Are the actors involved undertakings?
An undertaking revolves around the activity of the economic operator and not its legal
or institutional form. Two things are important. Firstly, the legal personality of the entity
and the way in which it is financed are not relevant for the definition of undertaking.
Secondly, the undertaking must be engaged in economic activity. In other words, it is
function rather than form that dictates whether or not an entity qualifies as an
undertaking. Check Höfner & Elser (Par. 21).
An activity can be considered economic if there is the offering of buying or selling goods
and services on a given market and the activity could at least in principle be carried on
by a private undertaking in order to make profits. This functional concept of
undertaking broadens the scope of competition rules to include entities that may
formally not be regarded as companies.
There are two exceptions to the concept of economic activity:
1. Exercise of public powers exception. Check SAT v. Eurocontrol (Par. 30).
2. Exception for non-commercial activities meaning solidarity-based activities. Check
Poucet & Pistre (Par. 18 + 19).
1
, - Is the actor's conduct covered by Article 101(1) TFEU?
For the application of Article 101 TFEU there must be some form of collusion. The
collusion can have the form of agreements, decisions of undertakings or concerted
practices.
Agreements;
An agreement requires a concurrence of wills. It does not matter which form the
agreement has. As long as there is a concurrence of wills, constituting the faithful
expression of the parties’ intention.
Horizontal agreements are agreements between undertakings that are competing
with each other at the same level of the commercial chain. Vertical agreements are
agreements between undertakings at different levels of the commercial chain. Inter-
brand competition means competition between different brands. Intra-brand
competition is competition between sellers of the same brand. Brands can set rules that
limit competition between their own stores, for example by specifying the areas where
they are allowed to sell. Within its text, Article 101 does not make a distinction between
horizontal and vertical agreements, and it seems to generically cover both types. Check
Consten & Grunding.
The notion of an 'agreement' ends where one party unilaterally imposes its will on the
other. The distinction between tacit acceptance and unilateral imposition is sometimes
unclear and the Court has struggled to draw this line clearly within Union law. An
agreement may be hidden as an ‘apparently unilateral behaviour’. An ‘apparently
unilateral measure’ also can be regarded as an agreement within the meaning of article
101 TFEU. Check Bayer (Par. 69 + 71).
Decisions of associations of undertakings;
You ask yourself the question if there is an obligation for the undertakings to follow. An
association of undertakings usually consists of undertakings of the same general type
and makes itself responsible for representing and defending their common interests vis-
à-vis other economic operators, government bodies and the public in general. An
example is the Nederlandse Orde van Advocaten. Check Wouters (Par. 64).
Concerted practices;
This concept was designed as a safety net to catch all forms of collusive behaviour falling
short of an agreement. It can be seen as coordination between undertakings which is not
consensually agreed. It is a coordination without a formal agreement. Check Suiker Unie
(Par. 173 + 174) and ICI v. Commission (Par. 64).
2
,You ask yourself the question if there is a coordinated behaviour based on an exchange
of individualised commercially sensitive information. To answer this question, you can
check three conditions:
1. Act of coordination has taken place;
2. Has resulted in a certain market behaviour;
3. Causal link.
Tacit collusion or coordination will often be the result of an oligopolistic market
structure (market structure with few key players). When there are very few
undertakings in the market, the strategic behaviour of each market player is known to
the others and depends on the behaviour of the others. They therefore act in parallel. A
price increase by one of the undertakings would have an effect on its market share or
that of others and therefore it would be more logical to raise prices in parallel. The crucial
question here is whether such parallel behaviour is actually used to eliminate uncertainty
as to each other’s conduct regarding the amount, subject-matter, date, and place of the
price changes/ increases.
However, not all parallel behaviour between undertakings is considered concerted
practice. Parallel behaviour that directly follows from market forces is not caught by
article 101 TFEU.
- Is the actor's conduct collusive?
For an agreement, decisions of undertaking or concerted practice to violate Article 101
TFEU, it must prevent, restrict or distort competition. The influence that a collusive
practice might exert on competition can be either by object or by effect. According to the
CJEU, object or effect represents alternative requirements.
Restriction by object -> Does the purpose of the conduct reveal in itself a sufficient
degree of harm to competition? Restriction by object means that the purpose of the
collusion itself harms competition, without needing to look at the effects. This is
prohibited by definition as a hardcore restriction. The conduct must be directly aimed
at restricting competition. Examples include price-fixing, output limits (reducing the
number of products that are available), market sharing, and clauses granting exclusive
territorial protection to a distributor.
Restriction by effect -> Does the conduct restrict actual or potential competition
situation that would have existed in the absence of the conduct? The agreement resulted
in restricting competition although it was not its aim or object. Check John Deere (Par.
92) for an example; the sharing of information through the register was not considered a
hardcore restriction but could have a restrictive effect.
Article 101 TFEU is not applicable where the impact of the collusion on competition is not
appreciable (noticeable). This is called the minimis rule. Minor market imperfections
will be tolerated. To check this, an assessment is required. This assessment is written in
the De Minimis Notice (Par. 8). This checks if the effect on competition is beyond ‘de
minimis’. If the market shares from the De Minimis Notice are exceeded, the collusion is
considered restrictive by effect and article 101 TFEU is violated.
- Does the undertaking's collusive conduct affect trade between Member States
in an appreciable manner?
3
, Article 101 TFEU applies only to anti-competitive collusion by undertakings which may
potentially affect the trade between Member States in general. If this condition is not
fulfilled, the article does not apply as there is no cross-border element present. To meet
the requirement of the cross-border element, it is necessary to establish when the trade
is affected in an appreciable manner. Check Consten & Grundig and STM. Later the
CJEU made the NAAT-Guideline (Par. 52) from this caselaw.
- Does the collusive conduct fall within an exception to the scope of Article 101
TFEU?
There are four exceptions on which article 101 TFEU does not apply:
1. The relationship between parent and subsidiary companies forms a single
economic entity, so there is no collusion between different undertakings, and
the prohibition of Article 101 TFEU does not apply.
2. The economic sector in which the collusion takes place is so heavily regulated
by the state that there is no competition to restrict. Check Ladbroke Racing (Par.
33).
3. The collusion between undertakings is intended to ensure proper professional
practice, without going beyond what is necessary. Check Wouters (Par. 100 +
109).
4. Collective (labour) agreements pursuing a social policy objective do not fall under
Article 101 TFEU if two conditions are met. The conduct is fulfilling a social
function. Check Albany (Par. 59).
If the four conditions of Article 101 paragraph 1 TFEU are met and there is no reason for
exceptions, then, in principle, there is a prohibited cartel. Yet, the agreement may still be
exempted. There are two types of exemptions possible under Article 101 TFEU:
1. Block exemption based on exemption regulations;
The EU has block exemption regulations for certain categories of agreements to provide
legal certainty. Article 103 TFEU empowers the Council to set these rules. Most block
exemptions depend on market share thresholds. The Commission can always withdraw a
block exemption for an individual case. An example is Regulation 1217/2010, which
grants an exemption for horizontal Research & Developments agreements with a
combined market share up to 25%.
2. Individual exemption based on article 101 paragraph 3 TFEU;
The third paragraph of Article 101 TFEU provides an exemption rule which is also known
as the individual exemption. Through the exemption, the provision of paragraph 1 may
be declared inapplicable when four cumulative conditions are met.
- The cooperation resulting from the agreement must contribute to better
production or distribution of goods, or to technical or economic progress. This
condition is met as soon as the agreement provides clear benefits, such as
improved distribution, new products, environmental protection, or increased
employment.
- Consumers must be at least compensated for any harm caused by the restriction
of competition. The term ‘consumers’ includes both industrial customers and end
users. The stronger the competition, the more likely benefits will be passed on to
consumers.
4
