Article 101 - Competition Law Flashcards
Consten and Grundig
Grundig was a manufactuer of electrical products that entered into a distribution agreement with French company; both agreed to terms in the distribution agreement which would limit their commercial freedom. Grundig agreed to give Consten an exclusive territory by
- agreeing not to appoint any other distributors in France,
- not to supply its products directly to customers in France
- to ensure its distributors in other Member States did not resell its products in French or to French customers;
in return Consten agreed:
- not to sell products of competing manufactures
- not to sell Grundig products outside France;
held to be in violation of Article 101 TFEU
RATIO:
Article 101 applies to both horizontal and vertical agreements
Export bans which remove any parallel import options amount to a hardcore restriction.
Quinine cartel
6 pharmaceuticals had a gentleman’s agreement concerning the production and sales of quinine and quinidine within Common Market and an export agreement to fix export prices in 3rd countries, fix export-partitioning quotas, portion off of home markets and the reserve of the production of quinidine to the German and Dutch parties to the agreement.
RAITO:
A gentleman’s agreement may fall under Article 101 if its clauses amount to a faithful expression of the joint intention of the parties and clauses restrict competition within the meaning of Article 101
IAZ NV International Belgium v Commission
Association of water supplies recommended that its members only connect dishwashers to the network which had specific conformity label supplied by the Belgian association of producers of such equipment
RAITO:
Decisions by associations of undertakings/trade associations may also fall under Article 101; need not be binding decisions (sufficient that they are recommendations)
Wouters
Rule adopted by the Dutch Bar Council prohibiting multi-disciplinary partnerships did not contravene Article 101 as it was a reasonable regulatory rule
RATIO:
Regulatory rule promulgated by professional bodies may potentially come within the scope of Article 101.
Dyestuffs
Each increase announced in advance by one undertaking in the dyestuffs industry was simultaneously followed by the others; industry argued the market was an oligopoly; ECJ found in favour of Commission – the dyestuffs industry was not an oligopoly and therefore the price increases were the result of a concerted practice (not a natural/acceptable reaction of one company to the others’ price increase)
RAITO:
Concerted practices are forms of cooperation which fall short even of informal agreements but which knowingly substitute practical cooperation between them for the risks of competition.
parallel conduct in itself is not evidence of a concerted practice – but it may well be strong evidence of one. It will be evidence of a concerted practice if, having regard to the specific features of the market concerned, it can be concluded that the conditions of competition, including the prices charged, are different from that which would normally be expected in that type of market
Woodpulp
Case involved several non-EU producers of woodpulp allegedly coordinating prices at which woodpulp was sold in the EU; producers argued the EU had no jurisdiction given they were based in Canada, US, Sweden and Finland (prior to their accession to the EU); held the EU had jurisdiction as long as agreement implemented within the EU, but held the market was an oligopoly and coordinated pricing could be explained by factors other than the existence of concerted practice.
RATIO:
While parallel conduct is strong evidence of a concerted practice, it may also be a natural occurrence due to the type of market, for example in the case of an oligopoly
Agreements between parties based outside the EU will still be caught by Article 101 as long as the agreement is implemented in the EU.
STM v Maschinenbau
Parties involved (STM and MU) had entered into agreement whereby MY, German manufacturer, appointed STM as its exclusive distributor in France; terms similar to Consten and Grundig but there were no export bans on MU’s distributors in other Member States, nor on STM; held to not have an anti-competitive effect; the parties did not have a high market share, the agreement was not part of a network nor did it preclude the possibility of parallel imports.
RATIO:
When assessing an agreement’s effect, the following will be considered:
- Nature and quantity of the products concerned
- The position and size of the parties on the market
- The isolated nature of the agreement or its position in a series
- Opportunities for other commercial competitors producing same product by way of parallel re-exportation/importation
- The severity of the clauses
Affect trade between Member States test: ‘is it possible to foresee with a sufficient degree of probability… that the agreement may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States?’
Cartes Bancaires
ECJ indicated that in order to decide whether an agreement is anti-competitive by object, ‘regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part. When determining that context, it is also necessary to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question.’ Importantly, the court added that ‘[t]he concept of restriction of competition “by object” can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competition’. In short, ‘object’ is about gravity and obviousness.
Banana case (Dole Fresh Fruit Europe v Commission)
ECJ found that an exchange of information between employees at various banana producers constituted a restriction of competition by object. This, said the Court, was the case even though the employees were too junior to have any real impact on the price of bananas, and were only exchanging their views on pre-pricing information, ie on factors that may influence prices in the weeks following each call. On appeal, one of the banana producers argued that the calls could not have amounted to a restriction by object, since they had no impact on prices. The ECJ affirmed the findings of the European Commission and upheld the fine against the banana producers. It indicated that a practice could be anti-competitive by object even if it had no impact whatsoever on prices, as long as it created abnormal conditions of competition.
Expedia inc
Expedia and the French railways operator, SNCF, had entered into a joint venture for the sale of tickets and other travel services and which gave Expedia privileged access to a website created by SNCF. The French competition authorities took exception to this arrangement, believing it to be an object infringement contrary to Article 101(1) TFEU. They fined Expedia and SNCF. Expedia appealed, arguing that the parties market shares were below the thresholds set out in European Commission’s de minimis Notice, and so the Atorite was precluded as matter of EU law from finding that the agreement appreciably restricted competition. Absent an appreciable restriction, Expedia argued that the agreement did not infringe Article 101(1). The point was referred to the CJEU, which found that an appreciable anti-competitive effect can be presumed in ‘object’ cases, even where market shares are below the Notice’s thresholds.
RATIO
An agreement that may affect trade between Member States and has an anti-competitive object constitutes by its nature (and independently of any concrete effect that it may have) an appreciable restriction upon competition.
ECJ reaffirmed this approach in the face of some academic criticism by stating that there is no need to take account of the concrete effects of an agreement once it appears that it has anti-competitive object.
Accordingly, an agreement that has anti-competitive object, such as price-fixing, constitutes an appreciable restriction on competition (provided it affects trade between Member States), even if there is little evidence of anti-competitive effect.
Brasserie de Haecht v Wilkin
Brewery and public house had an exclusive purchasing agreement; on its own the agreement did not violate Article 101, but it did when considered within a larger framework of agreements with public houses
RATIO
Agreements whereby one undertaking agrees to obtain supplies exclusively from another undertaking is not necessarily anti-competitive, but may affect trade within Member States and restrict competition if assessed in the broader economic context and in light of other agreements made.
Cooperatieve Stremsel-en Kleuselfabriek
Dairy producers in the Netherlands agreed to but their raw materials for cheese-making form each other; meant non-Dutch producers could not enter the market; held to violate Article 101
RATIO:
Agreements between parties based in the same Member State which have the effect of closing off the state in question to trade and competition from other Member States or which regard products or services easily traded across borders, are likely to affect trade between Member States and engage Article 101.
Chemidus Wavin v TERI
it may be possible to ask the relevant national court to sever the offending clause only leaving rest of agreement intact. In UK law, this is only possible where remaining agreement still accurately reflects original agreement
Volk v Vervaecke sprl
Facts similar to those in Consten v Grundig, except that agreement affected less than 1% of the market for washing machines in Belgium and Luxemburg; held to be outside the ambit of Article 101 TFE
RATIO:
Even if an agreement is made between 2 independent undertakings and could affect trade between Member States and restrict competition, its effects may be so small that the Commission will ignore its existence.
Courage Ltd v Creham
Crehan entered 2 leases for pubs where he agreed with Courage Ltd who owned 19% of UK beer sales, to buy beer exclusively from them at a specified price; unable to compete with cheaper houses and was sued for outstanding sums; successfully argued agreement was unenforceable because it violates 101; claimed and was awarded damages
RATIO:
Damages will be awarded by UK courts for losses resulting from an infringement of Article 101; these can be claimed by consumers as well as by one of the parties to the agreement.
