competition law Flashcards
(133 cards)
1
Q
Why was the idea of competition law first raised in the US?
A
to counter anti-competitive common law trust effects the US legislator adopted the first competition law of the modern world: the Sherman Antitrust Act 1890
2
Q
the idea of competition law first raised in the US to counter anti-competitive common law trust effects, so the US legislator adopted the first competition law of the modern world:
what was it called?
A
the Sherman Antitrust Act 1890
3
Q
What was section 1 and 2 of the Sherman Antitrust Act 1890?
A
1) that every contract, or form of trust, or conspiracy in restraint of trade or commerce is declared illegal
section 2) every person who does, or attempts to conspire with another person or persons to monopolise any part of the trade or commerce among several states, or foreign nations, shall be deemed guilty of a felony
4
Q
the meaning of what competition, is controversial
what are the two US schools?
A
- Harvard School: that competition law is to prevent harm to consumers as well as harm to competitors
- Chicago School sees the enhancement of ‘consumer welfare’ as the sole objective of competition law
5
Q
What does the Harvard School think?
A
that competition law is to prevent harm to consumers as well as harm to competitors
6
Q
What does the Chicago School think?
A
sees the enhancement of ‘consumer welfare’ as the sole objective of competition law
7
Q
The primary function of EU competition law was originally not competition but the internal market.
Where can the competition provision be found in the TFEU?
A
in Chapter 1 Title VII of the TFEU which deals with internal market matters
8
Q
What happened in the case of Costen and Grundig?
A
The ECJ found that an exclusive distribution agreement in which the distributor was to enjoy an absolute territorial protection restricted competition by object
The Treaty, whose preamble and content aim at abolishing the barriers between States, could not allow undertakings to reconstruct such barriers.
9
Q
The ECJ found that an exclusive distribution agreement in which the distributor was to enjoy an absolute territorial protection restricted competition by object
The Treaty, whose preamble and content aim at abolishing the barriers between States, could not allow undertakings to reconstruct such barriers.
which case?
A
Costen and Grundig
10
Q
main case in competition law
A
Costen and Grundig
11
Q
what are the 3 pillars of private undertakings?
A
Pillar 1: anticompetitive cartels Article 101
Pillar 2: situations where a dominant undertaking abuses its market power Art 102
Pillar 3: Invisible, Treaty did not conclude the control of mergers
12
Q
What is pillar 1?
A
anticompetitive cartels Article 101
13
Q
what is pillar 2?
A
situations where a dominant undertaking abuses its market power Art 102
14
Q
what is pillar 3?
A
Invisible, Treaty did not conclude the control of mergers
15
Q
Pillar 1: anticompetitive cartels Article 101
what does it state?
A
the following shall be prohibited: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between MS and which have as their object or effect the prevention, restriction or distortion of competition within the internal market
16
Q
the following shall be prohibited: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between MS and which have as their object or effect the prevention, restriction or distortion of competition within the internal market
which article?
A
Pillar 1: anticompetitive cartels Article 101
17
Q
what is an undertaking as defined by Hofner and Elser?
A
o Concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed
18
Q
o Concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed
who defined this?
A
Hofner and Elser
19
Q
Court has persistently held that Article 101 does not apply to the ‘internal’ relationships within an undertaking.
what does this mean?
A
that the relationship between a company and its workers is outside the scope of Article 101
20
Q
This doctrine is not confined to relationships within one legal entity, therefore what kind of relationships can it cover?
A
relationships between independent undertakings if they form part of a corporate group
The decisive criterion is control
21
Q
What are the 3 types of collusions covered by Art 101?
A
agreements between undertakings, decisions by associations of undertakings and concerted practises”
i. Agreements: Horizontal and Vertical
ii. Concerted Practices
iii. Decisions of Cartels
22
Q
the 3 types of collusions covered by Art 101 are
i. Agreements: Horizontal and Vertical
ii. Concerted Practices
iii. Decisions of Cartels
What is a case example of a vertical agreement?
A
Costen & Grundig
Article 101 refers in a general way to all agreements which distort competition within the common market and does not lay down any distinction between those agreements based on whether they are made between competitors operating at the same level in the economic process, or between non-competiting persons operating at different levels
23
Q
Article 101 refers in a general way to all agreements which distort competition within the common market and does not lay down any distinction between those agreements based on whether they are made between competitors operating at the same level in the economic process, or between non-competiting persons operating at different levels
which case and area?
A
Costen & Grundig
the 3 types of collusions covered by Art 101 are
i. Agreements: Horizontal and Vertical
ii. Concerted Practices
iii. Decisions of Cartels
24
Q
what is a tacit acquiesence?
A
agreement or consent by silence or without objection;
25
what 2 cases come undertacit acquiesence?
Ford Werke
| Bayer v Commission
26
2 cases come undertacit acquiesence
Ford Werke and
Bayer v Commission
explain the first?
Ford made cars, UK charged higher prices, so a company imported cars from Germany to UK. Ford then told german markers to stop selling right-handed cars,
concerted practise.
The decision formed part of the contractual relations between the undertaking and its dealers
27
2 cases come undertacit acquiesence
Ford Werke and
Bayer v Commission
explain the second
Prices of these drugs were different across the EU just to differences between national health authorities, lower in France and Spain. So spain and France exported great amounts of drugs to the UK.
France, until they only supplied them with enough to cover national markets. He denied that the policy was implemented through any agreement.
This was real unilateral behaviour. No tacit agreement and so Bayer acted lawfully because it simply made a unilateral decision.
28
Ford made cars, UK charged higher prices, so a company imported cars from Germany to UK. Ford then told german markers to stop selling right-handed cars,
concerted practise.
The decision formed part of the contractual relations between the undertaking and its dealers
which case
Ford Werke
29
France and Spain. So spain and France exported great amounts of drugs to the UK.
France, until they only supplied them with enough to cover national markets. He denied that the policy was implemented through any agreement.
This was real unilateral behaviour. No tacit agreement and so Bayer acted lawfully because it simply made a unilateral decision.
which case?
Bayer v Commission
30
What was the concept of a concerted practise aimed to do?
it was designed as a safety net to catch all forms of collusive behaviour falling short of an agreement.
31
What is at the heart of a concerted practise?
the practical ‘coordination’ between undertakings. Unlike agreements, this coordination is not consensually agreed.
32
what case comes under concerted practise?
Imperial Chemical industries:
‘a concerted practise does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants’
33
‘a concerted practise does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants’
which case and area
Imperial Chemical industries:
concerted practises
34
Why is there a jurisdictional limitation around Article 101?
Because of the principle of conferral. The European Union should only concern itself with agreements that have a European dimension.
The European dimension shows itself through the potential effects on trade between MS.
35
which area does the pattern of trade test come under?
concerted practises
36
What case demonstrates the pattern of trade test?
Costen & Grundig
Where ‘the agreement is capable of constituting a threat, either direct or indirect, actual or potential, to freedom of trade between MS in a manner which might harm the attainment of the objectives of the single market between States
37
Where ‘the agreement is capable of constituting a threat, either direct or indirect, actual or potential, to freedom of trade between MS in a manner which might harm the attainment of the objectives of the single market between States
e.g where the agreement or practise is liable to affect the competitive structure
which case and area
Costen & Grundig
demonstrates the pattern of trade test?
concerted practises
38
In order for an agreement to violate Article 101(1), it must be anti-competitive
therefore it must be what? (3)
Therefore it must be a ‘prevention, restriction or distortion of competition’
39
You can violate EU competition law ‘by object’ but this does not mean that purely imaginary restrictions that may have been ‘intended’ in the future are covered
Art 101 does not cover what?
subjective intentions of the parties.
It refers only to the objective content of the agreement. What are the hard-core restrictions that the Union legal order considers restrictions by object?
40
what does Art 101(1) state?
Article 101(1)…
a) Directly or indirectly fix purchase or selling prices or any other trading conditions
b) Limit or control production, markets, technical development, or investment
c) Share markets or sources of supply
41
What are the hard-core restrictions that the Union legal order considers restrictions by object?
Article 101(1)…
a) Directly or indirectly fix purchase or selling prices or any other trading conditions
b) Limit or control production, markets, technical development, or investment
c) Share markets or sources of supply
42
According to Article 101(3), Article 101(1) will not apply to an agreement ‘which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (2)
a) Impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives
b) Afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question
43
According to Article 101(3) , when will Article 101(1) not apply?
Article 101(1) will not apply to an agreement ‘which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (2)
Impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives
b) Afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question
44
what does Pillar Two: article 102 focus on?
This second pillar of EU competition law focuses on the bad behaviour of a single undertaking. Article 102 does not require the collusive behaviour of two or more economic actors. It sanctions the unilateral behaviour of a dominant undertaking where this behaviour amounts to a market abuse
45
o Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States
which pillar and article does this come under?
Pillar 2: Article 102 situations where a dominant undertaking abuses its market power
46
Under Pillar 2 Article 102: situations where a dominant undertaking abuses its market power
Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States
Such abuse may consist in what (4)?
a) Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions
b) Limiting production, markets or technical development to the prejudice of consumers
c) Applying dissimilar conditions to equivalent transactions with other trading parties, placing them at a competitive disadvantage
d) Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, have no connection with the subject of such contracts
47
a) Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions
b) Limiting production, markets or technical development to the prejudice of consumers
c) Applying dissimilar conditions to equivalent transactions with other trading parties, placing them at a competitive disadvantage
d) Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, have no connection with the subject of such contracts
what area is this under
Under Pillar 2 Article 102: situations where a dominant undertaking abuses its market power
48
By concentration on a ‘dominant position with the internal market’, this article goes beyond pure monopolies and is thus wider than its US counterpart. But in insiting on market abuse, it is also narrower than the US prohibition, why is this?
Article 102 will not directly outlaw the creation of market dominance, only the abuse of a dominant position
49
Like article 101, when will the prohibition of market abuse will only apply to Art 102?
Like Article 101, the prohibition of market abuse will only apply where an abusive behaviour ‘may affect trade between Member States’ but when this abuse is shown to have Union-wide effects, it appears to be prohibited as unlike Article 101, there is no third paragraph exempting abusive behaviour on the ground of its pro-competitive effects
50
A violation of Article 102 implies the satisfaction of only three criteria
Which are?
1) Must establish what the market is in which the undertaking operates
2) The undertaking must be dominant within that market
3) The undertaking must have abused its dominance
51
1) Must establish what the market is in which the undertaking operates
2) The undertaking must be dominant within that market
3) The undertaking must have abused its dominance
which area?
A violation of Article 102 implies the satisfaction of only three criteria
52
What did Hoffman La Roche state were indicators of a dominant position?
Very large market shares are highly significant evidence of the existence of a dominant position
53
Very large market shares are highly significant evidence of the existence of a dominant position
which case and area
hoffman La Roche Pillar Two: article 102
54
The interchangeability of a product typically expresses itself in demand substitution. what is this
This analyses whether the consumer regards two products as interchangeable ‘by reason of the products’ characteristics, their prices and their intended use’
55
When are two goods seen to be in the same product market?
| What is the test?
Quantitative test: The principle test here is that of cross-price elasticity. Whether a (SSNIP) small but significant non-transitory increase in price in one product, incentivises consumers to switch to another product. Where this is the case, the two goods are in the same product market
56
what two ways can the court analyse the interchangeability of a product to test they are in the same market?
Quantitative test: The principle test here is that of cross-price elasticity. Whether a (SSNIP) small but significant non-transitory increase in price in one product, incentivises consumers to switch to another product. Where this is the case, the two goods are in the same product market
Qualitative criteria: European Court even analyse the degree of potential competition by future market entrants. Supply substitution. i.e the extent to which an undertaking could switch from a non-competing to a competing product.
57
What is the qualitative criteria in Art 102?
Qualitative criteria: European Court even analyse the degree of potential competition by future market entrants. Supply substitution. i.e the extent to which an undertaking could switch from a non-competing to a competing product.
58
what is the Quantitative test: in Art 102?
Quantitative test: The principle test here is that of cross-price elasticity. Whether a (SSNIP) small but significant non-transitory increase in price in one product, incentivises consumers to switch to another product. Where this is the case, the two goods are in the same product market
59
what is the geographic element European Court has established for market dominance?
European Courts have established a presumption that the territory of a MS constitutes a substantial part of the internal market
60
Dominance is wider than monopoly
| What does monopoly refer to?
Monopoly technically refers to a situation in which one single undertaking dominates the market, Article 102 is not confined to that situation.
61
BUT exactly when an undertaking is dominant, the provision does not tell
EC has tried to define dominance by distinguishing it from related phenomena such as monopoly
which is wider
dominance
62
Undertakings compete in different products and different areas, and so there is not one market. There is a product dimension and a geographic dimension.
what do both of these mean?
Product dimension concerns what goods or services compete with each-other
Where two products do not compete, they are not in the same market
Two competing goods must however also physically meet in the same area, this is the geographic dimension
63
Hoffman La Roche defines what is meant by a dominant position
Art 102
o The dominant position relates to a position of economic strength enjoyed by an undertaking which enables it to prevent the effective competition being maintained on the relevant market
o Such a position does not preclude some competition, but enables the undertaking which profits by it, if not to determine, at least to have an appreciable influence on the conditions under which that competition will develop
64
The dominant position relates to a position of economic strength enjoyed by an undertaking which enables it to prevent the effective competition being maintained on the relevant market
o Such a position does not preclude some competition, but enables the undertaking which profits by it, if not to determine, at least to have an appreciable influence on the conditions under which that competition will develop
which case?
Hoffman La Roche
| Art 102
65
what is an oligopoly?
oligopolies are market structures in which a ‘few’ undertakings dominate the market
66
the higher the market share, the higher the probability of dominance
which case looks at this and defines this?
AKZO Chemie v Commission:
A market share above 50% was a clear indication of market dominance; but even below this the Court may find market dominance
67
o A market share above 50% was a clear indication of market dominance; but even below this the Court may find market dominance
which case?
AKZO Chemie v Commission:
68
The Commission gave guidance stating that where an undertaking has a market share below ____ a finding of dominance is unlikely
40%
69
o Article 102 refers to ‘an abuse of one or more undertakings of a dominant position’ and so teleologically it should capture _____ undertakings which go beyond parallel courses of conduct as a collective abuse would have the same consequences as that of a single dominant undertaking
oligopolistic
70
the EC o EC belatedly accepted the idea of collective dominance in which case?
Vetro et al v Commission
71
o EC belatedly accepted the idea of collective dominance in Vetro et al v Commission
describe case
Vetro et al v Commission
Three Italian producers of flat glass challenged a Commission decision that had found them guilty of violating Aritlce 102. Their joint market shares were 95% and the Commission claimed that the undertakings would ‘present themselves on the market as a single entity and not just as individuals’.
Commission pointed to evidence of collusive behaviour under Art 101
The UK objected that only in very special circumstances should two or more undertakings jointly hold a dominant position within the meaning of Art 102
However the simple existence of contractual or collusive relations between the three undertakings was not sufficient to establish collective dominance
72
Three Italian producers of flat glass challenged a Commission decision that had found them guilty of violating Aritlce 102. Their joint market shares were 95% and the Commission claimed that the undertakings would ‘present themselves on the market as a single entity and not just as individuals’.
Commission pointed to evidence of collusive behaviour under Art 101
The UK objected that only in very special circumstances should two or more undertakings jointly hold a dominant position within the meaning of Art 102
However the simple existence of contractual or collusive relations between the three undertakings was not sufficient to establish collective dominance
Vetro et al v Commission
73
in which case did the European Court confirmed the General Courts finding that a dominant position may be held by several undertakings
o CEWAL
74
CEWAL European Court confirmed the General Courts finding that a dominant position may be held by several undertakings
What did the court say in this case is necessary to establish the finding of a dominant position?
To establish the existence of a collective entity, it is necessary to examine the economic links or factors which give rise to a connection between the undertakings concerned
Mere existence of collusion within the meaning of Art 101 was inconclusive, but this collusion could result in the undertakings concerned being linked so as to present themselves on the market as a collective entity; it all depends on the nature and terms of an agreement
75
To establish the existence of a collective entity, it is necessary to examine the economic links or factors which give rise to a connection between the undertakings concerned
Mere existence of collusion within the meaning of Art 101 was inconclusive, but this collusion could result in the undertakings concerned being linked so as to present themselves on the market as a collective entity; it all depends on the nature and terms of an agreement
Which case?
CEWAL European Court confirmed the General Courts finding that a dominant position may be held by several undertakings
Art 102
76
What counts as an abuse in Article 102 depends on the context, that the behaviour is from a dominant undertaking
The forms of action in this provisoin are not illegal as such, but become illegal why?
illegal because of the standing of the actor within the market as a dominant undertaking has a ‘special responsibility
77
what are the 4 actions under Article 102 which demonstrate actions that will be illegal if the undertaking is a dominant force?
a) Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions
b) Limiting production, markets or technical development to the prejudice of consumers
c) Applying dissimilar conditions to equivalent transactions with other trading parties, placing them at a competitive disadvantage
d) Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, have no connection with the subject of such contracts
78
What two kinds of abuses does 102 cover?
covers both exploitative as well as exclusionary abuses
79
Article 102 covers both exploitative as well as exclusionary abuses why?
as it aimed at practises which may cause damage to consumers directly and also those which are detrimental to them through their impact on effective competition structure – Europemhallage v Commission
80
what is the central aim behind Art 102?
The ‘Maintenance of effective competition on the relevant market
81
How is Art 102 able to applied in associated markets?
Union legal order has developed a wider reading not just confined to the market the undertaking dominants, and includes abuse in adjacent markets in which the undertaking is not dominant
82
Union legal order has developed a wider reading not just confined to the market the undertaking dominants, and includes abuse in adjacent markets in which the undertaking is not dominant
Therefore the Application of Art 102 in associated markets is thus possible
BUT
which court found that Art 102 would only apply in special circumstances to conduct found in the associated market where the undertaking is not dominant?
Tetra Park
83
what case is an example of an illegal action: refusal to supply
Art 102
Istituto Chemioterpico
84
Istituto Chemioterpico is an example of an illegal action: refusal to supply
Art 102
explain case
An undertaking being in a dominant position as regards the production of raw material, and therefore able to control the supply to manufacturers, cannot, just because it decides to start manufacturing these derivatives (in competition with its former customers) act in such a way as to eliminate their competition which in the case in question, would amount to eliminating one of the principal manufacturers in the common market of ethambutol.
85
An undertaking being in a dominant position as regards the production of raw material, and therefore able to control the supply to manufacturers, cannot, just because it decides to start manufacturing these derivatives (in competition with its former customers) act in such a way as to eliminate their competition which in the case in question, would amount to eliminating one of the principal manufacturers in the common market of ethambutol.
case and area
Istituto Chemioterpico is an example of an illegal action: refusal to supply
Art 102
86
Article 102(a)‘directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.
what is a nickname for this?
predatory pricing’
87
```
Article 102(a)‘directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.
this is predatory pricing
Which case demonstrates this?
```
AKZO
AKZO attacked its competitor by offering unreasonably low prices to damage their competitors business viability, using price reductions in a sector which was vital for its competitor but of limited importance to itself
BUT the Court found that AKZO held a dominant position
88
company attacked its competitor by offering unreasonably low prices to damage their competitors business viability, using price reductions in a sector which was vital for its competitor but of limited importance to itself
BUT the Court found that AKZO held a dominant position
```
Article 102(a)‘directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions.
this is predatory pricing
```
AKZO
89
what is the is distinction between legitimate and illegitimate price competition?
o Prices below average variable costs where a dominant undertaking seeks to eliminate a competitor must be regarded as abusive
o What is important is establishment of a strategic plan to eliminate a competitor
90
What is the distinction between legitimate and illegitimate price competition?
Prices below average variable costs where a dominant undertaking seeks to eliminate a competitor must be regarded as abusive
What is important is establishment of a strategic plan to eliminate a competitor
However how does this undermine the Courts previous findings?
this subjective element within the definition of predatory pricing undermines, to some extent, the Courts idea that the concept of abuse if an objective concept.
91
What is the distinction between legitimate and illegitimate price competition?
Prices below average variable costs where a dominant undertaking seeks to eliminate a competitor must be regarded as abusive
What is important is establishment of a strategic plan to eliminate a competitor
o HOWEVER this subjective element within the definition of predatory pricing undermines, to some extent, the Courts idea that the concept of abuse if an objective concept.
How has the court responded
o General court tried to gloss over this by asserting that anti-compettive intent and anti-competitve effect may occasionally ‘be one and the same thing’
92
What is article 102(a)?
‘directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions. This wide category includes excessive pricing and predatory pricing
93
what is article 102(b)?
‘limiting production, markets or technical development to the prejudice of customers’
i.e refusal to supply
94
what is article 102(C)
‘applying dissimilar conditions to equivalent transaction with other trading parties, thereby placing them at a competitive disadvantage
(discretionary pricing)
95
which section of Art 102 best illustrates the special responsibilities of a dominant undertaking and why?
```
Art 102(b) refusal to supply
‘limiting production, markets or technical development to the prejudice of customers’
```
as the general principle of freedom of contract would would normaly allow any contracting party to reject an offr for a contract BUT this freedom cannot be granted where the market structure is that there is no alternative supply
96
Under Art 102(c) (discretionary pricing)
‘applying dissimilar conditions to equivalent transaction with other trading parties, thereby placing them at a competitive disadvantage
Price discrimination may take place directly or indirectly
give examples of both?
direct discrimination might be found where an undertaking charges different prices depending on the nationality or location of its customers.
Best known commercial techniques of indirect discrimination are discounts or rebates which have been subject to extensive European jurisprudence
97
what case demonstrates indirect price discrimination under Art 102(c)
Hoffman La Roche
The court was asked to look at the commercial lure of a loyalty rebate offered by a dominant undertaking. Fidelity rebates are condition on the customers promise to buy exclusively from one undertaking. Commision said this had a discriminating effect as Roche offered two purchases two different prices for an indentical quantity of the same product depending on whether these two buyers agree not to go to Roches competitors
98
The court was asked to look at the commercial lure of a loyalty rebate offered by a dominant undertaking. Fidelity rebates are condition on the customers promise to buy exclusively from one undertaking. Commision said this had a discriminating effect as Roche offered two purchases two different prices for an indentical quantity of the same product depending on whether these two buyers agree not to go to Roches competitors
case and area
Hoffman La Roche, Article 102(c) discretionary pricing
| indirect
99
what is a fidelity rebate under Art 102(c)
is designed through the grant of a financial advantage to prevent customers from obtaining their supplies from competing producers
100
which article defines tying or bundling?
Art 102(d)
101
what is bundling under Art 102(d) ?
‘making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts
connecting the sale of one product to another
102
which two cases are under Article 102(d) as an example of bundling?
Tetra II and Microsoft Case
103
Two cases comes under Article 102(d) as an example of bundling
Tetra II and Microsoft case;
explain the first
Involved a dominant manufacturer of cartons and carton filling machines. They tied the sale of both together. These were considered products that could be sold separately. As their tying was not in line with commercial usage, the dominant undertaking had abused its market power
104
Involved a dominant manufacturer of cartons and carton filling machines. They tied the sale of both together. These were considered products that could be sold separately. As their tying was not in line with commercial usage, the dominant undertaking had abused its market power
which case and area?
Tetra II Article 102(d) as an example of bundling
105
Two cases comes under Article 102(d) as an example of bundling
Tetra II and Microsoft case;
explain the second
Consumers are unable to acquire the Windows client PC operating system without acquiring Window Media Player. Was Microsoft able to bundle its flagship internet Exploror with its windows operating system. Theh condition that the conclusion of contracts is made subject to acceptance of supplementary obligations must be considered to be satisfied.
Court found that because of this, the condition that the conclusion of contracts is made subject ot acceptance of supplementary objligations must be considered to be satsifed
106
Who criticised the Microsoft case?
: Economist Milton Friedmen
107
why did : Economist Milton Friedmen critique the Microsoft case?
Economist Milton Friedmen believed this set a dangerous precedent for increasing government regulation of what was an industry formerly very free of government intrustion
108
Economist Milton Friedmen critiqued the Microsoft case however how did Jenkins and Bing respond?
Bing argued that contrary to Friedmans concerns, the settlement acutlay had little effect on Microsofts behaviour, the fines, restrictions and monitoring imposed were not enough to prevent it from ‘abusing its monopolistic power and too little to prevent it from dominating the software and operating system
109
what does the 2004 EU Merger Regulation require?
requires compulsory and exclusive prior notification to the European Commission of megers, acquisitions and certain joint ventures that involve a change of control and meet certain turnover thresholds
110
requires compulsory and exclusive prior notification to the European Commission of megers, acquisitions and certain joint ventures that involve a change of control and meet certain turnover thresholds
which regulation?
2004 EU Merger Regulation
111
Mergers may take place in two directions, what are they?
Horizontal Merger: between two previously competing undertakings
Vertical Merger: between two firms on different levels of the commercial chain
There is no provisions in the EU Treaties!
112
what is a vertical merger?
between two firms on different levels of the commercial chain
113
what is a horizontal merger?
between two previously competing undertakings
114
o Article 102 contains no separate paragraph dealing with possible justifications for abuses of a dominant position.
what does this suggest?
Article 102 thus appears to be an absolute prohibition
115
rticle 102 contains no separate paragraph dealing with possible justifications for abuses of a dominant position. This could suggest that Article 102 thus appears to be an absolute prohibition however o BUT the existence of unwrtitten grounds of justification is not uncommon and can be seen in other areas of EU law and so what does this mean the EC has done?
the European Courts do examine whether there exists an ‘objective justification’ of the apparently abusive behaviour of the market leader
116
Under Article 102
European Courts do examine whether there exists an ‘objective justification’ of the apparently abusive behaviour of the market leader
two jurispurdential lines have been distinguished what are they?
1) the behaviour of the dominant firm is not considered abusive due to a special context.
2) efficiency defence
117
Under Article 102
European Courts do examine whether there exists an ‘objective justification’ of the apparently abusive behaviour of the market leader
two jurispurdential lines have been distinguished
1) the behaviour of the dominant firm is not considered abusive due to a special context.
2) efficiency defence
what is an example of 1) special context
Benzine v Commission; e.g where a crisis within an industry leads to general supply shortages, the refusal to supply traditional customers has not been seen as abusive behaviour
But it must be beyond control of the dominant undertaking and cannot be overcome by other means
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Under Article 102
European Courts do examine whether there exists an ‘objective justification’ of the apparently abusive behaviour of the market leader
two jurispurdential lines have been distinguished
1) the behaviour of the dominant firm is not considered abusive due to a special context.
2) efficiency defence
what is an example of 2) efficiency defence
In british airways the EC used a relative concept of abuse that ‘the exclusionary effect which is disadvantageous for competition, may be counterbalanced or outweighed by advantages in terms of efficiency which also benefit the customer
most elaborate discussion of efficiency defense was in Microsoft.
i. Found that Microsoft had not shown that the integratin of Windows Media Player creates technical efficiencies or leads to superior technical product performance
ii. This second objective justification has remained very vague
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which two cases are examined under the efficiency defence for justifications under Art 102
british airways
Microsoft
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the EC used a relative concept of abuse that ‘the exclusionary effect which is disadvantageous for competition, may be counterbalanced or outweighed by advantages in terms of efficiency which also benefit the customer
case and area
efficiency defence
| british airways
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in what case did the Court use an expensive use of Art 102?
Continental Can Case
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o Expansive Use of Article 102 in Continental Can Case (1972)
explain case
A merger, otherwise blameless and directly affecting only the structure of an industry as opposed to directly harming consumers or competitors, may nonetheless be considered an ‘abuse’; though in this case the Court refused to condemn the specific merger before it
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in what case did the Court use an expansive use of Art 101?
British American tabacco
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o Expansive Use of Article 101 in British American Tabacco Case 87
explain case
Although the acquisition by one company of an equity interest in a competitor does not in itself constitute conduct restricting competition, such an acquisition may nevertheless serve as an instrument for influencing the commercial conduct of the companies in question so as to restrict or distort competition on the market on which they carry on business.
Each agreement must be assessed in its economic context and in light of the situation on the relevant market
Commission must exercise particular vigilance in the case of a stagnant and oligopolistic market, such as cigarettes
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Where companies concerned are multinational corporations worldwide, their relationships outside the Community cannot be ignored, and it is necessary in particular to consider the possibility that the agreement in question may be part of a policy of global cooperation
which case was this decided in?
British American Tobacco
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what are the three forms of concentrations?
merger
acquisition
joint venture
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when does a concentration have a Union dimension?
where
a) The combined worldwide turnover of all the undertakings concerned is more than 5000 million and
b) The Union wide turnover of each of at least two of the undertakings concerned is more than 250 million, unless each of the undertakings concerned achieves more than 2/3rds of its Union wide turnover within one and the same MS
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what did the 1989 EUMR state?
A concentration which creates or strengthens a dominate position as a result of which effective competition would be significantly impeded in the internal market or in a substantial part of it, shall be declared incompatible with the internal market
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A concentration which creates or strengthens a dominate position as a result of which effective competition would be significantly impeded in the internal market or in a substantial part of it, shall be declared incompatible with the internal market
what stated this?
1989 EU MR
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what did the 2004 EUMR say?
A concentration which would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the common market
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A concentration which would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the common market
what stated this
2004 EUMR
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what are the 3 merger defences?
efficiency defence
failing firm defence
national public policy justifications
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What counts as national public policy justifications under merger defences?
Public security, plurality of the media and prudential rules shall be regarded as legitimate interests
