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Hypos Restrictive Agreements - ENG
Hypos Restrictive Agreements - ENG
Here are two hypotheticals on how to analyze agreements between competitors under Article 101 which
we can discuss during the Tuesday morning session. For each fact pattern, think about how the analysis
under Article 101 should be structured: what are the relevant questions to be asked, what evidence would
be necessary to answer these questions. Can one quickly conclude that either one of these agreements
presumably would be unlawful, or would it be necessary to examine the facts and effects of the
agreements more carefully (i.e., do they have the object of restricting competition, or would a fuller effects
analysis be required)? What about the justifications the parties can put forward?
Restrictive Agreements - Megalopolis hypothetical
There's a new service in Megalopolis (a very big city). A driver who has had too much to drink can call this
service and for a fee a chauffeur dashes off to meet him or her on a motor scooter. The chauffeur puts the
(collapsible) scooter in the trunk, drives the customer home (in the customer's own car), and is on his or
her way on the scooter. There are two competing scooter firms, "Call Jeeves," which specializes in Britishsounding, elegantly-attired chauffeurs, and "Call an Actor," which employs only struggling young actors
and actresses.
Unfortunately, Megalopolis is huge and travel times can be a very long. Several scooter drivers have
gotten into accidents, resulting in sharply rising insurance costs. The owners of the two firms agreed to try
to improve safety, reduce costs and improve service by agreeing to instruct their drivers not to speed and
by specializing as to where they will advertise - Call Jeeves will promote its services and put up ads only
on the West side of town, Call an Actor only on the East side. (Advertising is typically either in bars and
restaurants or in newspapers or newspaper inserts targeted to particular parts of the huge Megalopolis
area.) If the bulk of calls come from only one side of town, the firms reasoned, response times should be
improved.
The competition authority finds out about the agreement (rumor has it that a senior manager used to be an
occasional customer of both firms). Does the agreement raise issues under Article 101? How would you
structure the analysis to determine whether the agreement is unlawful, and what evidence would be
relevant for each step?