Competition law (own)

Free market structure:

Prices determine the demand and control of the products. The government doesn’t control the
prices or demands for these products.

In the free market, products/stocks can be owned privately by companies, this raises an issue that
the primary purpose of such companies is to make maximum profits. The way to achieve that is by
having less competition in the market.

When businesses practice in anticompetitive practices this hurts the spirit of competition. To bring
efficiency to the market, to make it grow and to diversify it some laws were put in place i-e the
competition law.

another objective for the establishment of competition law is to provide consumer protection. The
governments balance out the two objectives depending on the state of their market (sometimes
diversification of market is focused on more, other times consumer protection is given a higher
priority).

Art 101-109 TFEU is developed keeping competition law in mind (ex art 85-86), we are concerned
with 101 and 102 in this course. This is similar to the sharman act in America which is concerned with
consumer protection and competition law.

101 and 102 are two parts in which competition law has been divided

101 TFEU:
1. Agreements/collusions between undertakings or decisions of association between
undertakings
2. These have an effect on trade between member states
3. Effects of which are to restrict, prevent or distort competition in the internal market
4. 101 (2) all agreements are void unless exempted under art 101(3)
5. You must first prove that the companies or businesses involved fall under the definition of
undertaking or not
6. You must have to prove if the agreements are –
7. There are three types of agreements:
 Agreements
 Decisions of association
 Concerted practice

Definition of undertaking
We don’t use the term business as there are different laws concerning sa business in the 28 different
states. this is why we use the word “undertaking”
An undertaking was defined in the case of Hofner. The ratio of the case rendered 2 operating parts:
1. If it is any institution /entity
2. is involved in an economic activity then it is an undertaking.
Exception: public bodies involved in charities/ social walfare (p finning) however if any part of it is
involved in commercial activity then it is an undertaking in that concerned commercial area.

Parent and subsidiary company:

Agreement between parents and subsidiary companies: it is common in undertakings to expand to
different niches of a market when expanding, a question arises; are the parent company and the
subsidiary considered one undertaking or two different undertakings? Generally (insert case) it is
considered to be one entity.

Exception: if the subsidiary undertaking has decisive control over their own structure and function, in
other words there is not a central management system then it is considered a separate entity/
undertaking

Types of agreements or collusions:

1. Agreements
2. Decisions of association
3. Concerted practices (hidden practices

You automatically prove the first and second limb of the test in a problem question if one of
these types of collusions are proven (there may even apply more than one type)

AGREEMENTS:
Not all agreements are illegal, undertakings routinely engage in agreements, however the intention
and the harm to the market is what makes it problematic. It is determined by article 101 if the
agreement falls under it.

Even agreements which have not yet impacted the markets

There are two types of agreements:

Agreements are made in two ways

1. Vertical agreements (different companies: example car manufacturing company eith a tire
manufacturer)
2. Horizontal agreements (between companies producing the same products)

Sometimes a mix of the two types can be observed.

In the sugar cartel case the courts required that it is imperative to show there has been some form of
contact

Re: woodpulp case: wood producers- one company in india other in Africa, their goods were sold in
Europe- they had an agreement- effect on Europe- the agreement isnt in Europe so why is it being
tried there?

Theres a doctrine of extra territoriality: example: it came from America. For example if there are
terrorists in Afghanistan and Pakistan and the effect is in America then they have the right to
interfere

Informal gentleman’s agreement:

Volkswagen v commission

Polypropylene case: it does not matter if the agreement was made in one meeting or multiple
meetings and if the undertaking has engaged in all of the meetings or not.

Unilateral tacit behavior:

One undertaking isnt involved in anticompetitive practices however has dealt with a cartel with does,
then initially the law made such an undertaking also liable. This was changed in buyer v commission,
the undertaking will not be liable unless it is proven by the commission that there was a concurrent
of wills . if the undertaking can prove that they have tried their best to not support the
anticompetitive undertaking then there is no liability.

Decision of association:
(question nai ata iss pr)

Sometimes anti-competitive decisions may be engaged in by associations these may not be formally
binding . IAZ international v commission (1983) (definition)

Wouters (2002)

Mastercard v commission (2012): code of practice

Concerted practice:
ICI v commission: concerted practices were defined in this case-

Coordination between businesses where an agreement may have not been reached but the
behavior/ actions of the undertakings indicate that an agreement may be reached in the future.

Re woodpulp case: must be proven beyond reasonable doubt that there was contact leading up to
the price fixing.

Suiker Unie (Sugar Cartel) [1975]: case of parallel behaviour/ competitive pricing.

Whistle blowers:

Commission leniency notice 2006

Re the Methylglucamine Cartel [2004]4

2nd requirement for art 101:

Effect on trade between two member states
Constan and gruding : the impact could be actual or there mmay just be a possibility of affecting
trade. Two undertakings in the same country may also be liable. (insert case)

T mobile netherland

As per STM there must be a degree of probability both grounded in fact and in law that it would limit
competition.

Disjunctive requirement:
What was the purpose/ object of the agreement? If it was the intention of distortion and impeding
the competition in the market, then the actual or potential effect of the agreement may be positive
or negative it is still found anti-competitive T mobile netherland and also constan and grunding

What if the intention/ object was not malicious? What if Samsung and apple form an agreement to
make a phone that is solar charged. This revolutionary device will throw all other phones in the
market out of the market. In this way the effect of the agreement is anti competitive.

As a result of such cases the law was softened. There is a degree of probability grounded in fact and
law
Derogation of art 101(3)
Derogations for art 101 has some derogations in place in art 101 (3) TFEU

1. Deminimus rule: market share is so small less than 10%) and cannot impact the market
(for example an agreement b/w two independent taxis) in horizontal cases and less than 16%
in vertical cases.
2. Ancillary restraints: policy reasons. Woulters for example: dutch bar association was
prohibited from sharing an office with accountants as there is a conflict of interest.
3. Block exemptions: commission enforces competition laws, there is a backlog of cases and
so some sample agreements and rules were introduced. An automatic exemption will be
granted if the agreement is made if it is within the parameters of the sample agreements.
4. Individual exemptions-> art 101(3): positive requirement and negative requirements.
Positive requirements are that a new innovation is being made and consumers must get a
profit or benefit. Negative requirement: no hardcore restriction: example price fixing and
territorial restrictions, there must be a causal link between benefit to consumer and the
restriction placed. These are cumulative requirements that must be proven altogether.

Competition commission: regulates competition in the European market. The commission was
decentralized and the NCA was established in member countries, these report back to the
competition commission. This was to ensure the competition commission is not burdened with
excessive litigation. It ensured that legally the local authorities may be given derogated powers.
 Suiker unie sugar cartel
 Re: woodpulp
 Huls AG v commission
 Re: methylglucamine case (whistleblowers)
 Even if the businesses are in the same locality and form an agreement, there may still be a
violation of art 101.

Article 102 TFEU: RECENT DEVELOPMENT SO WE’LL HAVE QUESTION ON

THIS
To prove in problem question:

Undertaking

Dominant position: no one fixed formula for determining dominant position. Multiple factors are
considered by the court before deciding whether there is a dominant position. The first is to see the
market: is it a wide or a narrow market. The test for this is SSNIP test

The second thing the court determines is the geographical market

3rd: market share of the undertaking

4th: barriers of entry.

Just being dominant in a market is not illegal. The dominant undertaking must also abuse and exploit
their position.

Relevant market: united brands v commission. This looks at the exchangeability of the product. How
many consumers would shift to an alternative if there was a price hike? Test: Small but significant
non transitory increase in price.
Substantial par of market

Absence of alternate products