EC Competition Law and Policy

EC Competition Law
and Policy

Albertina Albors-Llorens
Published by

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© Albertina Albors-Llorens 2002

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First published 2002

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ISBN 1-903240-75-1 Hardback

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 Contents v

Contents

Preface vii

Table of EC Commission decisions ix

Table of cases xi

Table of EC Treaty provisions xxiii

Table of EC legislation xxv

Chapter 1: The foundations of EC competition law 1

Introduction 1
The EC Treaty provisions in competition 2
The scope of application of Articles 81 and 82 EC 4
The two levels of enforcement of EC competition
law: the roles of the Commission, the natural
courts and national authorities 5
The aims of EC competition policy 6
Community competition law and national law 8
The common elements in articles 81 and 82 EC 10

Chapter 2: Anti-competitive agreements, decisions

and concerted practices: Article 81 EC 16
Introduction 16
Article 81(1) EC: The basic prohibition on anti-
competitive agreements, decisions by associations
of undertakings and concerned practices 18
vi EC Competition Law and Policy

Article 81(2) EC: the sanction 46

Article 81(3) EC: exemptions 46
The ‘rule of reason’ in EC competition law 68

Chapter 3: Abuses of dominant position by one or more

undertakings: Article 82 EC 74
Introduction 74
The prohibition on abuses of dominant
position by one or more undertakings 75

Chapter 4: The enforcement of EC competition law 113

Introduction 113
The present system – enforcement at
community level: Regulation 17/62 114
Enforcement at national level: national courts
and national authorities – the present system 145
The new system of enforcement of competition
law: the White Paper and the Draft Regulation 151
Concluding remarks 157

Index 159
 Preface vii

Preface

Despite the phenomenal growth of EC competition law in recent years,

there are plenty of excellent books on the market that cover exhaustively
the intricacies of this complex area. This book aims to provide a short and
accessible analysis of Articles 81 and 82 EC, the two core competition
provisions in the EC Treaty, and their system of enforcement. It also
focuses on two fundamental changes during the past two years that have
the potential to alter dramatically the complexion of EC competition law
as it has stood for over thirty years. These are the new system of block
exemption regulations for vertical and horizontal agreements and the
proposal for a fully decentralised system of enforcement of Articles 81 and
82 EC.
The book is divided into four chapters. Chapter 1 considers the
foundations of EC competition law. It includes an overview of the aims
and configuration of EC competition law and examines contentious
issues, such as those arising from the relationship between EC and
national competition law, and the extraterritorial jurisdiction of the
Commission in the application of Articles 81 and 82 EC. Chapter 2
analyses the structure of Article 81 EC. It surveys the case law of the
Community judicature and the decisions of the Commission in an attempt
to establish a coherent thread in their policy on collusive practices. This
chapter discusses in detail the process of reform of the Commission’s
policy on vertical restraints, initiated in 1997, and which culminated, in
December 1999, in the adoption of the umbrella block exemption on
vertical restraints. The new block exemption regulations for horizontal
agreements are also briefly discussed. Chapter 3 considers Article 82 EC
and develops its essential elements – in particular, the notions of
dominance, abuse and collective dominance, taking into account recent
developments in the case law. Finally, Chapter 4 examines the enforcement
of EC competition law. Important changes are taking place in this field,
viii EC Competition Law and Policy

following the Commission’s publication in April 1999 of its White Paper

on enforcement and in September 2000 of a Draft Regulation that, if
approved, will replace Regulation 17/62. The chapter is therefore divided
into two parts that consider, first, the current system of enforcement and
then the one suggested by the Commission.
This book would have never seen the light of day without the help of
many people. I began to teach competition law with Elizabeth Freeman;
she has always been a wonderful friend and guide to me. I am also very
grateful to Rosa Greaves, who has always encouraged me, providing
extremely helpful ideas and suggestions, and to Paul Taylor, who read the
manuscript and made pertinent and useful comments. Thanks are due to
Rosemary Graham for her editorial assistance, to Kirsty Allen, Catherine
Barnard, Joanne Scott and Stephanie Palmer for their unfailing support,
and to Christine Gray, for being such a kind and loyal friend. Finally, I am
enormously grateful to Brian Willan for his help and understanding
during the preparation of this book, which was so frequently interrupted
by my teaching commitments.
My greatest debt, however, is to my parents, to my husband Pantelis,
and to our son Alexander, whose unconditional love and patience have
helped me to see this book through. I dedicate it to Pantelis’s parents,
Nicholas and Lily Fanouraki, in thanks for their continuous support.

Albertina Albors-Llorens
April 2002
 Table of Commission Decisions
Table of EC Commission decisions
68/376/EEC (Re Rieckermann and AEG-
Elotherm) OJ [1968] L 276/25, [1968]
CMLR D78 40
69/240/EEC (Quinine cartel) OJ [1969] L
192/5, [1969] CMLR D41 40
(Dyestuffs) OJ [1969] L 195/11, [1969]
CMLR D23 25, 26
70/332/EEC (Re Kodak) OJ [1970] L
147/24, [1970] CMLR D19 45
71/23/EEC (Re German Ceramic Tiles) OJ
[1971] L 10/15, [1971] CMLR D6 44
71/224/EEC (GEMA) OJ [1971] L 134/15,
[1971] CMLR D35 92, 119, 129, 141,
143
72/403/EEC (Re Pittsburgh Corning Europe)
OJ [1972] L 272/35, [1973] CMLR
D2 45
73/332/EEC (Re Deutsche Philips) OJ
[1973] L 293/40, [1973] CMLR
D241 132
75/75/EEC (General Motors) OJ [1975] L
29/14, [1975] 1 CMLR D20 78, 87, 89,
111
75/77/EEC (Re French and Taiwanese
Mushrooms) OJ [1975] L 29/26, [1975]
1 CMLR D83 41
76/172/EEC (Re Bayer and Gist-Brocades)
OJ [1976] L 30/13, [1976] 1 CMLR
D98 48
76/353/EEC (United Brands) OJ [1976]
L 95/1, [1976] 1 CMLR D28 7, 75,
77, 79, 82, 84–86, 89, 90, 92, 99, 111,
132
77/327/EEC (BP) OJ [1977] L 117/1, [1977]
2 CMLR D1 100, 111
78/68/EEC (Hugin) OJ [1978] L 22/23,
[1978] 1 CMLR D19 77, 78, 105, 107
ix
79/934/EEC (Atka v. BP Kemi/Danske
Spritfabrikker) OJ [1979] L286/32,
[1979] 3 CMLR 684 44
80/1334/EEC (Re Italian Cast Glass) OJ
[1980] L 383/19, [1982] 2 CMLR 61
42
82/756/EEC (Fédération Nationale de
l’Industrie de la Chaussure de France) OJ
[1982] L 319/12, [1983] 1 CMLR
575 120, 121
83/400/EEC (Windsurfing International) OJ
1983] L 229/1, [1984] 1 CMLR 1 45
84/282/EEC (Polistil/Arbois) OJ [1984] L
136/9, [1984] 2 CMLR 594 36
84/380/EEC (Re Synthetic Fibres) OJ [1984]
L 207/17, [1985] 1 CMLR 787 43
84/405/EEC (Re the Zinc Producer Group)
OJ [1984] L 220/27, [1985] 2 CMLR
108 42
85/74/EEC (Peroxygen Products) OJ [1985]
L 35/1, [1985] 1 CMLR 481 36
85/609/EEC (AKZO) OJ [1985] L 374/1,
[1986] 3 CMLR 273 125, 137
86/398/EEC (Re Propylene cartel) OJ [1986]
L 230/1, [1988] 4 CMLR 347 23
87/409/EEC (Sandoz) OJ [1987] L 222/
28, [1989] 4 CMLR 628 28
88/138/EEC (Hilti) OJ [1988] L 65/19,
[1989] 4 CMLR 677 96
88/501/EEC (TetraPak I) OJ [1988] L
272/27, [1990] 4 CMLR 47 96
88/518/EEC (British Sugar) OJ [1988] L
284/41, [1990] 4 CMLR 196 83
89/22/EEC (British Plasterboard) OJ [1989]
L 10/50, [1990] 2 CMLR 464 83, 87
89/93/EEC (Italian Flat Glass) OJ [1989] L
33/44, [1990] 4 CMLR 535 108
x EC Competition Law and Policy
89/512/EEC (Dutch banks) OJ [1989]
L 253/1, [1990] 4 CMLR 768 30
90/299/ECC (Solvay) OJ (1991) L 152/
21, (1994) 4 CMLR 645 106
90/645/EEC (Bayer) OJ [1990] L 351/
46, [1992] 4 CMLR 61 28, 119
91/297/EEC (Re Soda Ash) OJ [1991]
L 152/1, [1994] 4 CMLR 454 7, 43,
83, 87, 124
92/96/EEC (Re Arssupol) OJ [1992] L
37/16, [1993] 4 CMLR 338 49
92/204/EEC (Dutch building cartel) OJ
[1992] l 92/1, [1993] 5 CMLR
135 129
92/213/EEC (Britsh Midland Airwarys v.
Aer Lingus) OJ [1992] L 96/34, [1993] 4
CMLR 596 87
92/521/EEC (Re Distribution of package
tours during the 1990 World Cup) OJ
[1992] L 326/31, [1994] CMLR 253
11
92 (B&I Line plc v. Sealink Harbours) [1992] 5
CMLR 255 103
94/894/EEC (Eurotunnel) OJ [1994] L
354/66, [1995] 4 CMLR 801 133
94/19/EC (Sea Containers v. Stena Sealink)
OJ [1994] L 15/8, [1995] 4 CMLR
84 103
94/296/EC (Stichting Baksteen) OJ [1994] L
131/15, [1995] 4 CMLR 646 116, 117
97/624/EEC (Re Irish Sugar) OJ [1997] L
258/1, [1997] 5 CMLR 666 84, 87,
94
98/273/EEC (Re Volkswagen and others)
OJ [1998] L 124/60, [1998] 5 CMLR
333 28, 36, 44
99/271/EC (Re Greek Ferries) OJ [1999] L
109/24, [1999] 5 CMLR 47 20, 32
2000/12/EC (Re The 1998 Football World
Cup) OJ [2000] L 5/55, [2000] 4 CMLR
963 7, 91
2000/74/EC (Virgin/British Airways) OJ
[2000] L 30/1, [2000] 4 CMLR 999 95
2000/117/EC (Re FEG and TU) OJ
[2000] L 39/1, [2000] 4 CMLR
1208 40
 Table of cases
Table of cases
European Court of Justice
ACF Chemiefarma v. Commission (Case
41/69) [1970] ECR 661 18
Adams v. Commission (Case 145/83)
[1985] ECR 3539, [1986] 2 CMLR
506 124, 144
AEG and Telefunken v. Commission
(Case 107/82) [1983] ECR 3151,
[1984] 3 CMLR 325 27
Ahlström and others v. Commission
(Woodpulp I) (Joined Cases 89/95,
104/85, 114/85, 116–117/85, 125–
129/85) [1988] ECR 5193, [1988] 4
CMLR 901 13
Ahlström and others v CMS (Woodpulp
II) Joined cases C-114/85 and C-125/
85, C-89/85, C-104/85, C-116–117/
85 and C-125–129/85 [1993] ECR
I-1307, [1993] 4 CMLR 407 26, 123,
124
Ahmed Saeed v. Zentrale zur
Bekämpfung Unlauteren Wettwerbs
(Case 66/86) [1989] ECR 803, [1990]
4 CMLR 102 41, 91
AKZO v. Commission (Case 53/85)
[1986] ECR 1965 125, 137
AKZO v. Commission (Case C-62/86)
[1991] ECR I-3359, [1993] 5 CMLR
215 98, 123
Alsatel v. Novasam (Case 247/86)
[1988] ECR 5987, [1990] 4 CMLR
434 75, 83
AM & S v. Commission (Case 155/79)
[1982] ECR 1575, [1982] 2 CMLR
264 122
ANCIDES v. Commission (Case 43/85)
xi
[1987] ECR 3131, [1988] 4 CMLR
821 125
Anne Marty v. Estée Lauder (Case 37/
79) [1980] ECR 2481, [1981] 2 CMLR
143 128
Bagnasco v. Banca Popolare di Novara
(Joined Cases C-215/96 and C-216/
96) [1999] ECR I-135 30
Banks v. British Coal Corporation (Case
C-128/92) [1994] ECR I-1209, [1994]
5 CMLR 30 149
BAT and Reynolds v. Commission (Joined
Cases 142/84 and 156/84) [1987]
ECR 4487, [1988] 4 CMLR 24 3, 117,
118, 129
Béguelin v. Import Export (Case 22/71)
[1971] ECR 949, [1972] CMLR
81 19, 46
Bela-Mühle (Case 114/76) [1977] ECR
121, [1979] 2 CMLR 83 50
Belasco v. Commission (Case 246/86)
[1989] ECR 2117, [1991] 4 CMLR 96
22, 40, 42
Bergaderm v. Commission (Case C-352/
98P) [2000] ECR I-5291 144
Binon v. Agence et messageries de la
presse (Case 243/83) [1985] ECR
2015, [1985] 3 CMLR 800 20,
41
BMW v. Commission (Joined Cases 32/
78, 36–82/78) [1979] ECR 2435,
[1980] 1 CMLR 370 28
BNIC v. Blair (Case 123/83) [1985] ECR
391, [1985] 2 CMLR 430 30, 41
xii EC Competition Law and Policy
Boehringer v. Commission (Case 45/69)
[1970] ECR 769 19
BP v. Commission (Case 77/77) [1978]
ECR 1513, [1978] 3 CMLR 174 100,
111
Brasserie de Haecht v. Wilkin-Janssen
(Case 23/67) [1967] ECR 407, [1968]
CMLR 26 29, 37, 116
Brasserie du Pêcheur and Factortame
(Joined Cases C-46 and C-48/93)
[1996] ECR I-1029, [1996] 1 CMLR
889 148
British Leyland v. Commission (Case
226/84) [1986] ECR 3263, [1987] 1
CMLR 185 90
BRT v. SABAM (I) (Case 127/73) [1974]
ECR 51, [1974] CMLR 238 6, 111
BRT v. SABAM (II) (Case 127/73) [1974]
ECR 313, [1974] 2 CMLR 238 90,
150
Bundeskartellamt v. Volkswagen (Case
C-266/93) [1995] ECR I-3477, [1996]
4 CMLR 478 10
Cadillon v. Höss (Case 1/71) [1971] ECR
351, [1971] CMLR 420 31
Camera Care v. Commission (Case 792/
79R) [1980] ECR 119, [1980] 1 CMLR
334 127, 128, 156
Centre d’insémination de la Crespelle v.
Coopérative de la Mayenne (Case C-
323/93) [1994] ECR I-5077 90
Cementhandelaren v. Commission (Case
8/72) [1972] ECR 977, [1973] CMLR
7 7, 29, 41
Chemiefarma v. Commission (Case 41/
69) [1970] ECR 661 7, 36
CICCE v. Commission (Case 298/83)
[1985] ECR 1105, [1986] 1 CMLR
486 9
Compagnie Maritime Belge v.
Commission (Joined Cases C-395/
96P and C-396/96P) [2000] 4 CMLR
1076 85, 99, 109
Compagnie Royale Asturienne des Mines
v. Commission (Cases 29–30/83)
[1984] ECR 1679, [1985] 1 CMLR
688 12
Commercial Solvents v. Commission
(Joined Cases 6 and 7/73) [1974] ECR
223, [1974] 1 CMLR 309 11, 13, 99–
101, 106, 130
Commission v. UK (Newcastle disease)
(Case 40/82) [1982] ECR 2793,
[1982] 3 CMLR 497 50, 97
Consten and Grundig v. Commission
(Joined Cases 56 and 58/64) [1966]
ECR 299, [1966] CMLR 418 6, 21,
34, 44, 106, 123
Continental Can v. Commission (Case 6/
72) [1973] ECR 215, [1973] CMLR
199 2, 5, 75, 77, 84, 86, 89
COSTA v. ENEL (Case 6/64) [1964] ECR
585, [1964] CMLR 425 8
Courage v Crehan (Case C-453/99,
Judgment of 20 September 2001, not
yet updated) 149
CRAM and Rheinzink v. Commission
(Cases 29–30/83) [1984] ECR 1679,
[1985] 1 CMLR 688 26
Deere v. Commission (Case C-7/95P)
[1998] ECR I-3111 27
Delimitis v. Henninger Bräu (Case C-
234/89) [1991] ECR I-935, [1992] 5
CMLR 210 37, 69, 145, 152
Deutsche Grammophon v. Commission
(Case 78/70) [1971] 1 CMLR
631 101
DGDC v. Asociación Española de Banca
Privada (Case C-67/91) [1992] ECR
I-4875 121
ENU v. Commission (Case C-107/91)
[1993] ECR I-599 142
Europemballage Corporation and
Continental Can Co. Inc. v.
Commission (Case 6/72) [1973] ECR
215, [1973] CMLR 199 18, 75
Fedesa (Case C-331/88) [1990] ECR I-
4023 50
Ferrerie Nord v. Commission (Case C-
219/95P) [1997] ECR I-4414, [1997] 5
CMLR 575 29, 34
Ford Werke and Ford Europa v.
Commission (Joined Cases 25 and
26/84) [1985] ECR 2725, [1985] 3
CMLR 528 28
France v. Commission (Case C-68/94)
[1998] ECR I-1375 108
François v. Lucazeau v. SACEM (Case
397/87) [1989] ECR 2811, [1991] 4
CMLR 248 24
Francovich and Bonifaci (Joined Cases C-
6/90 and 9/90) [1991] ECR I-5357,
[1993] 2 CMLR 66 148, 149
Fromançais v. Forma (Case 66/82)
[1983] ECR 395, [1983] 3 CMLR
453 50
 Table of cases
General Motors v. Commission (Case 26/
75) [1975] ECR 1367, [1976] 1 CMLR
95 78, 87, 89, 111
Gøttrup-Klim Grovvareforeninger and
others v. Dansk Landbrugs
Grovvareselskab (Case C-250/92)
[1994] ECR I-5641, [1996] 4 CMLR
191 30, 85, 111
GEMA v. Commission (Case 125/78)
[1979] ECR 3173, [1980] 2 CMLR
177 92, 119, 129, 141, 143
GT-Link v. De Danske Statsbaner (Case
C-242/95) [1997] ECR I-4449, [1997]
5 CMLR 601 148
Guérin v. Commission (Case C-282/95P)
[1997] ECR I-503, [1997] 5 CMLR
447 118, 119, 137
GVL v. Commission (Case 7/82) [1983]
ECR 483, [1983] 3 CMLR 645 92
Hasselblad v. Commission (Case 86/82)
[1984] ECR 883, [1984] 1 CMLR
559 36
Hoechst v. Commission (Cases 46/87
and 227/88) [1989] ECR 2859, [1991]
4 CMLR 410 121, 122
Hoffman-La Roche v. Commission (Case
85/76) [1979] ECR 461, [1979] 3
CMLR 211 77, 79, 80, 84, 85, 87, 88,
93, 94, 110
Höfner v. Macroton (Case C-41/90)
[1991] ECR I-1979, [1993] 4 CMLR
306 11, 91, 106
Hugin v. Commission (Case 22/78)
[1979] ECR 1869, [1979] 3 CMLR
345 77, 78, 105, 107
Hydrotherm v. Andreoli (Case 170/83)
[1984] ECR 2999, [1985] 3 CMLR
224 11
Ice-cream cases (Langnese-Iglo v.
Commission) (Case C-279/95P)
[1998] ECR I-5609, [1998] 5 CMLR
933 130
ICI v. Commission (Case 48/69) [1972]
ECR 619, [1972] CMLR 557 11, 13,
14, 23, 24, 36
IBM v. Commission (Case 60/81) [1981]
ECR 2639, [1981] 3 CMLR 635 123,
136
Javico v. Yves Saint Laurent (Case C-
306/96) [1998] ECR I-1983, [1998] 5
CMLR 172 29
xiii
Koelman v. Commission (Case C-59/
96P) [1997] ECR I-4812 128
Kruidvat v. Commission (Case C-70/
97P) [1998] ECR I-7183, [1999] 5
CMLR 68 139
Lancôme v. Etos (Case 99/79) [1980]
ECR 2511, [1981] 2 CMLR 164 39,
128
Lawrie-Blum v. Land Baden-
Württemberg (Case 66/85) [1986]
ECR 2121, [1987] 43 CMLR 389 11
Leclerc v. Au Blé Vert (Case 229/83)
[1985] ECR 1, [1985] 2 CMLR 286
6
Levin v. Staatssecretaris van Justitie
(Case 53/81) [1982] ECR 1035,
[1982] 2 CMLR 454 11
L’Oréal v. PVBA De Nieuwe (Case 31/
80) [1980] ECR 3775, [1981] 2 CMLR
235 75, 113, 128
Louis Erwauw-Jacquery v. La
Hesbignonne (Case 27/87) [1988]
ECR 1919, [1988] 4 CMLR 576 36
Masterfoods v. HB Ice Cream (Case
C-344/98) [2000] ECR I-11369
[2001] 4 CMLR 449 145, 147
Merci (Case C-179/90) [1991] ECR
I-5889 91
Metro v. Commission (Metro I) (Case 26/
76) [1977] ECR 1875, [1978] 2 CMLR
1 70, 138
Metro v. Commission (Metro II) (Case
75/84) [1986] ECR 3021, [1987] 1
CMLR 118 138
Michelin v. Commission (Case 322/81)
[1983] ECR 3461, [1985] 1 CMLR
282 75, 81, 83, 86, 88, 94, 105, 106
Ministère Public v. Jean-Louis Tournier
(Case 395/87) [1988] ECR 2521,
[1991] 4 CMLR 248 93
Montecatini v. Commission (Case C-235/
91P) [2000] 4 CMLR 691 72
Musique Diffusion Française and others
v. Commission (Joined Cases 100/80
to 103/80) [1983] ECR 1825, [1983] 3
CMLR 221 31, 123
National Carbonising Company (Case
109/75R) [1975] ECR 1193 127
National Panasonic v. Commission (Case
136/79) [1980] ECR 2033, [1980] 3
CMLR 169 120
xiv EC Competition Law and Policy
Nungeser and Eisele v. Commission
(Case 258/78) [1982] ECR 2015,
[1983] 1 CMLR 278 11
Oude Luttikhuis v. Verenigde
Coöperatieve Melkindustrie (Case C-
399/93) [1995] ECR I-4515, [1996] 5
CMLR 178 39
Orkem v. Commission (Case 374/87)
[1989] ECR 3283, [1991] 4 CMLR
502 120, 121
Oscar Bronner v. Mediaprint (Case C-7/
97) [1998] ECR I-7791, [1999] 4
CMLR 112 103
Papiers Peints v. Commission (Case 73/
74) [1975] ECR 11491, [1976] CMLR
1491 30, 40
Parke, Davis v. Centrafarm (Case 24/67)
[1968] ECR 55, [1968] CMLR 47 102
Piraiki-Patriki v. Commission (Case 11/
82) [1985] ECR 207, [1985] 2 CMLR
4 138
Plaumann v. Commission (Case 25/62)
[1963] ECR 95, [1964] CMLR 29 138
Procurer de Roi v. Dassonville (Case 8/
74) [1974] ECR 837, [1974] 2 CMLR
436 11
Pronuptia v. Schillgalis (Case 161/84)
[1986] ECR 353, [1986] 1 CMLR
414 71
R. v. HM Treasury, ex parte BT (Case
C-392/93) [1996] ECR I-1631, [1996]
2 CMLR 217 148
R. v. MAFF, ex parte Hedley Lomas (Case
C-5/94) [1996] ECR I-2533 148
Remia v. Commission (Case 42/84)
[1985] ECR 2545, [1987] 1 CMLR
1 29, 30, 49
Rendo v. Commission (Case C-19/93)
[1995] ECR I-3319, [1997] 4 CMLR
392 118
Rewe-Zentral Finanz v.
Landwirtschaftskammer für Saarland
(Case 37/76) [1976] ECR 1989,
[1977] 1 CMLR 533 148
RTE and ITP v. Commission (the Magill
cases) (Cases C-241/91 etc.) [1995]
ECR I-797, [1995] 4 CMLR 718 101,
130
San Giorgio (Case 199/82) [1983] ECR
3595 148
Sandoz v. Commission (Case C-277/87)
[1990] ECR I-45 19, 20
Serena v. Eda (Case 40/70) [1971] ECR
69, [1971] CMLR 260 102
Société de Vente de Ciments et Bétons de
l’est v. Kerpen & Kerpen (Case 319/
82) [1983] ECR 4173, [1985] 1 CMLR
511 46
Société Technique Minière v.
Maschinenbau Ulm (Case 56/65)
[1966] ECR 234, [1966] CMLR
357 29, 34, 36, 69
Sonito v. Commission (Case C-87/89)
[1990] ECR I-1981 144
Stichting Sigaretten-industrie v.
Commission (Cases 242/82 etc.)
[1985] ECR 3831, [1987] 3 CMLR
661 43, 116, 117
STM v. Maschinenbau Ulm (Cases 56 and
58/65) [1966] ECR 234, [1966] CMLR
357 7, 105
Suiker Unie v. Commission (Sugar cartel)
(Joined Cases 40–48, 50, 54–56, 111,
113–114/73) [1975] ECR 1663, [1976]
1 CMLR 295 24, 36, 88, 93
T. Port (Case C-68/95) [1996] ECR
I-6065, [1997] 1 CMLR 1 142
Tepea v. Commission (Case 28/77)
[1978] ECR 1391, [1978] 3 CMLR
392 19
TetraPak International v. Commission
(Case C-333/94P) [1996] ECR I-5951,
[1997] 4 CMLR 662 97, 99
Toepfer v. Commission (Cases 106–107/
63) [1965] ECR 405, [1966] CMLR
111 138
Transocean Marine Paint v. Commission
(Case 17/74) [1974] ECR 1063,
[1974] 2 CMLR 459 126
Tremblay v. Commission (Case C-91/
95P) [1996] ECR I-5547, [1997] 4
CMLR 211 118
TWD (Case C-188/92) [1994] ECR
I-833 140
United Brands v. Commission (Case 27/
76) [1978] ECR 207, [1978] 1 CMLR
429 7, 75, 77, 79, 82, 84, 85, 86, 89,
90, 92, 99, 111, 132
V.A.G. France v. Etablissements Magne
SA (Case 10/86) [1986] ECR 4071,
1988] 4 CMLR 98
Van Gend en Loos v. Nederlandse
administratie der belastingen (Case
26/62) [1963] ECR 1 [1963] CMLR
105 5
 Table of cases
Van Landewyck v. Commission (Joined
Cases 209–215 and 218/78) [1980]
ECR 3125, [1981] 3 CMLR 134 19,
22, 41, 42, 50
Van Zuylen v. Hag (Case 192/73) [1974]
ECR 731, [1974] 2 CMLR 127 19
VBVB and VBBB v. Commission (Joined
Cases 43/82 and 63/82) [1984] ECR
19, [1985] 1 CMLR 27 48, 134
Viho Europe v. Commission (Case C-73/
95P) [1996] ECR I-5457, [1997] 4
CMLR 419 19
Völk v. Vervaecke (Case 5/69) [1969]
ECR 295, [1969] CMLR 273 31
Volvo v. Veng (Case 238/87) [1988] ECR
6211, [1989] 4 CMLR 122 101
Wilhelm v. Bundeskartellamt (Case 14/
68) [1969] ECR 1, [1969] CMLR
100 8, 9, 10
Windsurfing International v. Commission
(Case 193/83) [1986] ECR 611, [1986]
3 CMLR 489 30
Züchner v. Bayerische Vereinsbank (Case
172/80) [1981] ECR 2021, [1982] 1
CMLR 313 24
Case 25/62 Plaumann v. Commission
[1963] ECR 95, [1964] CMLR 29 138
Case 26/62 Van Gend en Loos v.
Nederlandse administratie der
belastingen [1963] ECR 1, [1963]
CMLR 105 5
Cases 106–107/63 Toepfer v.
Commission [1965] ECR 405, [1966]
CMLR 111 138
Case 6/64 COSTA v. ENEL [1964] ECR
585, [1964] CMLR 425 8
Joined Cases 56 and 58/64 Consten and
Grundig v. Commission [1966] ECR
299, [1966] CMLR 418 6, 21, 34, 44,
106, 123
Case 56/65 Société Technique Minière v.
Maschinenbau Ulm [1966] ECR 234,
[1966] CMLR 357 7, 29, 34, 36, 39,
105
Case 23/67 Brasserie de Haecht v.
Wilkin-Janssen [1967] ECR 407,
[1968] CMLR 26 29, 37, 116
xv
Case 24/67 Parke, Davis v. Centrafarm
[1968] ECR 55, [1968] CMLR 47 102
Case 14/68 Wilhelm v. Bundeskartellamt
[1969] ECR 1, [1969] CMLR 100 8,
9, 10
Case 5/69 Völk v. Vervaecke [1969] ECR
295, [1969] CMLR 273 31
Case 41/69 Chemiefarma v. Commission
[1970] ECR 661 7, 18, 36
Case 45/69 Boehringer v. Commission
[1970] ECR 769 19
Case 48/69 ICI v. Commission [1972]
ECR 619, [1972] CMLR 557 11, 13,
23, 24, 36
Case 40/70 Serena v. Eda [1971] ECR 69,
[1971] CMLR 260 102
Case 78/70 Deutsche Grammophon v.
Commission [1971] 1 CMLR
631 101
Case 1/71 Cadillon v. Höss [1971] ECR
351, [1971] CMLR 420 31
Case 22/71 Béguelin v. Import Export
[1971] ECR 949, [1972] CMLR
81 19, 46
Case 6/72 Continental Can v.
Commission [1973] ECR 215, [1973]
CMLR 199 2, 5, 18, 75, 77, 84, 86,
89,
Case 8/72 Cementhandelaren v.
Commission [1972] ECR 977, [1973]
CMLR 7 7, 29, 41
Joined Cases 6 and 7/73 Commercial
Solvents v. Commission [1974] ECR
223, [1974] 1 CMLR 309 11, 13,
99–101, 106, 130
Joined Cases 40–48, 50, 54–56, 111,
113–114/73 Suiker Unie v.
Commission (Sugar cartel) [1975]
ECR 1663, [1976] 1 CMLR 295 24,
36, 88, 93
Case 127/73 BRT v. SABAM (I) [1974]
ECR 51, [1974] CMLR 238 6, 111
Case 127/73 BRT v. SABAM (II) [1974]
ECR 313, [1974] 2 CMLR 238 90,
150
Case 192/73 Van Zuylen v. Hag [1974]
ECR 731, [1974] 2 CMLR 127 19
Case 8/74 Procurer de Roi v. Dassonville
[1974] ECR 837, [1974] 2 CMLR
436 11
xvi EC Competition Law and Policy
Case 17/74 Transocean Marine Paint v.
Commission [1974] ECR 1063, [1974]
2 CMLR 459 126
Case 73/74 Papiers Peints v.
Commission [1975] ECR 11491,
[1976] CMLR 1491 30, 40
Case 26/75 General Motors v.
Commission [1975] ECR 1367, [1976]
1 CMLR 95 78, 87, 89, 111
Case 109/75R National Carbonising
Company [1975] ECR 1193 127
Case 26/76 Metro v. Commission (Metro
I) [1977] ECR 1875, [1978] 2 CMLR
1 70, 138
Case 27/76 United Brands v.
Commission [1978] ECR 207, [1978] 1
CMLR 429 7, 75, 77, 79, 82, 84–86,
89, 90, 92, 99, 111, 132
Case 37/76 Rewe-Zentral Finanz v.
Landwirtschaftskammer für Saarland
[1976] ECR 1989, [1977] 1 CMLR
533 148
Case 85/76 Hoffman-La Roche v.
Commission [1979] ECR 461, [1979] 3
CMLR 211 77, 79, 80, 84, 85, 87, 88,
93, 94, 110
Case 114/76 Bela-Mühle [1977] ECR 121,
[1979] 2 CMLR 83 50
Case 28/77 Tepea v. Commission [1978]
ECR 1391, [1978] 3 CMLR 392 19
Case 77/77 BP v. Commission [1978]
ECR 1513, [1978] 3 CMLR 174 100,
111
Case 22/78 Hugin v. Commission [1979]
ECR 1869, [1979] 3 CMLR 345 77,
78, 105, 107
Joined Cases 32/78, 36–82/78 BMW v.
Commission [1979] ECR 2435, [1980]
1 CMLR 370 28
Case 125/78 GEMA v. Commission
[1979] ECR 3173, [1980] 2 CMLR
177 92, 119, 129, 141, 143
Joined Cases 209–215 and 218/78 Van
Landewyck v. Commission [1980]
ECR 3125, [1981] 3 CMLR 134 19,
22, 41, 42, 50
Case 258/78 Nungeser and Eisele v.
Commission [1982] ECR 2015, [1983]
1 CMLR 278 11
Case 37/79 Anne Marty v. Estée Lauder
[1980] ECR 2481, [1981] 2 CMLR
143 128
Case 99/79 Lancöme v. Etos [1980] ECR
2511, [1981] 2 CMLR 164 39, 128
Case 136/79 National Panasonic v.
Commission [1980] ECR 2033, [1980]
3 CMLR 169 120
Case 155/79 AM & S v. Commission
[1982] ECR 1575, [1982] 2 CMLR
264 122
Case 792/79R Camera Care v.
Commission [1980] ECR 119, [1980] 1
CMLR 334 127, 128, 156
Case 31/80 L’Oréal v. PVBA De Nieuwe
[1980] ECR 3775, [1981] 2 CMLR
235 75, 113, 128
Joined Cases 100/80 to 103/80 Musique
Diffusion Française and others v.
Commission [1983] ECR 1825, [1983]
3 CMLR 221 31, 123
Case 172/80 Züchner v. Bayerische
Vereinsbank [1981] ECR 2021, [1982]
1 CMLR 313 24
Case 53/81 Levin v. Staatssecretaris van
Justitie [1982] ECR 1035, [1982] 2
CMLR 454 11
Case 60/81 IBM v. Commission [1981]
ECR 2639, [1981] 3 CMLR 635 123,
136
Case 322/81 Michelin v. Commission
[1983] ECR 3461, [1985] 1 CMLR
282 75, 81, 83, 86, 88, 94, 105, 106
Case 7/82 [1983] GVL v. Commission
ECR 483, [1983] 3 CMLR 645 92
Case 11/82 Piraiki-Patriki v. Commission
[1985] ECR 207, [1985] 2 CMLR
4 138
Case 40/82 Commission v. UK
(Newcastle disease) [1982] ECR 2793,
[1982] 3 CMLR 497 50, 97
Joined Cases 43/82 and 63/82 VBVB
and VBBB v. Commission [1984]
ECR 19, [1985] 1 CMLR 27 48,
134
Case 66/82 Fromançais v. Forma [1983]
ECR 395, [1983] 3 CMLR 453 50
Case 86/82 Hasselblad v. Commission
[1984] ECR 883, [1984] 1 CMLR
559 36
Case 107/82 AEG and Telefunken v.
Commission [1983] ECR 3151, [1984]
3 CMLR 325 27
Case 199/82 San Giorgio [1983] ECR
3595 148
 Table of cases
Cases 242/82 etc. Stichting Sigaretten-
industrie v. Commission [1985] ECR
3831, [1987] 3 CMLR 661 43, 116,
117
Case 319/82 Société de Vente de Ciments
et Bétons de l’est v. Kerpen & Kerpen
[1983] ECR 4173, [1985] 1 CMLR
511 46
Cases 29–30/83 Compagnie Royale
Asturienne des Mines v. Commission
[1984] ECR 1679, [1985] 1 CMLR
688 12
Cases 29–30/83 CRAM and Rheinzink v.
Commission [1984] ECR 1679, [1985]
1 CMLR 688 26
Case 123/83 BNIC v. Blair [1985] ECR
391, [1985] 2 CMLR 430 30, 41
Case 145/83 Adams v. Commission
[1985] ECR 3539, [1986] 2 CMLR
506 124, 144
Case 170/83 Hydrotherm v. Andreoli
[1984] ECR 2999, [1985] 3 CMLR
224 11
Case 193/83 Windsurfing International v.
Commission [1986] ECR 611, [1986] 3
CMLR 489 30
Case 229/83 Leclerc v. Au Blé Vert
[1985] ECR 1, [1985] 2 CMLR 286 6
Case 243/83 Binon v. Agence et
messageries de la presse [1985] ECR
2015, [1985] 3 CMLR 800 20, 41
Case 298/83 CICCE v. Commission
[1985] ECR 1105, [1986] 1 CMLR
486 9
Joined cases 25 and 26/84 Ford Werke
and Ford Europa v. Commission
[1985] ECR 2725, [1985] 3 CMLR
528 28
Case 42/84 Remia v. Commission [1985]
ECR 2545, [1987] 1 CMLR 1 29, 30,
49
Case 75/84 Metro v. Commission (Metro
II) [1986] ECR 3021, [1987] 1 CMLR
118 138
Joined Cases 142/84 and 156/84 BAT
and Reynolds v. Commission [1987]
ECR 4487, [1988] 4 CMLR 24 3, 117,
118, 129
Case 161/84 Pronuptia v. Schillgalis
[1986] ECR 353, [1986] 1 CMLR
414 71
Case 226/84 British Leyland v.
Commission [1986] ECR 3263, [1987]
1 CMLR 185 90
xvii
Case 43/85 ANCIDES v. Commission
[1987] ECR 3131, [1988] 4 CMLR
821 125
Case 53/85 AKZO v. Commission [1986]
ECR 1965 125, 137
Case 66/85 Lawrie-Blum v. Land Baden-
Württemberg [1986] ECR 2121,
[1987] 43 CMLR 389 11
Joined Cases 89/85, 104/85, 114/85,
116–117/85, 125–129/85 Ahlström
and others v. Commission (Woodpulp
I) [1988] ECR 5193, [1988] 4 CMLR
901 13
Joined Cases C-114/85 and C-125/85, C-
89/85, C-104/85, C116–117/85 and
C-125–129/85 Ahlström and others
v. Commission (Woodpulp II)
Woodpulp (II) [1993] ECR I-1307,
[1993] 4 CMLR 407 27, 123, 134
Case 10/86 V.A.G. France v.
Etablissements Magne SA [1986]
ECR 4071, [1998] 4 CMLR 98 46
Case C-62/86 AKZO v. Commission
[1991] ECR I-3359, [1993] 5 CMLR
215 98, 123
Case 66/86 Ahmed Saeed v. Zentrale zur
Bekämpfung Unlauteren Wettwerbs
[1989] ECR 803, [1990] 4 CMLR
102 41, 91
Case 246/86 Belasco v. Commission
[1989] ECR 2117, [1991] 4 CMLR
96 22, 40, 42
Case 247/86 Alsatel v. Novasam
[1988] ECR 5987, [1990] 4 CMLR
434 75, 83
Case 27/87 Louis Erwauw-Jacquery v.
La Hesbignonne [1988] ECR 1919,
[1988] 4 CMLR 576 36
Cases 46/87 and 227/88 Hoechst v.
Commission [1989] ECR 2859, [1991]
4 CMLR 410 121, 122
Case 238/87 Volvo v. Veng [1988] ECR
6211, [1989] 4 CMLR 122 101
Case C-277/87 Sandoz v. Commission
[1990] ECR I-45 19, 20
Case 374/87 Orkem v. Commission
[1989] ECR 3283, [1991] 4 CMLR
502 120, 121
Case 395/87 Ministère Public v. Jean-
Louis Tournier [1988] ECR 2521,
[1991] 4 CMLR 248 93
Case 397/87 François v. Lucazeau v.
SACEM [1989] ECR 2811, [1991] 4
CMLR 248 24
xviii EC Competition Law and Policy
Case C-331/88 Fedesa [1990] ECR
I-4023 50
Case C-87/89 Sonito v. Commission
[1990] ECR I-1981 144
Case C-234/89 Delimitis v. Henninger
Bräu [1991] ECR I-935, [1992] 5
CMLR 210 37, 69, 145, 152
Joined Cases C-6/90 and 9/90
Francovich and Bonifaci [1991] ECR I-
5357, [1993] 2 CMLR 66 148, 149
Case C-41/90 Höfner v. Macroton [1991]
ECR I-1979, [1993] 4 CMLR 306 11,
91, 106
Case C-179/90 Merci [1991] ECR I-
5889 91
Case C-67/91 DGDC v. Asociación
Española de Banca Privada [1992]
ECR I-4875 121
Case C-107/91 ENU v. Commission
[1993] ECR I-599 142
Case C-235/91P Montecatini v.
Commission [2000] 4 CMLR 691 72
Cases C-241/91 etc. RTE and ITP v.
Commission (the Magill cases) [1995]
ECR I-797, [1995] 4 CMLR 718 101,
130
Case C-128/92 Banks v. British Coal
Corporation [1994] ECR I-1209,
[1994] 5 CMLR 30 149
Case C-188/92 TWD [1994] ECR
I-833 140
Case C-250/92 Gøttrup-Klim
Grovvareforeninger and others v.
Dansk Landbrugs Grovvareselskab
[1994] ECR I-5641, [1996] 4 CMLR
191 30, 85, 111
Case C-19/93 Rendo v. Commission
[1995] ECR I-3319, [1997] 4 CMLR
392 118
Joined Cases C-46 and C-48/93 Brasserie
du Pêcheur and Factortame [1996]
ECR I-1029, [1996] 1 CMLR 889 148
Case C-266/93 Bundeskartellamt v.
Volkswagen [1995] ECR I-3477,
[1996] 4 CMLR 478 10
Case C-323/93 Centre d’insémination de
la Crespelle v. Coopérative de la
Mayenne [1994] ECR I-5077 90
Case C-392/93 R. v. HM Treasury, ex
parte BT [1996] ECR I-1631, [1996] 2
CMLR 217 148
Case C-399/93 Oude Luttikhuis v.
Verenigde Coöperatieve Melkindustrie
[1995] ECR I-4515, [1996] 5 CMLR
178 39
Case C-5/94 R. v. MAFF, ex parte
Hedley Lomas [1996] ECR I-
2533 148
Case C-68/94 France v. Commission
[1998] ECR I-1375 108
Case C-333/94P TetraPak International
v. Commission [1996] ECR I-5951,
[1997] 4 CMLR 662 97, 99
Case C-7/95P Deere v. Commission
[1998] ECR I-3111 27
Case C-68/95 T. Port [1996] ECR I-6065,
[1997] 1 CMLR 1 142
Case C-73/95P Viho Europe v.
Commission [1996] ECR I-5457,
[1997] 4 CMLR 419 19
Case C-91/95P Tremblay v. Commission
[1996] ECR I-5547, [1997] 4 CMLR
211 118
Case C-219/95P Ferrerie Nord v.
Commission [1997] ECR I-4414,
[1997] 5 CMLR 575 29, 34
Case C-242/95 GT-Link v. De Danske
Statsbaner [1997] ECR I-4449, [1997]
5 CMLR 601 148
Case C-279/95P Ice-cream cases
(Langnese-Iglo v. Commission [1998]
ECR I-5609, [1998] 5 CMLR
933 145, 147
Case C-282/95P Guérin v. Commission
[1997] ECR I-503, [1997] 5 CMLR
447 118, 119, 137
Case C-59/96P Koelman v. Commission
[1997] ECR I-4812 128
Joined Cases C-215/96 and C-216/96
Bagnasco v. Banca Popolare di
Novara [1999] ECR I-135 30
Case C-306/96 Javico v. Yves Saint
Laurent [1998] ECR I-1983, [1998] 5
CMLR 172 29
Joined Cases C-395/96P and C-396/96P
Compagnie Maritime Belge v.
Commission [2000] 4 CMLR
1076 85, 99, 109
Case C-7/97 Oscar Bronner v. Mediaprint
[1998] ECR I-7791, [1999] 4 CMLR
112 103
 Table of cases
Case C-70/97P Kruidvat v. Commission
[1998] ECR I-7183, [1999] 5 CMLR
68 139
Case C-352/98P Bergaderm v.
Commission [2000] ECR I-5291
144
Court of First Instance
Aéroports de Paris v. Commission
(Case T-128/98) [2000] ECR II-
3929 93
Air France v. Commission (Case T-3/93)
[1994] ECR II-121 137, 139
Asia Motor France v. Commission (Case
T-28/90) [1992] ECR II-2285, [1992]
5 CMLR 431 141
Automec v. Commission (Automec II)
(Case T-24/90) [1992] 5 CMLR
431 118, 129, 131
Bayer v. Commission (Case T-41/96R)
[1996] ECR II-381, [1996] 5 CMLR
290 134, 135
Bayer v. Commission (Case T-41/96)
[2000] ECR II-3383 19, 20
BENIM v. Commission (Case T-5/93)
[1995] ECR II-197, [1996] 4 CMLR
305 117
BPB v. Commission (Case T-65/89)
[1993] ECR II-389, [1993] 5 CMLR
32 93, 100
BPB Eendracht v. Commission (Case
T-311/94) [1998] ECR II-1129 123
Bureau Européen des Unions des
Consommateurs v. Commission (Case
T-37/92) [1994] ECR II-285, [1995] 4
CMLR 167 117
CB and Europay v. Commission (Joined
Cases T-39/92 and T-40/92) [1994]
ECR II-49 48
Cimenteries v. Commission (Cases T-10–
12/92 and T-15/92) [1992] ECR II-
2667, [1992] 4 CMLR 259 123
Cimenteries v. Commission (Joined Cases
T-25/95) [2000] ECR II-491, [2000] 5
CMLR 204 124, 136
Comité Central d’entreprise de la Société
Générale des Grandes Sources and
others v. Commission (Case T-96/92)
[1995] ECR II-1213 139
xix
Case C-344/98 Masterfoods v. HB Ice
Cream [2000] ECR J-11369 [2001] 4
CMLR 449 145, 147
Case C-453/99 Courage v. Crehan,
Judgment of 20 September 2001,
not yet reported 149
Comité Central d’entreprise de la Société
Anonyme Vittel and others v.
Commission (Case T-12/93) [1995]
ECR II-1247 139
Compagnie Maritime Belge v.
Commission (Joined Cases T-24–26
and 28/93) [1996] ECR II-1201 109
Deere v. Commission (Case T-35/92)
[1994] ECR II-957 27
Deutsche Bahn v. Commission (Case T-
229/94) [1997] ECR II-1689, [1998] 4
CMLR 220 78, 87
Dutch banks (Case T-138/89) [1992]
ECR II-2195, [1993] 5 CMLR
435 137
Enichem Anic v. Commission (Case T-6/
89) [1991] ECR II-1623 12
ENS v. Commission (Joined Cases T-374–
375, 384, 388/94) [1998] ECR II-
3141 39
Ferriere Nord v. Commission (Case
T-143/89) [1995] ECR II-917 39
Gencor v. Commission (Case T-102/96)
[1999] ECR II-753, [1999] 4 CMLR
971 14, 109
Hercules v. Commission (Polypropylene
cartel case) (Case T-7/89) [1991] ECR
II-1711, [1992] 4 CMLR 84 20, 123
Hilti v. Commission (Case T-30/89)
[1991] ECR II-1439, [1992] 4 CMLR
16 78, 82, 83
Ice-cream cases (Langnese-Iglo v.
Commission) (Cases T-7/93 and T-9/
93) [1995] ECR II-1633, [1995] 5
CMLR 602 128, 130
ICI v. Commission (Case T-36/91) [1995]
ECR II-1847 124
xx EC Competition Law and Policy
Irish Sugar (Case T-228/97) [1999] ECR
II-2969, [1999] 5 CMLR 1300 87,
108
ITT Promedia v. Commission (Case T-
111/96) [1998] ECR II-2937, [1998] 5
CMLR 491 97
Kruidvat v. Commission (Case T-87/92)
[1996] ECR II-1931, [1997] 4 CMLR
1046 139
La Cinq v. Commission (Case T-44/90)
[1994] ECR II-1, [1992] 4 CMLR
449 128
Mayr-Melnhof Kartongedellschaft v.
Commission (Case T-347/94) [1998]
ECR II-1751 20
Métropole v. Commission (Joined Cases
T-528/93, T-542/93, T-543/93 and T-
546/93) [1996] ECR II-649, [1996] 5
CMLR 386 139
Métropole v. Commission (Case T-112/
99, Judgment of 17 September 2001,
not yet reported 72
Métropole v. Commission (Case T-206/
99) (judgment of 21 March 2001, not
yet reported) 118
Montecatini v. Commission (Case T-14/
89) [1992] ECR II-2409 72
Prodifarma v. Commission (Case T-3/90)
[1991] ECR II-1 136, 142
RTE v. Commission (the Magill cases)
(Cases T-69/70/89 etc.) [1991] ECR
II-485, [1991] 4 CMLR 586 102,
106
Schöller v. Commission (Case T-9/93)
[1995] ECR II-1611, [1995] 5 CMLR
602 32
Scottish Football Association v.
Commission (Case T-46/92) [1994]
ECR II-1039 121
Shell v. Commission (Case T-11/89)
[1992] ECR II-757 12
Società Italiana Vetro v. Commission
(Cases T-68, 77 and 79/89) [1992]
ECR II-1403, [1992] 5 CMLR
302 107, 109
Solvay v. Commission (Case T-30/91)
[1995] ECR II-1775, [1996] 5 CMLR
57 106, 124
TetraPak v. Commission (TetraPak II)
(Case T-83/91) [1994] ECR II-
755 83, 88, 92, 96, 104
Tiercé Ladbrooke (Case T-504/93)
[1997] ECR II-923, [1997] 5 CMLR
309 102
Tréfilunion v. Commission (Case T-148/
89) [1995] ECR II-1063 36, 43
Case T-6/89 Enichem Anic v.
Commission [1991] ECR II-1623 12
Case T-7/89 Hercules v. Commission
(Polypropylene cartel case) [1991]
ECR II-1711, [1992] 4 CMLR 84 20,
123
Case T-11/89 Shell v. Commission [1992]
ECR II-757 12
Case T-14/89 Montecatini v. Commission
[1992] ECR II-2409 72
Case T-30/89 Hilti v. Commission [1991]
ECR II-1439, [1992] 4 CMLR 16 78,
82, 83
Case T-65/89 BPB v. Commission [1993]
ECR II-389, [1993] 5 CMLR 32 93,
100
Cases T-68, 77 and 79/89 Società
Italiana Vetro v. Commission [1992]
ECR II-1403, [1992] 5 CMLR
302 107, 109
Cases T-69/70/89 etc. RTE v.
Commission (the Magill cases) [1991]
ECR II-485, [1991] 4 CMLR 586 101,
130
Case T-138/89 Dutch banks [1992]
ECR II-2195, [1993] 5 CMLR
435 137
Case T-143/89 Ferriere Nord v.
Commission [1995] ECR II-917 34
Case T-148/89 Tréfilunion v. Commission
[1995] ECR II-1063 36, 43
Case T-3/90 Prodifarma v. Commission
[1991] ECR II-1 136, 142
Case T-24/90 Automec v. Commission
(Automec II) [1992] 5 CMLR
431 118, 129, 131
Case T-28/90 Asia Motor France v.
Commission [1992] ECR II-2285,
[1992] 5 CMLR 431 141
Case T-44/90 La Cinq v. Commission
[1994] ECR II-1, [1992] 4 CMLR
449 128
 Table of cases
Case T-30/91 Solvay v. Commission
[1995] ECR II-1775, [1996] 5 CMLR
57 106, 124
Case T-36/91 ICI v. Commission [1995]
ECR II-1847 124
Case T-83/91 TetraPak v. Commission
(TetraPak II) [1994] ECR II-755 83,
88, 92, 96, 104
Cases T-10–12/92 and T-15/92
Cimenteries v. Commission [1992]
ECR II-2667, [1992] 4 CMLR
259 123
Case T-35/92 Deere v. Commission
[1994] ECR II-957 27
Case T-37/92 Bureau Européen des
Unions des Consommateurs v.
Commission [1994] ECR II-285,
[1995] 4 CMLR 167 117
Joined Cases T-39/92 and T-40/92 CB
and Europay v. Commission [1994]
ECR II-49 48
Case T-46/92 Scottish Football
Association v. Commission [1994]
ECR II-1039 121
Case T-87/92 Kruidvat v. Commission
[1996] ECR II-1931, [1997] 4 CMLR
1046 139
Case T-96/92 Comité Central
d’entreprise de la Société Générale des
Grandes Sources and others v.
Commission [1995] ECR II-1213
139
Case T-3/93 Air France v. Commission
[1994] ECR II-121 137, 139
Case T-5/93 BENIM v. Commission
[1995] ECR II-197, [1996] 4 CMLR
305 117
Cases T-7/93 and T-9/93 Ice-cream
cases (Langnese-Iglo v. Commission)
[1995] ECR II-1633, [1995] 5 CMLR
602 128, 130
Case T-9/93 Schöller v. Commission
[1995] ECR II-1611, [1995] 5 CMLR
602 32
Case T-12/93 Comité Central
d’entreprise de la Société Anonyme
Vittel and others v. Commission
[1995] ECR II-1247 139
xxi
Joined Cases T-24–26 and 28/93
Compagnie Maritime Belge
v. Commission [1996] ECR II-1201
109
Case T-504/93 Tiercé Ladbrooke [1997]
ECR II-923, [1997] 5 CMLR 309
102
Joined Cases T-528/93, T-542/93,
T-543/93 and T-546/93 Métropole v.
Commission [1996] ECR II-649,
[1996] 5 CMLR 386 118
Case T-229/94 Deutsche Bahn v.
Commission [1997] ECR II-1689,
[1998] 4 CMLR 220 78, 87
Case T-311/94 BPB Eendracht v.
Commission [1998] ECR II-1129
123
Joined Cases T-374–375, 384, 388/94
ENS v. Commission [1998] ECR II-
3141 39
Joined Cases T-25/95 Cimenteries v.
Commission [2000] ECR II-491,
[2000] 5 CMLR 204 124, 136
Case T-41/96 Bayer v. Commission
[2000] ECR II-3383 19, 20
Case T-41/96R Bayer v. Commission
[1996] ECR II-381, [1996] 5 CMLR
290 134, 135
Case T-102/96 Gencor v. Commission
[1999] ECR II-753, [1999] 4 CMLR
971 14, 109
Case T-111/96 ITT Promedia v.
Commission [1998] ECR II-2937,
[1998] 5 CMLR 491 97
Case T-228/97 Irish Sugar [1999] ECR
II-2969, [1999] 5 CMLR 1300 87,
108
Case T-128/98 Aéroports de Paris v.
Commission [2000] ECR II-3929 93
Case T-112/99 Métropole v. Commission
(Judgment of 18 September 2001, not
yet reported 72
Case T-206/99 Métropole v. Commission
(judgment of 21 March 2001, not yet
reported) 118
xxii EC Competition Law and Policy

National

UK 1 CMLR 1 148, 150

Garden Cottage Foods v. Milk Marketing
American Cyanamid v. Ethicon [1975] Board [1984] AC 130 148, 150
AC 396 150
Application des Gaz v. Falks Veritas
[1974] Ch. 381 148
USA
Chelmkarm v. Esso [1979] 1 CMLR
73 150 United States v. Alcoa, 148F 2d 416 (2
Cutsforth v. Mansfield Inns [1986] Circ. 1945) 13
 Chapter title xxiii

Table of EC Treaty provisions

Art. 3(g) EC 2 Art. 87(2) EC 3

Art. 10 EC 8 Art. 87(3) EC 3
Art. 28 EC 111 Art. 88 EC 3
Art. 30 EC 111 Art. 225 EC 135
Art. 39 EC 11 Art. 229 EC 135
Arts 81–89 EC 2 Art. 230 EC 119, 135, 140, 147
Art. 81 EC 15 Art. 230(1) EC 133, 136, 137
Art. 81(1) EC 17, 113, 145, 150 Art. 230(3) EC 138
Art. 81(2) EC 46, 113, 145, 150 Art. 230(4) EC 138, 142
Art. 81(3) EC 46, 47, 51, 113, 147 Art. 230(5) EC 140
Art. 82 EC 15, 76 Art. 232(2) EC 119, 135, 141
Art. 82(1)(a) EC 89 Art. 232(3) EC 119, 142
Art. 82(1)(b) EC 91 Art. 234 EC 140, 146, 147
Art. 82(1)(c) EC 91 Art. 235 EC 143
Art. 82(1)(d) EC 96 Art. 242 EC 135
Art. 83 EC 155 Art. 243 EC 135
Art. 85(3) 113, 116 Art. 253 EC 118, 134
Art. 86 EC 92 Art. 254(3) EC 134
Art. 87 EC 3 Art. 288(2) EC 143
xxiv EC Competition Law and Policy
 Chapter title xxv

Table of EC legislation

Council Regulations Reg. 19/65 OJ Sp. Ed. [1965] 35 47, 51

Art. 1(1)(a) 57
Reg. 1017/68 OJ Sp. Ed. [1968] 302 3, 11,
Reg. 17/62 OJ Sp. Ed. [1962] 204/62, 114
p. 87 3, 47 Art. 12(3) 133
Art. 2 116 Reg. 2821/71 OJ Sp. Ed. [1971] 1032 47,
Art. 3 116, 127, 129, 143, 155 51
Art. 4(1) 51, 116 Reg. 4064/89 OJ [1989] L 257/13
Art. 4(2) 116, 152 (amended OJ [1990] L 257/13) 3, 114,
Art. 4(2)(2) 116 139
Art. 5(1) 116 Reg. 1534/91 OJ [1992] L 398/7 48, 51
Art. 6(1) 58, 116 Reg. 1310/97 OJ [1997] L 180/1 114
Art. 6(2) 58, 116 Reg. 659/1999 OJ [1999] L 83/1 3
Reg. 1215/99 OJ [1999] L 148/1 57
Art. 8(1) 133
Reg. 1216/99 OJ [1999] L 148/5 57, 116
Art. 9(1) 113, 116, 145
Art. 9(3) 145, 150
Art. 11 120, 153
Art. 11(2) 120 Commission Regulations
Art. 11(3) 120
Art. 11(4) 120, 137
Reg. 99/63 OJ Sp. Ed. [1963] 47 118
Art. 11(5) 120, 127
Art. 6 141
Art. 12 121
Reg. 67/67 OJ Eng. Sp. Ed. [1967] 52
Art. 13 121
Reg. 1983/83 OJ [1983] L 173/1 52
Art. 14 120, 153
Art. 1 52
Art. 14(1) 120
Art. 2 53
Art. 14(3) 120, 127, 137
Art. 6 64
Art. 15(5) 117, 132, 136
Reg. 1984/83 OJ [1983] L 173/5 37, 52
Art. 15(6) 117, 126, 136
Art. 1 37
Art. 16 132
Art. 3(d) 37, 53
Art. 17 132
Art. 14 63
Art. 19 125, 139
Reg. 417/85 OJ [1985] L 53/1 48, 53
Art. 19(1) 125
Art.1 53
Art. 19(2) 125
Reg. 418/85 OJ [1985] L 53/5 53
Art. 20(1) 121
Art. 1 53
Reg. 141/62 OJ Sp. Ed. [1959–62] 291 3,
Reg. 4056/86 OJ [1986] L 378/4 3, 11, 114
11, 114
xxvi EC Competition Law and Policy

Reg. 1475/88 OJ [1995] L 145/25 52, 60 Art. 5(1) 34

Art. 1 52 Reg. 2659/2000 OJ [2000] L 304/7, [2001]
Reg. 4087/88 OJ [1988] L 359/46 52 4 CMLR 808 7, 42, 60, 65
Art. 1(3)(a) 52 Art. 1 53
Art. 1(3)(b) 52 Art. 5(1) 34
Art. 6 53
Art. 8 64
Reg. 240/96 OJ [1996] L 31/2 45, 52, 60
Art. 7 64 Commission Draft
Reg. 1582/97 OJ [1997] L 214/2 52 Regulations
Reg. 2236/97 OJ [1997] L 306/12 53
Reg. 2842/98 OJ [1998] L 354/18 118, Draft regulation implementing Articles 81
134 and 82 EC [ 2000] 5 CMLR 1148 3, 10,
Art. 3 122 154, 155, 156, 157
Art. 4 122, 126
Art. 5 126
Art. 6 118, 137, 141
Art. 8 126 Council Decisions
Art. 9 126
Art. 9(3) 126 88/591 OJ [1988] L 319/1 135
Arts 10–14 126 93/350 OJ [1993] L 144/21 135
Art. 13(1) 123
Reg. 2790/1999 OJ [1999] L 336/21,
[2000] 4 CMLR 398 7, 33, 44, 46, 48, 66,
67 Commission Notices
Art. 1 59, 67
Art. 1(c) 28, 60 Notice on co-operation between national
Art. 2 59, 67 courts and the Commission in applying
Art. 2(1) 60 Articles 85 and 86 of the EEC Treaty, OJ
Art. 2(1)(1) 59 [1993] C 39/6, [1993] 5 CMLR 95 6, 146,
Art. 2(1)(2) 60 147
Art. 2(2) 60, 61 Notice on co-operation between national
Art. 2(3) 60 competition authorities and the
Art. 2(4) 60 Commission in handling cases falling
Art. 2(5) 60 within the scope of Articles 85 and 86 of
Art. 3 60, 67 the EEC Treaty, OJ [1997] C 313/3,
Art. 4 60 [1997] 5 CMLR 884 6, 9, 150
Art. 4(a) 41, 62 Notice on access to the file, OJ [1997] C
Art. 4(b) 62 25/3 123
Art. 4(c) 62 Notice on agreements of minor
Art. 4(d) 63 importance, OJ [1997] C 372/3 31, 32
Art. 4(e) 63 Notice on market definition OJ [1997] C
Art. 5 63 372/5 75, 77, 79, 81, 82, 84
Art. 5(a) 63
Art. 5(b) 63
Art. 5(c) 63
Art. 6 64 Commission Guidelines
Art. 7 64
Art. 8 64 Guidelines on vertical restraints, OJ [2000]
Art. 12 54 C 291/1, [2000] 5 CMLR 1074 41, 55
Art. 13 54 Guidelines on the applicability of Article
Reg. 2658/2000 OJ [2000] L 304/3, [2001] 81 EC to categories of research and
4 CMLR 800 60, 65 development agreements, OJ [2001] C
Art. 1 53 3/2, [2001] 4 CMLR 819 42
 The foundations of EC competition law 1

1
The foundations of EC
competition law

1.1 Introduction

Competition law is a rapidly developing area, fundamental to most legal

systems. Despite its idiosyncratic and technical character, it influences
numerous fields of law and itself draws heavily on principles of economics
and politics. Its primary aim is to protect and encourage the competitive
process, resulting in an optimum allocation of resources and the maxi-
misation of consumer welfare. Bork points out: ‘antitrust was originally
conceived as a limited intervention in free and private processes for the
purpose of keeping these processes free’.1 In other words, competition law
regulates market behaviour in order to preserve a free market economy. In
a perfectly competitive market – i.e. one in which there are no barriers to
entry or exit, where buyers and sellers of homogeneous products are
plentiful, and where competitors have similar and very small market
shares and there is total transparency – a system of competition law would
be superfluous. This type of market is, however, almost impossible to find
in practice, just as pure monopoly is unlikely to arise without state
intervention. Most markets are placed between these two extremes and, in
the absence of any form of control, undertakings are inclined to collude to
fix prices, those in a dominant position misuse their market strength and
mergers lead to excessive concentrations of economic power.2 All these
practices hinder or impede the competitive process.
Competition law has played a prominent role in the development of EC
law. In addition to the general objectives outlined above, it has also con-
tributed significantly, and often controversially, to the consolidation of the
1
See R. H. Bork, The Antitrust Paradox: A Policy at War with Itself (New York, 1978, reprinted
with a new Introduction and Epilogue, 1993) at p. 418.
2
For a full discussion of the economic background of competition policy, see E. Gellhorn
and W. E. Kovacic, Antitrust Law and Economics (St Paul, MN, 1994).
2 EC Competition Law and Policy

single market objective of the Treaty. In the following pages the basic
principles that underpin EC competition law will be considered.

1.2 The EC Treaty provisions in competition

Although the Preamble to the Treaty refers to the need to guarantee

‘steady expansion, balanced trade and fair competition’, the basis of EC
competition policy is Article 3(g) EC. This Article provides that one of the
activities intended to help the achievement of the aims of the Community
is ‘the establishment of a system ensuring that competition in the internal
market is not distorted’. Since this is a provision drafted in very general
terms – as are many others in the Treaty – the Commission and Com-
munity judicature have been primarily responsible for the shaping of the
aims and objectives of EC competition law.
Articles 81–89 EC establish a set of rules on competition and can be
divided into two main groups: (a) those that focus on the activities of
undertakings, and (b) those that focus on the activities of governments.

1.2.1 Rules concerning the activities of undertakings

Three provisions set out the parameters within which undertakings
should operate to guarantee, as far as possible, the preservation of a
competitive market:

1. Article 81 EC refers to anti-competitive behaviour that results from

collusion between private undertakings. It prohibits agreements,
decisions by associations of undertakings and concerted practices
which may affect trade between Member States and that have the object
or effect of preventing, restricting or distorting competition.
2. Article 82 EC aims to control abuses of dominant position, by one or more
private undertakings, which may affect trade between Member States.
3. Article 86 EC sets out the rules that apply to public undertakings or to
undertakings granted special rights.

The Treaty did not establish a specific legal basis for mergers between
undertakings. The European Court of Justice (ECJ) in some of its early case
law, considered the suitability of Articles 81 EC or 82 EC as the means of
controlling mergers. In particular, its judgment in Continental Can v.
Commission,3 supported the Commission’s use of Article 82 EC for these

3
Case 6/72 [1973] ECR 215, [1973] CMLR 199.
 The foundations of EC competition law 3

purposes.4 The adoption of the Merger Regulation in 1989, however,

finally provided a separate substantive and procedural framework for the
regulation of concentrations between undertakings.5

1.2.2 Rules concerning the activities of governments

Competition may be distorted not only by undertakings, but also by the
action of a Member State, most commonly where the latter gives artificial
competitive advantages to declining national industries. Article 87 EC lays
down the principle that state aids are incompatible with EC law, unless
otherwise provided in the Treaty. This provision also sets out some kinds
of aid that are automatically6 or that may be permitted.7

1.2.3 Procedural rules

Article 83 EC provides that the Council will adopt appropriate regulations
or directives to give effect to the principles in Articles 81 and 82 EC. On the
basis of this provision, the Council enacted Regulation 17/62,8 which sets
out the general procedure for the enforcement of Articles 81 and 82 EC at
Community level. A radical reform of the system of enforcement provided
in Regulation 17/62 was suggested by the Commission in its 1999 White
Paper on enforcement.9 This crystallised in the recent proposal of the
Commission for a draft enforcement regulation in September 2000.10 The
current system of enforcement and the proposed reforms will be
considered in detail in Chapter 4.
Moreover, certain sectors of the economy are the subject of special
regulations, such as transport.11 Likewise, mergers and state aids are sub-
ject to specific procedural rules set out respectively in the EC Merger
regulation12 and in Article 88 EC and its implementing regulation.13

4
In BAT and Reynolds v. Commission [1987] ECR 4487, [1988] 4 CMLR 24, the Court
confirmed the Commission’s view that Article 81 EC could be used in cases where an
undertaking acquired a minority shareholding in a competitor, thus prompting fears that
this was a stepping stone for the application of Article 81 EC to mergers.
5
See Council Regulation 4064/89 OJ [1989] L 395/1 (amended OJ [1990] L 257/13).
6
See Article 87(2) EC.
7
See Article 87(3) EC.
8
OJ Sp. Ed. [1962] 87.
9
OJ [1999] C 132/1, [1999] 5 CMLR 208.
10
[2000] 5 CMLR 1148.
11
See Regulation 141/62 (OJ Sp. Ed. [1959–62] 291); Regulation 1017/68 (OJ Sp. Ed. [1968]
302); Regulation 4056/86 (OJ [1986] L 378/4).
12
See supra n. 5.
13
See Council Regulation 659/1999 (OJ [1999] L 83/1).
4 EC Competition Law and Policy

1.3 The scope of application of Articles 81 and 82 EC

As this work focuses on Articles 81 and 82 EC, it seems necessary at the

outset to understand the basic structure and scope of application of these
two provisions. This is set out in Figure 1.1.14
Article 81 EC deals with anti-competitive behaviour that results from
collusion between undertakings. This provision therefore does not refer to
unilateral but to bilateral or multilateral behaviour. It is divided into three
paragraphs. The first lays down a general prohibition against anti-
competitive forms of cooperation between undertakings. The second pro-
vides a sanction of nullity for the infringement of that prohibition. The
third allows exemptions to be granted to forms of cooperation that come
under the prohibition in the first paragraph, on account of their beneficial
effects.

Anti-competitive agreements, Abuses of dominant

decisions by associations of position by one or
undertakings and concerted more undertakings
practices.

▼ ▼
Article 81 EC Article 82 EC
(ex Art. 85) (ex Art. 86 EC)

▼ ▼
Art. 81(1) = Prohibition Art. 82 = Prohibition

▼
Art. 81(2) = Sanction

▼
Art. 81(3) = Exemptions

Figure 1.1 Scope of application of Articles 81 and 82 EC

14
See infra p. 4.
 The foundations of EC competition law 5

Article 82 EC, by contrast, prohibits abuses of dominant position by one

or more undertakings. As the Court expressed it in Continental Can,15 this
provision concerns the unilateral activity of one or more undertakings.
Even when more than one undertaking is involved – such as in the case of
joint or collective dominance – their behaviour is still regarded as
unilateral where they operate as a single economic unit which is dominant
and abuse that position of dominance. The structure of Article 82 EC is
simple: it comprises only a prohibition on abuses of dominant position
and there is neither a provision for automatic nullity nor a provision for
exemption equivalent to those in Article 81 EC.
Articles 81 and 82 EC will be considered in detail in Chapters 2 and 3 of
this work respectively.

1.4 The two levels of enforcement of EC competition law:

the roles of the Commission, the national courts
and national authorities

Articles 81 and 82 EC are both enforced at Community level and at

national level.
At Community level, the Commission is the enforcement authority, as
provided by Article 85 EC, and its specific powers are laid down in
Regulation 17/62. Under this regulation, the Commission may find that
there has been an infringement of Article 81 or 82 EC and, as a result,
impose fines or, alternatively, it may adopt decisions finding that there has
been no breach of the competition rules. It may also grant exemptions.16
Undertakings dissatisfied with Commission decisions may challenge
them before the Court of First Instance and an appeal on points of law is
available before the European Court of Justice.17
At national level, national courts and national competition authorities
are competent to enforce competition law.18 National courts derive their
power to apply Articles 81(1) and (2) and Article 82 EC from the direct
effect of these provisions.19 The power of enforcement of national com-

15
See supra n. 3.
16
See infra Chapter 4, section 4.2.1.
17
The judicial review of acts adopted by the Commission in the enforcement of competition
policy is discussed in detail in Chapter 4, section 4.2.2.
18
See infra Chapter 4, section 4.3.
19
The EC Treaty did not expressly lay down the principle of direct effect. This was
enunciated by the Court in its seminal judgment in Van Gend en Loos v. Nederlandse
administratie der belastingen (Case 26/62 [1963] ECR 1, [1963] CMLR 105), where the Court
held that Treaty provisions were capable of giving rights to individuals that could be
enforced before national courts (at p. 12). The Court explained that, to be directly effective,
a provision had to be sufficiently clear and unconditional and not subject to further
implementation (at p. 13). In competition law, the Court took the view that Articles 81(1)
6 EC Competition Law and Policy

petition authorities is founded in Articles 84 EC and 9(3) of Regulation

17/62.20 However, in the current system of enforcement, neither national
courts nor national authorities can grant exemption or, in other words,
apply Article 81(3) EC. This is because Article 9(1) of Regulation 17/62
granted the Commission the exclusive power to grant exemptions. One of
the core reforms suggested by the Commission in its 1999 White Paper is
that Article 81 EC, as a whole, should be directly applicable by national
courts and national authorities.21

1.5 The aims of EC competition policy

In its XXIXth Report on Competition Policy, the Commission clearly set

out the two principal objectives that underline Community Competition
law:

The first objective of competition policy is the maintenance of competitive

markets. Competition policy serves as an instrument to encourage industrial
efficiency, the optimal allocation of resources, technical progress and the
flexibility to adjust to a changing environment … The second is the single
market objective … 22

Therefore, in addition to the general goals pursued by any competition

system, EC competition law fulfils the function of contributing to the
achievement of the single market.23 The removal of barriers to the free
movement of factors of production put in place by Member States would
be pointless if private parties could divide the territories of the Common
Market by means of anti-competitive practices or if concentrations of
economic power could significantly restrict market access.24

and Article 82 EC were directly effective in BRT v. SABAM (I) (Case 127/73 [1974] ECR 51,
[1974] CMLR 238). See also the Notice on co-operation between national courts and the
Commission in applying Articles 85 [now 81] and 86 [now 82] of the EEC [now EC] Treaty (OJ
[1993] C 39/6, [1993] 5 CMLR 95) at II.5.
20
Unlike the national courts, however, they can only enforce Articles 81(1) and 82 EC as long
as the Commission has not initiated enforcement proceedings (see Article 9(3) Regulation
17/62). See also the Notice on co-operation between national competition authorities and the
Commission in handling cases falling within the scope of Articles 85 [now 81] and 86 [now 82] of
the EC Treaty (OJ [1997] C 313/3, [1997] 5 CMLR 884).
21
See infra Chapter 4, section 4.4 [1999].
22
See the XXIXth Report on Competition Policy at paragraphs 2 and 3.
23
The inextricable link existing between the Treaty provisions on competition and the
consolidation of the single market has been emphasised repeatedly by the Court (see, for
example, its judgment in Leclerc v. Au Blé Vert (Case 229/83 [1985] ECR 1, [1985] 2 CMLR
286), at paragraph 9 of the judgment).
24
In Consten and Grundig v. Commission (Joined Cases 56 and 58/64 [1966] ECR 299, [1966]
CMLR 418), the Court held that ‘an agreement between a producer and a distributor
 The foundations of EC competition law 7

The Commission and the Community judicature have, in their inter-

pretation of Articles 81 and 82 EC, consistently upheld the single market
objective. This has been achieved by the prohibition of agreements that
may lead to the partitioning of the Common Market, such as market
sharing agreements,25 and also with the exemption of certain agreements
that may promote cross-border trade, such as research and development
agreements26 or certain vertical agreements.27 The single market aim has
also influenced the construction of certain types of abusive conduct, for
example discriminatory practices.28 Finally the Court has also consistently
interpreted the requirement in both Articles 81 and 82 EC that the anti-
competitive practices should have an effect on intra-Community trade
with a view to upholding the single market principle.29
The defence of this specific objective of EC competition law has not
been uncontroversial. For example, in United Brands v. Commission,30 the
Court upheld the Commission’s view that United Brands, a leading world
producer of bananas, had abused its position of dominance in a series of
practices which included the charging of different prices to its distributors
in the Community. The principle of non-discrimination is, of course, one of
the tenets of the Common Market. The Court took the view that the
different prices, in combination with the other resale restrictions imposed
by United Brands, created a rigid partitioning of national markets. The
ruling of the Court was, however, criticised as lacking a proper economic
basis and argued to be justified solely by the need to uphold the single
market ideal.31

which might tend to restore the national division in trade between Member-States might
be such as to thwart the most basic objectives of the Community. The Treaty, whose
preamble and text aim to suppress the barriers between States, and which in several
provisions gives evidence of a stern attitude with regard to their reappearance, could not
allow undertakings to reconstruct such barriers’ (at p. 340).
25
See Case 41/69 Chemiefarma v. Commission [1970] ECR 661, and the decision of the
Commission in Re Soda Ash (Decision 91/297/EEC OJ [1991] L 152/1, [1994] 4 CMLR 454).
26
See Regulation 2659/2000 (OJ [2000] L 304/7).
27
See Regulation 2790/1999 (OJ [1999] L 336/21).
28
See Case 27/76 United Brands v. Commission [1978] ECR 207, [1978] 1 CMLR 429, and the
decision of the Commission in The Football World Cup 1998 (Decision 2000/12/EC OJ
[2000] L 5/55, [2000] 4 CMLR 963).
29
See, for example, the very wide interpretation of the test by the Court in STM v.
Maschinenbau Ulm (Case 56/65 [1966] ECR 234, [1966] CMLR 357) or the consistent line of
case law that holds that even a purely national agreement can have an effect on intra-
Community trade if it contributes to the isolation of national markets and makes the
penetration of imports difficult (see Case 8/72 Cementhandelaren v. Commission [1972] ECR
977, [1973] CMLR 7).
30
Case 27/76, supra n. 28.
31
See W. Bishop, ‘Price discrimination under Article 82 EC: political economy in the
European Court’ [1981] 4 MLR 282.
8 EC Competition Law and Policy

1.6 Community competition law and national law

Member States of the Community have their own systems of national

competition law, which may differ substantially from the one provided in
the EC Treaty. This was the case in the United Kingdom until the enact-
ment of the 1998 Competition Act, the Chapter I and II prohibitions of
which mirror closely Articles 81 and 82 EC respectively.
The EC Treaty remained silent about how conflicts between EC law and
national law should be resolved. In COSTA v. ENEL,32 the Court laid down
the principle of the supremacy of EC law, which, together with the
principle of direct effect, constitutes the cornerstone of the Community
legal order. It held that, in the event of a conflict between national law and
directly effective Community law, the latter should prevail. The Court
applied this principle in the framework of EC competition law in Wilhelm
v. Bundeskartellamt.33 Moreover, Article 10 EC imposes on Member States
an obligation to refrain from enacting any measures ‘that could jeopardise
the attainment of the objectives of the Treaty’.34
In Wilhelm v. Bundeskartellamt35 the Court considered the issue of the
concurrent application of national competition law and EC competition
law. In that case, the German Federal Cartel Bureau (Bundeskartellamt)
investigated and fined a group of undertakings, which had engaged in
price fixing, pursuant the German Law against Restraint of Competition
(GWB). A few months before the final decision of the Bundeskartellamt,
the Commission commenced proceedings against the same undertakings,
under Article 81(1) EC. The main argument of the undertakings before the
national court was that the Bundeskartellamt could not continue
proceedings for an offence which was being simultaneously investigated
by the Commission.
The Court recognised that the same agreement could be subject to
parallel proceedings and, therefore, that national competition law and EC
competition law could apply concurrently to it. This could be the case
provided that a parallel application did not ‘prejudice the uniform
application, throughout the Common Market, of the Community rules on
cartels and the full effect of the acts adopted in implementation of those

32
Case 6/64 [1964] ECR 585, [1964] CMLR 425.
33
Case 14/68 [1969] ECR 1, [1969] CMLR 100, at paragraph 6 of the judgment.
34
This has been interpreted by the Court as follows: ‘Whilst it is true that the rules on
competition are concerned with the conduct of undertakings and not with national
legislation, Member States are none the less obliged under the second paragraph of Article
5 [now 10] of the Treaty not to detract, by means of national legislation, from the full and
uniform application of Community law or from the effectiveness of its implementing
measures; nor may they introduce or maintain in force measures, even of a legislative
nature, which may render ineffective the competition rules applicable to undertakings’
(Case 229/83, supra n. 23, at paragraph 14 of the judgment).
35
Case 14/68, supra n. 33.
 The foundations of EC competition law 9

rules’.36 It would follow from this that parallel proceedings are possible as
long as the Commission and the national authorities do not issue
conflicting decisions. In Wilhem v. Bundeskartellamt,37 there was no conflict
because both the Commission and the national competition authority had
reached the conclusion that the agreement ought to be prohibited. But in the
event of a conflict, should national authorities always give priority to the
Commission’s view? The principle of supremacy of EC law and the state-
ment in Wilhelm would seem to dictate this conclusion, but considerable
debate has surrounded the issue.
On the one hand, it seems clear from the judgment that if the
Commission reaches the conclusion that an agreement (in the context of
Article 81 EC) or abusive practice (in the context of Article 82 EC) should
be prohibited, then the national authority should not reach a different
conclusion.38 If a national competition authority could authorise an
agreement that the Commission had prohibited, this would effectively
mean that the force of Community law could vary from one Member State
to another, thereby jeopardising the attainment of the objectives of the
Treaty.39 The Commission explained this in very clear terms in its Notice on
co-operation between national competition authorities and the Commission:

Where an infringement of Articles 85 [now 81] or 86 [now 82] is established by

Commission decision, that decision precludes the application of a domestic
legal provision authorising what the Commission has prohibited. The objective
of the prohibitions in Articles 85(1) [now 81(1)] and 86 [now 82] is to guarantee
the unity of the Common Market and the preservation of undistorted com-
petition in that market. They must be strictly complied with if the functioning of
the Community regime is not to be endangered.40

On the other hand, if the Commission finds that an agreement is not

restrictive of competition or exempts it, could the national authority apply
stricter national law and prohibit the agreement? Could it be argued
that the application of stricter national law poses no danger to the
fundamental objectives of the Treaty and therefore should be allowed?41 In
36
Case 14/68, supra n. 33, at paragraph 5 of the judgment.
37
Case 14/68, supra n. 33.
38
Even where national and EC competition law is similar or identical, if the Commission
reaches the conclusion that an agreement should be prohibited, national courts may not
decide otherwise (see Case 298/83 CICCE v. Commission [1985] ECR 1105, [1986] 1 CMLR
486, at paragraph 27 of the judgment).
39
In this respect, see also COSTA v. ENEL (Case 6/64, supra n. 32, at p. 594).
40
OJ [1997] C 313/3, [1997] 5 CMLR 884.
41
See K. Markert, who considered this possibility in detail in ‘Some legal and administrative
problems of the co-existence of Community and national competition law’ [1974] CMLRev
92 at pp. 96–8. See also the Opinion of AG Roemer in Wilhelm v. Bundeskartellamt (Case 14/
68, supra n. 33). He took the view that in this case there would not be a real conflict between
Community and national law because the fundamental objectives of the Treaty would not
be threatened (at. pp. 23–4).
10 EC Competition Law and Policy

Bundeskartellamt v. Volkswagen42 the Commission and Advocate General

Tesauro43 vigorously defended the view that national authorities should
not be able to prohibit an exempted agreement. Any other conclusion
would be at variance with the principle of supremacy of EC law and
would undermine the uniform application of Community law. Un-
fortunately, the Court did not consider the issue in this case, and
clarification remained necessary.
Article 3 of the new draft enforcement regulation,44 however, has finally
addressed this issue by taking the bold step of regulating the relationship
between national and EC competition law. It provides that where an
agreement or practice ‘may affect trade between Member States, Com-
munity competition law shall apply to the exclusion of national com-
petition laws’. In other words, the draft regulation introduces the view
that the concurrent application of EC and national law should be avoided
and that, if an agreement or practice might have an effect on Community
trade, national competition authorities should refrain from applying
national competition law and should apply exclusively EC competition
law. The Explanatory Memorandum to the Draft Regulation justifies this
approach on the need to ensure a level playing field throughout the
Community and on the protection of the single market ideal of the Treaty.
It points out that ‘it is inconsistent with the notion of a single market that
agreements and practices capable of affecting cross-border trade should be
subject to different standards and that agreements which would be
considered innocuous or beneficial under Community law can be pro-
hibited under national competition law.’45
This development is to be welcomed as it resolves the uncertainties that
followed the judgment in Wilhem v. Bundeskartellam.46 One problem that
may arise, however, is that the requisite effect on intra-Community trade,
although fairly straightforward in principle, is not always easy to ascertain
in practice.47

1.7 The common elements in Articles 81 and 82 EC

Three issues, common to both Articles 81 and 82 EC, deserve specific

comment before these provisions are examined in detail in Chapters 2 and
3 respectively.

42
Case C-266/93 [1995] ECR I-3477, [1996] 4 CMLR 478.
43
See Case C-266/93, supra n. 42, at paragraphs 50–1 of his Opinion.
44
See supra n. 10 and infra Chapter 4, section 4.4.3.
45
See the Explanatory Memorandum to the Draft Regulation (supra n. 10), section 4, ‘The
Regulation, Article by Article’).
46
Case 14/68, supra n. 33.
47
See further infra Chapter 2, section 2.2.2.
 The foundations of EC competition law 11

1.7.1 The notion of undertaking

Both Articles 81 and 82 EC apply to the behaviour of ‘undertakings’ but,
unsurprisingly for EC Treaty provisions, the term is not defined. Lack of
definition is not uncommon in the Treaty. For example, in the field of free
movement of goods and persons, no definition is given by the Treaty to
key concepts, such as measures having equivalent effect to quantitative
restrictions in Article 30 EC, or the notion of a worker in Article 39 EC.
These concepts have been rendered meaningful by the case law of the
European Court. 48
The Court generally construes the notion of undertaking very widely.
In Höfner v. Macroton,49 the Court defined an undertaking as ‘every entity
engaged in an economic activity regardless of the legal status of the entity
and the way in which it is financed’.50 This wide interpretation has various
implications.
First, not only companies but also natural persons can constitute
undertakings, as the Court has ruled in several of its decisions.51 Secondly,
the Court has also made it clear that the term ‘undertaking’ designates an
‘economic unity for the purposes of the subject-matter of the agreement,
even if in law that economic unit consists of several persons, natural or
legal’.52 This means that several independent undertakings with separate
legal personalities may constitute only one undertaking for the purposes
of EC competition law. Thus a parent company and its subsidiary,53 or

48
See, for a definition of measures having equivalent effect to quantitative restrictions,
Procurer de Roi v. Dassonville (Case 8/74 [1974] ECR 837, [1974] 2 CMLR 436, at paragraph
5 of the judgment); for a definition of work and of a worker, see Levin v. Staatssecretaris van
Justitie (Case 53/81[1982] ECR 1035, [1982] 2 CMLR 454, at paragraph 17 of the judgment)
and Lawrie-Blum v. Land Baden-Württemberg (Case 66/85 [1986] ECR 2121, [1987] 4 CMLR
389).
49
Case C-41/90 [1991] ECR I-1979, [1993] 4 CMLR 306.
50
Ibid., at paragraph 21 of the judgment. The Commission has consistently adopted this
definition (see Commission Decision 92/521/EEC Re Distribution of package tours during the
1990 World Cup, OJ [1992] L 326/31, [1994] CMLR 253, at paragraph 43 of the Decision).
51
See Case 170/83 Hydrotherm v. Andreoli [1984] ECR 2999, [1985] 3 CMLR 224 at paragraph
11 of the judgment. See also Case 258/78 Nungeser and Eisele v. Commission [1982] ECR
2015, [1983] 1 CMLR 278.
52
See Case 170/83, supra n. 51, at paragraph 11 of the judgment.
53
See ICI v. Commission (Case 48/69 [1972] ECR 619, [1972] CMLR 557), a case under Article
81 EC, where the Court held: ‘The fact that a subsidiary has separate legal personality is
not sufficient to exclude the possibility of imputing its conduct to the parent company.
Such may be the case, in particular where the subsidiary, although having separate legal
personality, does not decide independently upon its own conduct on the market, but
carries out, in all material respects, the instructions given to it by the parent company’ (at
paragraphs 132–3 of the judgment). In Commercial Solvents v. Commission (Joined Cases 6
and 7/73 [1974] ECR 223, [1974] 1 CMLR 309), a case under Article 82 EC, the Court took
the same view, i.e. since it was clear that the parent company exercised a power of control
over the subsidiary, the two would be considered as a single economic entity.
12 EC Competition Law and Policy

several companies belonging to the same group,54 might be treated as one

undertaking. The defining criterion for treating a parent and its subsidiary
as a single undertaking is that the subsidiary should act under the
direction or control of the parent company. In the case of treating a group
of companies as one undertaking it is whether the group constitutes a
‘unitary organisation of personal, tangible and intangible elements which
pursues a specific economic aim on a long-term basis’.55 Finally, changes in
the corporate structure of an undertaking do not allow parties responsible
for an infringement to escape liability. For example, in Enichem Anic v.
Commission,56 the Court of First Instance made it clear that where an
undertaking that committed an infringement of the competition rules has
ceased to exist in law at the time when it must answer for that infringe-
ment, it is necessary ‘first to find the combination of physical elements
which contributed to the commission of the infringement and then to
identify the person who has become responsible for their operation’.57
Similarly, in Compagnie Royale Asturienne des Mines v. Commission,58 the
Court upheld the Commission’s view that when an undertaking succeeds
another that has committed an infringement of EC competition, the former
will remain liable for the behaviour of the latter, when from an economic
point of view the two are identical.59

1.7.2 The jurisdiction of the Commission to apply

Articles 81 and 82 EC
Both Articles 81 and 82 EC prohibit practices that distort competition
within the Common Market. This clearly means that the Commission does
have jurisdiction to prohibit agreements or abuses of dominant position
by undertakings established in the Common Market. But does it have the
power to apply the EC Treaty competition provisions extraterritorially?
The case law has shed light on this important issue.
First, in cases where a parent company is established outside the
Common Market but its subsidiary is established within the Common
Market, the Court has consistently held that the Commission can address

54
See Shell v. Commission (Case T-11/89 [1992] ECR II-757) at paragraphs 311–12 of the
judgment.
55
See Case T-11/89, supra n. 54, at paragraph 311. In this case the Court went even further, as
it held that not only the Shell Group operating companies (in charge of manufacturing and
sales) constituted a single economic unit, but also that one of Shell’s service companies (in
charge of planning and coordination of the activities of the Shell Group) also was part of
the same economic unit.
56
Case T-6/89 [1991] ECR II-1623.
57
Ibid., at paragraph 237 of the judgment.
58
Cases 29–30/83 [1984] ECR 1679, [1985] 1 CMLR 688.
59
Ibid., at paragraphs 7–9 of the judgment.
 The foundations of EC competition law 13

a decision to the parent company concerning the anti-competitive

behaviour of its subsidiary. For example, in ICI v. Commission (Dyestuffs),60
a case decided before the United Kingdom acceded to the European
Community, the applicant had its registered office outside, but sub-
sidiaries within, the Common Market and it objected that the anti-
competitive conduct of its subsidiaries was imputed to it by the
Commission. The Court took the view that the Commission had juris-
diction to do so, on the basis that the parent company and its subsidiaries
constituted one ‘economic unity’ for the purposes of EC competition law.
In other words, it was clear that the parent company had a decisive
influence on the policy of its subsidiaries.61 An analogous conclusion was
reached, within the framework of Article 82 EC, in Commercial Solvents v.
Commission.62 Interestingly, however, Advocate General Mayrás, in his
Opinion in ICI v. Commission,63 had not suggested this approach, for he
thought that, taken to the extreme, ‘it would amount to denying any
substance to the legal personality of the subsidiaries’.64 He suggested
instead that the defining criterion should be that the anti-competitive
practice in question has effects within the Common Market. This is known
as the ‘doctrine of effects’, which has been intensely debated in public
international law. In its purest form, it implies that a state has jurisdiction
over activities of non-nationals abroad where these have effects within its
territory.65 Advocate General Mayrás suggested that this doctrine should
apply in the framework of EC competition law, subject to certain con-
ditions. In particular, only where the effects of anti-competitive practices
within the Community were direct and immediate, reasonably foreseeable and
substantial, would the Commission have jurisdiction to apply EC
competition law to undertakings not established in the Community.66
The Court was able to avoid considering the application of the doctrine
of effects in cases involving parent companies established outside, but
with subsidiaries within the Common Market, by using the ‘economic
unity’ approach. However, it was only a matter of time before a case arose
in which the companies responsible for the infringement had no
subsidiaries within the Common Market, such as in the case of Ahlström

60
Case 48/69, supra n. 53.
61
Ibid., at paragraphs 133–7 of the judgment.
62
Joined Cases 6 and 7/73, supra n. 53.
63
Case 48/69, supra n. 53.
64
Ibid., at p. 693.
65
See United States v. Alcoa, 148F 2d 416 (2 Circ. 1945).
66
Ibid., at pp. 693–4. This mitigated form of the doctrine of effects is also based on American
law, where it was put forward as a reaction to the criticism levelled at the absolute form of
the doctrine in Alcoa (see the Opinion of AG Darmon in Ahlström and others v. Commission
(Woodpulp I) (Joined Cases 89/95, 104/85, 114/85, 116–117/85, 125–129/85 [1988] ECR
5193, [1988] 4 CMLR 901) at paragraphs 32–46 of his Opinion, where he summarises the
principles in US law).
14 EC Competition Law and Policy

and others v. Commission (Woodpulp I).67 The Commission found that

various Scandinavian, Canadian and North American producers of
woodpulp were in breach of Article 81(1) EC. Several of them argued
before the Court that the Commission had no jurisdiction to apply EC
competition rules to them. Advocate General Darmon endorsed as a
jurisdictional criterion the qualified form of the doctrine of effects
suggested by Advocate General Mayrás in ICI v. Commission.68 The judg-
ment of the Court was terse and did not explicitly embrace the doctrine of
effects. The key paragraph of the judgment reads as follows:

It should be observed that an infringement of Article 85 [now 81], such as the

conclusion of an agreement which has had the effect of restricting competition
within the common market, consist of conduct made up of two elements, the
formation of the agreement, decision or concerted practice and the imple-
mentation thereof. If the applicability of the prohibitions laid down under
competition law were made to depend on the place where the agreement,
decision or concerted practice was formed, the result would obviously be to
give undertakings an easy means of evading those prohibitions. The decisive
factor is therefore the place where it is implemented [emphasis added].69

Accordingly, the Court decided that the Commission had jurisdiction on

the basis that the practice had been implemented in the Common Market.
The judgment left open the question whether the ‘implementation’ test
was substantially identical to the qualified doctrine of effects described
above.
The recent decision of the Court of First Instance in Gencor v.
Commission,70 a merger case, has the potential to resolve the debate about
whether these two jurisdictional tests are one and the same. The case
concerned a proposed merger between a South African company and a
company incorporated under English law. The Commission declared that
the proposed concentration was incompatible with the Common Market.
Gencor, the South African company, argued that the Commission had no
jurisdiction to do so, as the merger had originated and would have been
implemented in South Africa. The Court of First Instance held that the
application of the EC Merger Regulation71 would be justified when it was
foreseeable that the merger would have an immediate and substantial effect in
the Community.72 Thus, the Court adopted almost verbatim the sug-
gestions of Advocates General Mayrás and Darmon in ICI and Woodpulp
respectively. The Court did not reject the implementation test. In fact, it

67
Joined Cases 89/95, 104/85, 114/85, 116–117/85, 125–129/85, supra n. 66.
68
Ibid., at paragraphs 47–59 of his Opinion.
69
Ibid., at paragraph 16 of the judgment.
70
Case T-102/96 [1999] ECR II-753.
71
See supra n. 5.
72
Ibid., at paragraphs 92–101 of the judgment.
 The foundations of EC competition law 15

explained that the implementation test would be satisfied, contrary to

Gencor’s submissions, because the companies’ aggregated sales world-
wide and Community-wide were well above the thresholds in the EC
Merger Regulation.73 More importantly, however, the Court of First
Instance went further by tackling the argument that the European Court
had failed to address in previous cases. Although Gencor is a merger
case,74 there is no reason why the same approach should not extend to
cases under Articles 81 and 82 EC.

1.7.3 The effect on trade between Member States

A third essential element in both Articles 81 and 82 EC is that the anti-
competitive practice in question – whether an agreement or an abuse of
dominant position – should have an effect on trade between Member
States. This element establishes, in principle, the boundary between the
application of EC and national competition law. It is an element
inextricably linked to the other constitutive elements of the prohibitions in
Articles 81 and 82 EC, rather than a pre-condition. Therefore, it will be
considered in detail in the analysis of these provisions in Chapters 2
and 3.75

73
Ibid., at paragraph 87 of the judgment. The EC Merger Regulation (see supra n. 5) refers
only to concentrations that have a Community dimension. Articles 1(2) and 3 of the
Merger Regulation set out the thresholds that are applied to establish whether or not a
merger has a Community dimension. The thresholds refer mainly to the Community and
world-wide turnover of the companies involved.
74
The Gencor approach also pervades the recent Decision of the Commission that declares
the proposed merger between two American companies, General Electric Co. and
Honeywell Inc. to be incompatible with EC law (see the Commission Decision of 3 July
2001, Commission Press Release of 3 July 2001, IP/01/939).
75
See infra Chapter 2, section 2.2.2 (Article 81 EC), and Chapter 3, section 3.2.3 (Article 82
EC).
16 EC Competition Law and Policy

2
Anti-competitive agreements,
decisions and concerted practices:
Article 81 EC

2.1 Introduction

Article 81 EC is the Treaty provision that covers anti-competitive

behaviour that results from collusion between undertakings. It reads as
follows:

1. The following shall be prohibited as incompatible with the common market:

all agreements between undertakings, decisions by associations of under-
takings and concerted practices which may affect trade between Member States
and which have, as their object or effect, the prevention, restriction or distortion
of competition within the Common Market, and in particular, those which:

(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;
(d) apply dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
(e) make 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.

2. Any agreements or decisions prohibited pursuant to this Article shall be

automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the

case of:

– any agreement or category of agreements between undertakings;

– any decision or category of decisions by associations of undertakings;
– any concerted practice or category of concerted practices,
 Anti-competitive agreements, decisions, practices 17

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 benefits, and which does not:

(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 substantial part of the products in question.

Article 81 EC has, therefore, a clear structure, which has been set out in
Figure 2.1.1 It lays down:

• a basic prohibition on anti-competitive agreements, decisions by

associations of undertakings and concerted practices that may affect
trade between Member States (Article 81(1) EC);
• a sanction of nullity for any such agreements, decisions and concerted
practices (Article 81(2) EC);
• the possibility that such agreements, decisions or concerted practices
may be given an exemption because of their beneficial effects (Article
81(3) EC).

Step 1: Basic prohibition (Article 81(1) EC):

• Form of cooperation: agreements, decisions, concerted practices

• Effect on trade between Member States
• Object or effect to prevent, restrict or distort competition within
the Common Market

Step 2: The sanction (Article 81(2) EC):

• Agreements, decisions and concerted practices that fulfil the

conditions in Article 81(1) are, in principle, void

Step 3: Exemptions (Article 81(3) EC):

• An agreement that fulfils the conditions in Article 81(1) EC may,

nevertheless, be the subject of an exemption
• Conditions in Article 81(3) EC must be satisfied: two positive and
two negative conditions
• Two types of exemption: (a) individual and (b) block exemptions

Figure 2.1 Basic steps in the application of Article 81 EC

1
See infra p. 17.
18 EC Competition Law and Policy

The three paragraphs of Article 81 EC will now be considered in turn.

2.2 Article 81(1) EC: the basic prohibition on anti-

competitive agreements, decisions by associations
of undertakings and concerted practices

There are three elements necessary to determine that the basic prohibition
set out in Article 81(1) EC applies. First, the existence of a form of cooperation
between undertakings has to be shown. Article 81(1) EC enumerates three
possible forms of cooperation: agreements, decisions by associations of
undertakings and concerted practices. Secondly, the form of cooperation
has to have the potential to affect trade between Member States. Thirdly, the
form of cooperation must have an anti-competitive object or effect within the
Common Market.
Article 81 EC also provides a non-exhaustive list of practices that would
generally be caught by the prohibition. Those include price fixing, pro-
duction restrictions, market sharing, discriminatory conditions and tying.

2.2.1 Forms of cooperation

The basic distinction between the scope of application of Article 81 and
Article 82 EC is that the first provision applies to the anti-competitive
behaviour that results from concerted action, whereas the second applies to
the unilateral behaviour of one or more undertakings.2 It is therefore,
logical that the first requisite for the application of Article 81 EC should be
the existence of a form of cooperation between undertakings. Three forms
of cooperation are expressly recognised by Article 81 EC: agreements,
decisions by associations of undertakings and concerted practices.

Agreements
The EC Treaty does not include a definition of agreements for the purposes
of the application of Article 81 EC, but the European Court has defined
them broadly in its case law. Clear examples of agreements would be
written contracts,3 but the Court has also brought within this category
other less formal means of cooperation. One of the early cases where the
Court had the opportunity to interpret the notion of agreement was ACF
Chemiefarma v. Commission.4 A group of European quinine producers

2
Case 6/72 Europemballage Corporation and Continental Can Co. Inc. v. Commission [1973]
ECR 215, [1973] CMLR 199, at paragraph 25.
3
In this respect, see exclusive and selective distribution agreements and franchise
agreements, infra section 2.4.5.
4
Case 41/69 [1970] ECR 661.
 Anti-competitive agreements, decisions, practices 19

concluded an agreement relating to trade with third countries, which

provided inter alia for the fixing of prices and rebates relating to exports
and for the sharing of export markets. Two gentlemen’s agreements5
between the same parties extended similar arrangements to sales within
the Common Market. The Court took the view that, given that the parties
to the export agreement had declared themselves willing to abide by the
gentlemen’s agreements,6 Article 81 EC should apply to the latter.7 The
Court explained that ‘[t]his document … amounted to the faithful ex-
pression of the joint intention of the parties to the agreement with regard
to their conduct in the Common Market’.8 The crucial element therefore is
that the parties should have a joint intention, without it being necessary
for the intention to take the form of a valid and binding contract under
national law,9 or indeed to be expressed formally.10 The Court has also
made it clear that the parties to an agreement should be two or more
independent undertakings, therefore excluding internal agreements
between parent companies and their subsidiaries, where the subsidiaries
do not enjoy real autonomy in determining their course of action.11
The non-formalistic approach of the Court has been richly reflected in
the case law. First, the Court has accepted that oral agreements are
covered, as in Tepea v. Commission,12 where two oral exclusive distribution
and exclusive licensing agreements were held to come under Article 81
5
This type of agreement has been defined as one ‘which is not enforceable at law, and
which is only binding as a matter of honour’ (A Supplement to the Oxford English
Dictionary, ed. by R. W. Burchfield (Oxford, 1972), p. 1216).
6
Case 41/69, supra n. 4, at paragraph 112 of the judgment.
7
See also Case 45/69 Boehringer v. Commission [1970] ECR 769, at paragraphs 27–9 of the
judgment.
8
Case 41/69, supra n. 4, at paragraph 113 of the judgment. The Court took into
consideration a second element: the parties had agreed that, in the event of the
infringement of the gentlemen’s agreement, the export agreement would automatically
be considered to have been infringed.
9
See Joined Cases 209–215 and 218/78 Van Landewyck v. Commission [1980] ECR 3125,
[1981] 3 CMLR 134, at paragraph 86 of the judgment and Case C-277/87 Sandoz v.
Commission [1990] ECR I-45, at paragraph 2 of the summary of the judgment.
10
In its recent decision in Bayer v. Commission (Case T-41/96, [2000] ECR II-3383 [2001] 4
CMLR 126), the Court of First Instance has held that ‘an agreement within the meaning of
Article 85(1) (now 81(1)) EC, as interpreted by the case-law, centres around the existence
of a concurrence of wills between at least two parties, the form in which it is manifested
being unimportant so long as it constitutes the faithful expression of the parties’ intention’
(at paragraph 69 of the judgment).
11
Case 22/71 Beguelin [1971] ECR 949, [1972] CMLR 81, at paragraph 8 of the judgment and
Case C-73/95P Viho Europe v. Commission [1996] ECR I-5457, [1997] 4 CMLR 419, where
the Court upheld the view of the Court of First Instance that ‘where there is no agreement
between economically independent entities, relations within an economic unit cannot
amount to an agreement or concerted practice [emphasis added]’ (at paragraph 17 of the
judgment). See also the Opinion of AG Mayrás in Van Zuylen v. Hag [1974] ECR 731, [1974]
2 CMLR 127.
12
Case 28/77 [1978] ECR 1391, [1978] 3 CMLR 392, at paragraph 41 of the judgment.
20 EC Competition Law and Policy

EC. Secondly, tacit cooperation – although frequently coming under the

heading of concerted practices – might also constitute an agreement.13 In
Sandoz v. Commission,14 the dispatching by a supplier to his customers of
invoices bearing the words ‘export prohibited’ was held to be an
agreement both because it took place in the context of a continuing
commercial relation framed by a previous general agreement and because
the customers had tacitly accepted the conduct of the supplier by placing
further orders.15 However, the recent judgment of the Court of First
Instance in Bayer v. Commission,16 a case on suspected prohibition of
parallel importation, sits uncomfortably with this approach as the Court
struck down a Commission decision that took a broad view of the concept
of agreement to promote market integration.17 Thirdly, the Court has held
that Article 81 EC is applicable to agreements which are no longer in force
but which continue to produce effects after they have formally ceased to be
in force.18 Fourthly, the Court has considered that once an agreement has
been concluded, it is irrelevant for the purposes of the application of
Article 81 EC whether the undertakings consider themselves bound to
adopt the agreed conduct.19 Finally, and in an effort to facilitate the
efficient application of Article 81 EC, the Court and the Commission have
also treated as one single agreement those complex networks of agree-
ments with a common economic aim.20
There are two different types of agreement, which are relevant for the
purposes of the application of the competition rules: horizontal and
vertical agreements. Horizontal agreements are those between under-
takings operating at the same level of production or marketing, whereas
vertical agreements are those concluded between undertakings operating
at different economic levels. An example of the first type would be an
agreement concluded between two producers or manufacturers, whereas

13
See the Order of the President of the Court of First Instance in Case T-41/96R Bayer v.
Commission [1996] ECR II-381, [1996] 5 CMLR 290, at paragraph 40, where he explained
that the consent between the parties to an agreement ‘may also arise implicitly from clear
and unequivocal conduct by undertakings in the context of continuing commercial
relations’.
14
Case C-277/87, supra n. 9.
15
See also Case T-41/96R Bayer v. Commission, supra n. 13.
16
See Case T-41/96, [2000] ECR II-3383, [2001] 4 CMR 126.
17
The decision of the Court of First Instance has been appealed and is, at the time of writing,
pending before the European Court.
18
See Binon v. Agence et messageries de la presse (Case 243/83 [1985] ECR 2015, [1985] 3 CMLR
800, at paragraph 17 of the judgment) and the Polypropylene cartel case (Case T-7/89,
[1991] ECR II-1711, [1992] 4 CMLR 24, at paragraph 257 of the judgment).
19
Case T-347/94 Mayr-Melnhof Kartongesellschaft v. Commission [1998] ECR II-1751 at
paragraph 65 of the judgment.
20
See the Polypropylene cartel case (Case T-7/89, supra n. 18) and the decision of the
Commission in Re Greek Ferries, OJ [1999] L 109/124, [1999] 5 CMLR 47.
 Anti-competitive agreements, decisions, practices 21

an example of the second type would be an agreement concluded between

a supplier and its distributor. This is illustrated in Figures 2.2. and 2.3.21

Manufacturer A Manufacturer B

Figure 2.2 Horizontal agreements

Manufacturer

Wholesaler

Retailer

Figure 2.3 Vertical agreements

Traditionally, horizontal agreements are more objectionable from the

point of view of competition policy, because they are more likely to be
made between parties that compete inter se. However, even agreements
between non-competitors may be caught by Article 81 EC. In one of the
landmark competition cases, Consten and Grundig v. Commission,22 the
Court considered a vertical agreement, i.e. an exclusive distribution agree-
ment. The applicants tried to argue that vertical agreements are not caught
by Article 81 EC because the parties are not competitors inter se and not on
an equal footing. The Court, however, took the view that Article 81 EC also
applies to vertical agreements. It gave two main reasons. First, com-
petition can be distorted not only by agreements that restrict competition
between the parties, but also by those that restrict competition between
one of them and third parties.23 Secondly, vertical agreements may have
the aim of dividing the Community market along national lines (i.e.

21
See supra p. 21.
22
Joined Cases 56 and 58/64 [1966] ECR 299, [1966] CMLR 418; see also infra section 2.2.3.
23
Ibid., at p. 339 (ECR), and at p. 470 (CMLR).
22 EC Competition Law and Policy

exclusive distributorships, coupled with attempts to secure absolute

territorial protection), which would frustrate one of the fundamental
objectives of the Community, the creation of a single market.24

Decisions by associations of undertakings

The second category envisaged in Article 81 EC aims to cover the anti-
competitive practices of associations or of member undertakings. The
Court has given a broad interpretation to the expression ‘decisions by
associations of undertakings’ and has held that it covers not only
agreements between its members but also recommendations issued by the
association, provided that they are shown to be binding, either in law or in
fact, on its members. An example of the former is Belasco v. Commission, 25
where the members of Belasco, a co-operative association of Belgian
roofing felt manufacturers, entered into an agreement among its members
that provided for the adoption of price lists, a system of quotas and
defensive measures against competition from foreign undertakings. The
agreement was implemented by resolutions passed at the general meeting
of the association. An example of the latter is Van Landewyck,26 where the
Commission found that FEDETAB, a trade association of Belgian and
Luxembourg tobacco manufacturers, had breached Article 81(1) EC, inter
alia by issuing a recommendation in relation to the sale of cigarettes on the
Belgian market. Seven prominent members of the association challenged
the Commission Decision, on the grounds that the recommendation could
not be classified as a decision by an association of undertakings because it
had only advisory and not binding effect. The Court rejected that
argument: first, because according to the statutes of the association the
recommendation was binding, and secondly, because the applicants – who
controlled a substantial part of the total cigarette sales in Belgium – had
complied with the recommendation.27 In other words, the recom-
mendation was binding both in law and in fact, as demonstrated by the
compliance with it by the relevant undertakings.

Concerted practices
This category is intended to catch all those anti-competitive practices that
do not fall within the definition of an agreement or of a decision by an
association of undertakings, but which still involve collusion between
undertakings. Its raison d’être is clearly to prevent companies from evading
the prohibition in Article 81 EC by the adoption of co-operative practices

24
Ibid., at p. 340.
25
Case 246/86 [1989] ECR 2117, [1991] 4 CMLR 96.
26
Joined Cases 209–215 and 218/78 [1980] ECR 3125, [1981] 3 CMLR 134.
27
Ibid., at paragraph 89 of the judgment.
 Anti-competitive agreements, decisions, practices 23

which could not be classified properly as an agreement or as a decision.28

Given the Court’s liberal interpretation of the notion of agreement,29 the
borderline between an agreement and a concerted practice is not always
clear-cut, especially in cases involving complex cartels30 or those
involving tacit collusion.31 In cases involving complex cartels, the Court
has dismissed the need for a rigid classification of a set of practices as
either an agreement or a concerted practice and has been willing to find
elements of both.32 Tacit collusion will generally come under the heading
of a concerted practice, but it could also be classified as an agreement if it
takes place within the framework of an existing agreement between the
parties.33
The Treaty did not define concerted practices but the Court of Justice
provided the standard definition in its decision in ICI v. Commission
(Dyestuffs).34 A concerted practice was defined as ‘… a form of cooperation
between undertakings, which, without having reached the stage where an
agreement properly so-called has been concluded, knowingly substitutes
practical cooperation between them for the risks of competition [emphasis
added]’.35 The gist of the definition is therefore the existence of an act of

28
See the Decision of the Commission in Re Polypropylene cartel (Decision 86/398/EEC, OJ
[1986] L 230/1, [1988] 4 CMLR 347 at paragraph 87), where the Commission explained
that ‘… [T]he objective of the Treaty in creating a separate concept of concerted practice
was to forestall the possibility of undertakings evading the application of Article 85(1)
[now 81(1)] by colluding in an anti-competitive manner falling short of a definite
agreement by, for example, informing each other in advance of the attitude each intends
to adopt, so that each could regulate its commercial conduct in the knowledge that its
competitors would behave in the same way’. See also the Opinion of AG Mayrás in ICI v.
Commission (Case 48/69 [1972] ECR 619, [1972] CMLR 557, at p. 671).
29
See supra n.n. 12–20 and relevant text.
30
See the Opinion of AG Mayrás in ICI v. Commission (Case 48/69, supra n. 18 at p. 669).
31
See Case T-41/96R Bayer v. Commission (supra n. 10).
32
Thus, in the Polypropylene cartel case (Case T-7/89, supra n. 18), the Court of First Instance
found that the Commission was entitled to treat a series of practices carried out by 15
undertakings in the petrochemical sector with the common aim of distorting prices within
the Common Market as ‘one agreement and a concerted practice’. As the Court explained:
‘such dual characterisation, must be understood, not as requiring simultaneously and
cumulatively, proof that each aspect of the cartel’s behaviour contained elements both of
an agreement and of a concerted practice, but rather referring to a complex whole com-
prising a number of aspects some of which were characterised as agreements and others
as concerted practices’ (at paragraphs 262–4 of the judgment). See also the Decision of the
Commission in that case (supra n. 18 at paragraph 86), where the Commission took the
view that, although the two concepts are distinct, some types of collusion may present
elements of both forms of cooperation.
33
Thus see Sandoz v. Commission (Case C-277/87, supra n. 9 and supra p. 20).
34
Case 48/69, supra n. 28.
35
Case 48/69, supra n. 28, at paragraph 64 of the judgment.
24 EC Competition Law and Policy

reciprocal communication36 between undertakings, which has the aim of

distorting competition in a particular market. It follows that, in order to
escape the application of Article 81 EC, undertakings must determine
independently the economic policy they intend to adopt.37 That includes, as
the Court has recognised, their ability to adapt themselves intelligently to
the existing or anticipated conduct of their competitors.38 Beyond that, any
form of direct or indirect coordination between undertakings that aims to
create artificial conditions of competition in a given market will come
under Article 81 EC.39 The application of these concepts may pose dif-
ficulties: in the absence of any written or documentary evidence, the
existence of a concerted practice needs to be inferred from the behaviour of
the undertakings. The burden of proof of the existence of a concerted
practice normally falls on the Commission.40
One of most revealing indicators that undertakings might have
colluded is similar or parallel behaviour. In ICI v. Commission,41 the
Commission had investigated three general and uniform increases in the
prices of dyestuffs in 1964, 1965 and 1967 within the Common Market. The
Commission found that several undertakings with subsidiaries in the
Common Market were in breach of Article 81 EC for participating in
concerted practices which aimed to fix prices for dyestuffs. The Com-
mission used the following evidence to prove the existence of a concerted

36
As AG Darmon explained in his Opinion in the Woodpulp (II) case (Joined Cases C-114/85
and C-125/85, C-89/85, C-104/85, C-114/85, C-116–117/85 and C-125–129/85 [1993]
ECR I-1307, [1993] 4 CMLR 407, at paragraph 171), that reciprocal act of communication
needs to be defined in a case-to-case basis.
37
Joined Cases 40–48, 50, 54–56, 111, 113–114/73 Suiker Unie v. Commission (Sugar cartel)
[1975] ECR 1663, [1976] 1 CMLR 295, at paragraph 173 of the judgment.
38
Case 48/69, supra n. 28, at paragraph 118 of the judgment; Joined Cases 40–48, 50, 54–56,
111, 113–114/73, supra n. 37, at paragraph 174 of the judgment; Case 172/80 Züchner v.
Bayerische Vereinsbank [1981] ECR 2021, [1982] 1 CMLR 313, at paragraph 14 of the
judgment, and Case T-7/89 supra n. 18, at paragraph 258 of the judgment.
39
The nature of that act of communication has been liberally interpreted by the Court: mere
attendance at meetings where information on prices or market shares has been discussed
has been held to constitute such an act. See Polypropylene cartel case (Case T-7/89, supra n.
28, at paragraph 259 of the judgment).
40
But it may also fall on a private party, when Article 81 EC is invoked in proceedings before
a national court. See Züchner v. Bayerische Vereinsbank (Case 172/80, supra n. 38), where
the holder of an account with a German bank argued that the imposition of a bank charge
on transfers was contrary to Article 81 EC because it was part of a concerted practice
followed by most banks, both in Germany and in other Member States. See also François
Lucazeau v. SACEM (Case 397/87 [1989] ECR 2811, [1991] 4 CMLR 248), where three
discotheque operators refused to pay royalties to SACEM (the society that manages
copyright in musical works in France) for the performance of protected musical works on
their premises. They argued, inter alia, that the collective practice of national copyright
societies of systematically refusing to grant direct access to their repertoires to foreign
users could constitute a concerted practice under Article 81 EC.
41
Case 48/69, supra n. 28.
 Anti-competitive agreements, decisions, practices 25

practice. First, the prices applied by the undertakings were not only
identical but also applied simultaneously.42 Secondly, the orders issued by
the producers of dyestuffs to their subsidiaries to implement the price
increases were similar in content.43 Thirdly, the records of informal
meetings held in Basel and London by the producers showed that prices
for dyestuffs were discussed and that, in the 1967 meeting, one of the
producers had announced its intention to raise prices before the end of
that year.44
The Commission, therefore, inferred the existence of a concerted
practice primarily from the parallel behaviour of the producers. The
producers of dyestuffs argued, however, that their parallel behaviour was
the result of the characteristics of the dyestuffs market and not of
concertation between them. In particular, they argued that the market was
oligopolistic. An oligopolistic market is one essentially characterised by
the presence of a few producers of homogeneous goods, by very high
barriers of entry (in other words, very difficult to penetrate) and by a high
degree of transparency. In an oligopoly, producers are naturally inter-
dependent. If, for example, one producer lowers its prices, the others will
follow suit, for fear of losing their market share.45 Likewise, a producer
will not raise prices unless it is confident that the other producers will fall
in line with the increase. In such markets, parallel behaviour is the norm
and does not necessarily reflect the existence of collusion between the
parties. Similar arguments based on the existence of an ‘oligopolistic
market’ have been frequently deployed by parties accused of engaging in
concerted practices on the basis of their parallel courses of action. The
Commission can only refute the argument by an economic analysis of the
market in question. In its decision in Dyestuffs, that analysis was not
conducted in any detail,46 but more recent case law of the Court has

42
See Commission Decision in Dyestuffs (OJ [1969] L 195/11, [1969] CMLR D23) at
paragraph 7.
43
Ibid., at paragraph 8. In fact, some of the orders to make the 1964 price increases were
drafted in identical terms, with messages sent on the same day and at the same time.
44
Ibid., at paragraph 9 of the decision.
45
On the theory of oligopolistic interdependence and criticisms levelled at it, see R. Whish,
Competition Law, 3rd edn (London, 1993), pp. 467–73.
46
See paragraph 6 of the Commission’s Decision (supra n. 42) which stated: ‘The
investigations made by the Commission have revealed that the successive price increases
and the conditions in which they were carried out cannot be explained by the oligopolistic
structure of the market in question but are indeed the consequence of a concerted
practice.’ The Court, however, was more explicit and took the view that the lack of price
transparency in the market and the fact that the producers were sufficiently powerful and
numerous ruled out the oligopoly argument (at paragraphs 105–10 of the judgment).
26 EC Competition Law and Policy

emphasised the importance of the Commission carrying out that

analysis.47
Although parallelism has been successfully defended in the unusual
context of oligopolies, there nevertheless exists a particularly high risk that
innocent and natural behaviour could be seen as constituting illegal
cooperation. This begs the question of whether parallel behaviour per se
constitutes evidence of a concerted practice in markets where a healthy
degree of competition exists. In Dyestuffs,48 the Court took the view that
parallel behaviour in itself cannot be identified with a concerted practice
but can amount to strong evidence of such a practice if it leads to different
conditions of competition from those prevalent in the market.49 An
examination of the market for dyestuffs showed that the simultaneous –
and identical – rises in prices could not be seen as spontaneous in a market
that was clearly divided into five different national markets where
different conditions of competition applied and where there was a lack of
price transparency. In later cases, the Court has refined its approach and
has taken the view that parallel behaviour will furnish proof of
concertation only when it is ‘the only plausible explanation for that
conduct’.50 Even in such cases, the parties accused of engaging in a
concerted practice should be able to show there is an alternative
explanation for their behaviour.51
The Woodpulp (II) case52 patently illustrates the complexities sur-
rounding the notion of concerted practice. In that case, a group of
woodpulp producers53 operated a system of quarterly announcements of
prices. Under that system, a few weeks or days before the beginning of
each quarter all woodpulp producers communicated to their customers
the prices they wished to obtain for each type of pulp. The Commission
regarded that parallel action as proof that concertation had taken place

47
Joined Cases C-114/85 and C-125/85, C-89/85, C-104/85, C-114/85, C-116–117/85 and
C-125–129/85, supra n 36. In that case, the Commission had taken the view that the
parallel behaviour of a number of woodpulp producers could not be spontaneous but
was the result of concerted action and had dismissed, with little analysis, the theory that
the market was oligopolistic. The Court, however, relied on detailed economic analysis
undertaken by experts in order to show that the market showed oligopolistic tendencies
and to highlight the flaws of the Commission’s approach (see paragraphs 102–27 of the
judgment)
48
Case 48/69, supra n. 28.
49
Case 48/69, supra n. 28, at paragraph 66 of the judgment.
50
Joined Cases 40–48, 50, 54–56, 111, 113–114/73, supra n. 37.
51
See Cases 29–30/83 CRAM and Rheinzink v. Commission [1984] ECR 1679, [1985] 1 CMLR
688.
52
Joined Cases C-114/85 and C-125/85, C-89/85, C-104/85, C-114/85, C-116–117/85 and
C-125–129/85, supra n. 36.
53
See, for the jurisdictional aspects of the case, the decision of the Court in Woodpulp (I),
which is considered in Chapter 1, section 1.7.2.
 Anti-competitive agreements, decisions, practices 27

between the producers in order to influence conditions of competition, as

it could not find any other plausible explanation for the simultaneous
timing of the announcements and the uniformity of the prices published.
The Court, however, disagreed with the Commission’s findings and
concluded, mainly on the basis of expert economic advice, that the parallel
behaviour could be justified. The Court held that the price announcements
could be explained as a rational response to the long-term nature of the
market, where producers and customers tried to limit risks, while the
timing of the announcements could result directly from the high degree of
market transparency.54 Finally, the oligopolistic tendencies of the market
could explain the parallelism in prices and price trends.55
Another case concerning exchanges of information is Deere v.
Commission,56 which can usefully be compared with the decision in
Woodpulp (II). In Deere, the members of a trade association agreed upon a
system of exchange of information between them that would enable their
sales to be identified. The Commission took the view – upheld by the
Court of First Instance – that such exchanges of information had the effect
of restricting competition by removing uncertainty about the nature of the
competitors’ conduct and by raising barriers to entry for non-members.57
The European Court, on appeal, helpfully distinguished the ruling in
Woodpulp (II) from the one in the present case. It explained that in the
former case the system of quarterly announcements involved com-
munication of information to purchasers, whereas in the latter the
information was to be shared only by certain undertakings that were
parties to the system.58

Apparent unilateral behaviour

Since the first step in the application of Article 81 EC is the finding of a
form of cooperation between undertakings, it would follow that strictly
unilateral anti-competitive action by one undertaking would not fall
within that provision.59 The Court has sometimes classified seemingly
unilateral behaviour as a form of disguised cooperation and has applied
Article 81 EC to such instances. A good example is furnished by the
decision of the Court in AEG and Telefunken v. Commission.60 In that case,
AEG, a manufacturer of electronic goods, operated a system of selective
distribution61 in all the Member States of the European Community. The

54
Joined Cases C-114/85 and C-125/85, C-89/85, C-104/85, C-114/85, C-116–117/85 and
C-125–129/85, supra n. 36, at paragraph 126 of the judgment.
55
Ibid.
56
Case C-7/95P [1998] ECR I-3111.
57
Case T-35/92 Deere v. Commission [1994] ECR II-957, at paragraphs 51–81 of the judgment.
58
Case C-7/95, supra n. 56, at paragraph 91 of the judgement.
59
If the undertaking is dominant, then Article 82 EC might apply instead.
60
Case 107/82 [1983] ECR 3151, [1984] 3 CMLR 325.
28 EC Competition Law and Policy

Commission found that AEG’s system of selective distribution con-

travened Article 81 EC. This was because the selling prices charged by the
dealers had been determined by AEG and some dealers who satisfied the
qualitative criteria set out in the selective distribution agreement had been
refused access to the contract goods. The underlying intention of AEG was
to maintain high prices.62 AEG tried to argue that the acts complained of
were strictly unilateral and that, therefore, Article 81 EC was not
applicable to them. The Court, however, explained that the conduct of the
manufacturer was not unilateral but took place within the framework of
the contractual relationship between AEG and its authorised distributors,
who had obviously agreed to the anti-competitive terms set by AEG.63 In
other words, the Court took the view that all those distributors who had
been allowed to continue as part of the distribution system and who had
continued to receive the contract goods must have agreed implicitly to the
anti-competitive conditions imposed by AEG. Therefore, a form of
cooperation within the meaning of Article 81 EC had taken place. Many
other examples of this approach can be found in the case law64 and in the
decisions of the Commission.65

2.2.2 Effect on trade between Member States

The second element in the prohibition set out in Article 81 EC is that the
form of cooperation should have an effect on intra-Community trade. This
clause draws the prima facie boundary between the application of EC and
of national competition law.66 In the absence of guidance from the Treaty
about how this requirement should be applied, it fell to the Court to give

61
The new umbrella block exemption regulation on vertical restraints (see infra section
2.4.5) has defined a selective distribution agreement as one ‘where the supplier
undertakes to sell the contract goods or services, either directly or indirectly, only to
distributors selected on the basis of certain predefined criteria and where these
distributors undertake not to sell such goods or services to unauthorised distributors’
(Article 1(c) of Regulation 2790/99 (OJ [1999] L 336/21, [2000] 4 CMLR 398).
62
Case 107/82, supra n. 60, at paragraph 37 of the judgment.
63
Ibid., at paragraph 38 of the judgment.
64
See, for example, Joined Cases 32/78, 36–82/78 BMW v. Commission [1979] ECR 2435,
[1980] 1 CMLR 370; Joined Cases 25 and 26/84 Ford Werke and Ford Europa v. Commission
[1985] ECR 2725, [1985] 3 CMLR 528.
65
See Commission Decisions in Sandoz (Decision 87/409, OJ [1987] L 222/28, [1989] 4
CMLR 628, at paragraphs 25 to 28), in Bayer (Decision 90/3645, OJ [1990] L 351/46, [1992]
4 CMLR 61, at paragraph 9 of the Decision) and in Volkswagen and others (Decision 98/273,
OJ [1998] L 124/60, [1998] 5 CMLR 333, at paragraphs 111–29 of the Decision).
66
Joined Cases 56 and 58/64, supra n. 22, at p. 341. See also Part I, Chapter I, s. 2 of the UK
1998 Competition Act, which contains a prohibition almost identical to that found in
Article 81 EC, except that anti-competitive agreements, decisions and concerted practices
should have the potential to affect trade within the United Kingdom.
 Anti-competitive agreements, decisions, practices 29

content to it. The Court has developed two important parameters in its
case law: first, a basic test and, secondly, a de minimis rule.

The basic test

In Société Technique Minière v. Maschinenbau Ulm,67 the Court explained
that, for the effect on Community trade to be fulfilled, ‘it must be possible
to foresee with a sufficient degree of probability on the basis of a set of
objective factors of law or of fact that the agreement in question may have
an influence, direct or indirect, actual or potential, on the pattern of trade
between the Member States’.68 In later cases, the Court explained that the
agreement or practice must influence the patterns of trade in such a way as
to cause concern that it might prejudice the realisation of the single market
objective of the Treaty.69
The Court has acknowledged that it is not necessary to demonstrate
that an agreement or concerted practice has had an effect on trade; it
suffices to show that is likely to distort the normal patterns of trade.70 For
example, an exclusive distribution agreement that aims to secure absolute
territorial protection will affect trade between Member States by
restricting exports and will be at variance with the fundamental single
market aim of the Treaty.71
The Court has held since its early case law that, even if the parties to an
agreement operate in the same Member State, an effect on intra-
Community trade cannot be ruled out. One of the early examples was the
decision of the Court in Brasserie de Haecht v. Wilkin.72 In that case, the
national court considered the breach of an exclusive purchasing
agreement in favour of a Belgian brewery by the proprietors of a small café
in Esneux. In the Belgian market there was a network of similar contracts
imposed by a small number of Belgian breweries. The Court not only
explained that the agreement in question should be considered within its
economic context (i.e. within the framework of the network of similar
agreements), but also implied that, despite the national character of the
agreements, there could be an effect on intra-Community trade.73 In later
cases, such as Cementhandelaren v. Commission,74 the Court made that point
67
Case 56/65 [1966] ECR 234, [1966] CMLR 357.
68
Ibid., at p. 249.
69
See Case 42/84 Remia v. Commission [1985] ECR 2545, [1987] 1 CMLR 1, at paragraph 22 of
the judgment, and Case C-306/96 Javico v. Yves Saint Laurent [1998] ECR I-1983, [1998] 5
CMLR 172, at paragraph 16 of the judgment.
70
Joined Cases 209–215 and 218/78 supra n. 26, at paragraph 172 of the judgment; Case C-
219/95P Ferrerie Nord v. Commission [1997] ECR I-4414, [1997] 5 CMLR 575, at paragraph
19.
71
Joined Cases 56 and 58/64, supra n. 22, at p. 341.
72
Case 23/67 [1967] ECR 407, [1968] CMLR 26.
73
Ibid., at pp. 415–16.
74
Case 8/72 [1972] ECR 977, [1973] CMLR 7.
30 EC Competition Law and Policy

explicitly. In that case, the Dutch Cement Dealers’ Association issued a

series of decisions establishing target prices and standard conditions of
sale, for application in the Dutch market. These included the prohibition
against selling cement to traders other than members of the Association or
resellers approved by the Association. The Association argued that Article
81 EC was inapplicable to a purely national cartel that had no effect on
exports. The Court, however, took the view that, despite their national
character, the decisions could affect intra-Community trade, because they
extended to the whole Dutch territory thereby reinforcing the compart-
mentalisation of the national market. In particular, the prohibition against
selling to unauthorised resellers, made it difficult for producers or sellers
from other Member States to penetrate or be active in that market.75 Often
it will be fairly clear that a national agreement is likely to affect 76 – or not
likely to affect77 – trade between Member States. The Court has held,
however, that in less obvious cases economic analysis will be necessary to
decide whether or not such effect on trade has taken place.78
Sometimes, not all the anti-competitive provisions found in an agree-
ment might have an effect on intra-Community trade. The general rule set
out by the Court is that if the overall effect of the agreement is to hinder
trade between the Member States, there is no need to examine whether
each clause individually has such an effect.79

75
Ibid., at paragraphs 29 and 30 of the judgment. See also BNIC v. Blair [1985] ECR 391,
[1985] 2 CMLR 430, where the Court held that an agreement of a purely regional character
had an effect on intra-Community trade.
76
See, for example, Case 42/84 Remia v. Commission (supra n. 69), where the Court examined
a non-competition clause which was included in an agreement for the sale of an
undertaking and which covered the entirety of the Dutch market.
77
See, for example, Joined Cases C-215/96 and C-216/96 Bagnasco v. Banca Popolare di
Novara [1999] ECR I-135, where the Court examined, inter alia, the compatibility with
Article 81 EC of standard bank conditions relating to the provision of general guarantees
required to secure the opening of a current-account credit facility imposed by the Italian
Banking Association. The Court was satisfied with the findings of the Commission that
the banking service in question involved economic activities that had limited impact on
trade between Member States and that the participation of subsidiaries of non-Italian
banks – which may have wished to apply more favourable conditions – was limited (see
paragraphs 49–53 of the judgment).
78
See Case C-250/92 Gøttrup-Klim Grovvareforeninger and others v. Dansk Landbrugs
Grovvareselskab [1994] ECR I-5641, [1996] 4 CMLR 191, at paragraph 55 of the judgment.
For an early example of a case where the Court found that the Commission had failed to
provided adequate reasoning to show that a purely national agreement had effect on
intra-Community trade, see Case 73/74 Papiers Peints v. Commission [1975] ECR 11491,
[1976] CMLR 1491, at paragraphs 22–35 of the judgment.
79
Case 193/83 Windsurfing International v. Commission [1986] ECR 611, [1986] 3 CMLR 489.
In cases where an agreement did not have the overall effect of affecting trade between
Member States, the Commission considered the effect of each clause individually (see the
Commission Decision on the Dutch banks, Decision 89/512/EEC, OJ [1989] L 253/1,
[1990] 4 CMLR 768, at paragraphs 58–60 of the decision).
 Anti-competitive agreements, decisions, practices 31

De minimis rule
In addition to the basic test, the Court has formulated the requirement that
the effect on trade must not be insignificant. In Völk v. Vervaecke,80 the
Court held that an agreement would fall outside the prohibition in Article
81 EC ‘when it has only an insignificant effect on the markets, taking into
account the weak position which the persons concerned have on the
market of the product in question’.81 In that case, an exclusive distribution
agreement between a small German manufacturer of washing and drying
machines and a Belgian company, which attempted to secure absolute
territorial protection for the latter in Belgium and Luxembourg, fell
outside Article 81 EC because of the small market share held by the
supplier.82
The question is, of course, how to decide when an agreement has an
insignificant effect on competition. The Commission has issued several
notices setting some quantitative guidelines for the application of the de
minimis rule. The current Notice83 lays down the following general criteria:

1. An agreement will fall outside Article 81 EC if the aggregate market

shares held by all participant undertakings do not exceed 5 per cent in
the case of horizontal agreements and 10 per cent in the case of vertical
agreements.84
2. These benchmarks will not apply where competition is restricted in a
relevant market by parallel networks of agreements.85
3. Further, the application of Article 81 EC to horizontal agreements that
fix prices or share markets or sources of supply, and to vertical
agreements that fix prices or that aim to secure territorial protection,
even if the market shares of participant undertakings fall below the

80
Case 5/69 [1969] ECR 295, [1969] CMLR 273.
81
Ibid., at paragraphs 5–7 of the judgment.
82
The Court has confirmed in later case law that ‘an exclusive dealing agreement may
escape the prohibition laid down in Article 81(1) because, in view of the weak position of
the parties on the market in the products in question in the territory covered by the
exclusive dealing agreement, it is not capable of hindering the attainment of the objectives
of a single market between the States, even if it creates absolute territorial protection’
(Case 1/71 Cadillon v. Höss [1971] ECR 351, [1971] CMLR 420, at paragraph 9 of the
judgment). See also Musique Diffusion Française and others v. Commission (Joined Cases
100/80 to 103/80 [1983] ECR 1825, [1983] 3 CMLR 221, at paragraph 85 of the judgment).
83
OJ [1997] C 372/13.
84
Ibid., at paragraph 9 of the Notice. An additional criterion set out in the Notice is that both
horizontal and vertical agreements do not fall under Article 81(1) EC if the thresholds laid
down in paragraph 9 of the Notice are exceeded by no more than one-tenth during two
successive financial years (paragraph 10 of the Notice).
85
Ibid., at paragraph 18 of the Notice. See also Case 23/67, supra n. 72, and accompanying
text.
32 EC Competition Law and Policy

established thresholds, cannot be ruled out, but the Commission will

only intervene if there is sufficient Community interest.86
4. There is a presumption that agreements between small and medium-
sized undertakings do not significantly affect trade between Member
States even if they exceed the market thresholds set out in the Notice.87

The Notice also makes it clear that sometimes agreements between

undertakings whose market shares exceed the established thresholds may
still have a negligible effect on intra-Community trade and therefore may
not be caught by Article 81 EC.88 The criteria set out in the Notice are
shown in Figure 2.4.89
In May 2001, the Commission published a new Draft Notice on
agreements of minor importance, which revises the criteria set out in the
current Notice and opens a two-month period of public consultation.90
The Commission has explained that the current Notice needs to be
coherent with the new rules applicable to horizontal and vertical
agreements.91 The following aspects of the Commission’s Draft are
noteworthy:

• The system of market thresholds is maintained but raised to 10 per cent

for agreements between competitors and to 15 per cent for agreements
between non-competitors. A residual 10 per cent threshold is laid down
for agreements which are difficult to classify under either of these
categories.92 This seems broadly to reflect the traditional distinction
between horizontal and vertical agreements, although framed in
terminology based more on economic analysis.
• Where competition is restricted by parallel networks of agreements, a
threshold of 5 per cent is introduced, below which Article 81(1) would
not apply.93
86
Ibid., at paragraph 11 of the Notice.
87
Ibid., at paragraph 19 of the Notice. That presumption may be waived by the Commission
if such agreements either significantly impede competition in a substantial part of the
relevant market or if a network of parallel agreements exists in that market which
cumulatively restricts competition (paragraph 20 of the Notice). See the decision of the
Commission in Re Greek Ferries (supra n. 20).
88
See paragraph 3 of the Notice. See also Case T-9/93 Schöller v. Commission [1995] ECR II-
1611, [1995] 5 CMLR 602, at paragraph 75 of the judgment.
89
See infra p. 33.
90
The Draft Notice was published on the Commission’s website on 16 May 2001 and then in
the Official Journal (OJ [2001] C 149/28).
91
See the Commission’s Press Release of 16 May 2001 (IP/01/709). See also section 2.4.5
(infra), for a consideration of the new block exemption regulations on horizontal and
vertical agreements.
92
See the Draft Notice, at II.8.
93
See the Draft Notice at, II.9.
 Anti-competitive agreements, decisions, practices 33

Agreements which are presumed Agreements which might

to be de minimis and which significantly affect trade between
escape the application of Article Member States or restrict
81(1) EC competition to an appreciable
extent

1. Total market shares of all 1. Total market shares of

participant undertakings do participant undertakings
not exceed: exceed:
– horizontal agreements: 5% – horizontal agreements: 5%
– vertical agreements: 10% – vertical agreements: 10%

2. Total market shares of 2. Parallel networks of agreements

participant undertakings
exceed the established
thresholds by no more than
1
10
during two consecutive
financial years.
(even if the market shares of the
participant undertakings in each
individual agreement fall below
the established thresholds) that
cumulatively restrict
competition.

3. Agreements between small and 3. Horizontal agreements that fix

medium-sized undertakings
(even if they exceed the
established thresholds) but
Commission may intervene:
(a) if they significantly impede
competition in a substantial
part of the relevant market;
(b) if competition is restricted
in the relevant market by
the cumulative effect of a
network of similar
agreements.
prices or share markets or
sources of supply and vertical
agreements that fix resale
prices or that aim to secure
territorial protection (even if
the market shares of participants
undertakings fall below the
established thresholds) but
Commission will only intervene
if there is sufficient Community
interest.

Figure 2.4 The 1997 Commission’s Notice on agreements of minor importance

• In line with the current Notice, vertical and horizontal agreements

containing certain hardcore restrictions will not be treated as de minimis,
even if the threshold rules are satisfied.

The Draft Notice, however, has modified the list of these restrictions94 to
reflect the hardcore restrictions in the new umbrella block exemption
regulation on vertical restraints95 in the case of vertical agreements, and

94
See the Draft Notice at, II.12.
95
Regulation 2790/99 (OJ [1999] L 336/21).
34 EC Competition Law and Policy

those in the new block exemption regulations on specialisation96 and

research and development97 agreements in the case of horizontal
agreements.

2.2.3 Anti-competitive object or effect

The third element in the basic prohibition in Article 81 EC is that the
agreement, decision or concerted practice must have the object or effect of
preventing, restricting or distorting competition within the Common
Market. To this, the Court has added that restriction or distortion of
competition should be ‘appreciable’.98 The quantitative criteria set out in
the 1997 Commission Notice on Minor Agreements, based on the market
shares of the undertakings participating in an agreement, are used to give
meaning to the term ‘appreciable’.99

Object or effect to restrict competition

In Société Technique Minière v. Maschinenbau Ulm100 the Court followed a
literal interpretation of the expression ‘object or effect’ and explained that
these were alternative and not cumulative conditions. In other words, if
the object of an agreement is clearly anti-competitive, there is no need to
consider its effects.101 This premise is clearly illustrated in the key decision
of the Court in Consten and Grundig,102 delivered only a few days later. The
structure of the agreement in that case is represented in Figure 2.5.103
Grundig, a German manufacturer of electronic goods, appointed Consten
as its exclusive distributor in France. Under the terms of the agreement,
Consten undertook not to sell the contract goods outside France, and a
similar prohibition was imposed on all Grundig’s exclusive distributors in
other Member States and on the German wholesalers. In addition,
Consten was authorised to register in France in its own name the trade
mark ‘GINT’, which appeared on all Grundig appliances. The combined

96
See Article 5(1) of Regulation 2658/2000 (OJ [2000] L 304/3, [2001] 4 CMLR 800).
97
See Article 5(1) of Regulation 2659/2000 (OJ [2000] L 304/7, [2001] 4 CMLR 808).
98
Case 56/65, supra n. 67, at p. 249.
99
See the Commission Notice on agreements of minor importance (supra n. 90), at
paragraphs 2, 3, 9 and 10.
100
Case 56/65, supra n. 67, at p. 249.
101
Only the Italian version of Article 81 EC can be read as requiring the Commission to
demonstrate that an agreement has both an anti-competitive object and effect by the use of
the coordinating conjunction ‘e’. The Court of First Instance, however, held in Ferriere
Nord v. Commission (Case T-143/89 [1995] ECR II-917, at paragraph 31) that that version
could not prevail by itself against all the versions of that provision in other languages,
where the two conditions could only be read disjunctively.
102
Joined Cases 56 and 58/64, supra n. 22.
103
See infra p. 35.
 Anti-competitive agreements, decisions, practices 35

Grundig

Exclusive distribution Exclusive distribution

agreement agreements in other EC
countries
France
+
Consten (exclusive distributor)
Germany
1. Prohibition on selling
German wholesalers
contract goods outside
France 1. Prohibition on selling contract
2. Assignment of ‘GINT’ goods outside their respective
trade mark for the French contract territories
territory

SOLD

BOUGHT

UNEF

Figure 2.5 Consten and Grundig

aim of those clauses was effectively to ‘seal off’ the French market or, in
other words, to grant absolute territorial protection to Consten. The export
bans standing in isolation would have still permitted a parallel importer104
to buy the contract goods in Germany and then sell them in France. The
assignment of the trade mark, however, ensured that, should that be the
case, Consten could use French intellectual property law to bring an action
before the national courts for infringement of the trade mark against a
parallel importer. This is precisely what happened when UNEF, a French
parallel importer, bought Grundig products in Germany and resold them
at more favourable prices than Consten in the French market.
104
A parallel importer is an independent undertaking which acquires goods in one Member
State and sells them in another Member State.
36 EC Competition Law and Policy

The Court explained that the agreement clearly had an anti-competitive

object as its purpose was to grant absolute territorial protection and thus
eliminate any possibility of competition in Grundig products at the
wholesale level, thereby allowing higher prices to be charged in the French
market. This anti-competitive object was evident from the terms of the
agreement and the economic context in which it was to be applied.105 In the
circumstances, there was no need to take into account the effects of the
agreement.106
Traditionally, the Court and the Commission have viewed horizontal
agreements that fix prices107 or share markets108 or sources of supply109 as
having an anti-competitive object.110 Likewise, contractual clauses in
vertical agreements that aim to secure territorial protection (i.e. by
imposing export bans on distributors111 or prohibiting cross-supplies
between authorised dealers112 or that fix resale prices113 have consistently
been held by the Court to have such an object. The strength of opposition
to such provisions stems not only from the fact that they are manifestly
detrimental to competition but also they are antagonistic to the single
market objective of the Treaty.114
In those cases where it is not clear that the object of an agreement is
clearly anti-competitive, an economic analysis is necessary to establish
whether the agreement or practice has the effect of preventing, restricting
or distorting competition.115 The case law of the Court concerning parallel
networks of exclusive purchasing bears this out. In one of the early cases,
Brasserie de Haecht v. Wilkin,116 the Court held that the effects of an
exclusive purchasing agreement on competition had to be considered not

105
See Case 56/65 (supra n. 67, at p. 249). Those criteria had been set out in Société Technique
Minière v. Maschinenbau Ulm (Joined Cases 56 and 58/64, supra n. 22, at pp. 342–3).
106
Ibid.
107
Case 48/69 ICI v. Commission, supra n. 28.
108
Case 41/69 Chemiefarma v. Commission, supra n. 4; see also the Decision of the Commission
in Peroxygen Products (OJ [1985] L 35/1, [1985] 1 CMLR 481).
109
Joined Cases 40–48/73 etc., Suiker Unie (Sugar cartel), supra n. 37.
110
See Case T-148/89 Tréfilunion v. Commission [1995] ECR II-1063, at paragraphs 108–9 of
the judgment.
111
Joined Cases 56 and 58/64, supra n. 22, at pp. 342–3. See also the Decision of the
Commission in Polistil/Arbois (OJ [1984] L 136/9, [1984] 2 CMLR 594).
112
See Case 86/82 Hasselblad v. Commission [1984] ECR 883, [1984] 1 CMLR 559, at paragraph
46 of the judgment, and the decision of the Commission in Volkswagen and others (Decision
98/273, supra n. 65, at paragraph 139).
113
Case 27/87 Louis Erauw-Jacquery v. La Hesbignonne [1988] ECR 1919, [1988] 4 CMLR 576, at
paragraph 15 of the judgment.
114
On the importance of the single market objective as an aim of EC competition law, see
supra Chapter 1, section 1.5.
115
For a recent analysis of the restrictive effect in Article 81(1) EC see O. Odudu, ‘Interpreting
Article 81(1) EC: demonstrating restrictive effect’ [2001] 26 ELRev 261.
116
Case 23/67, supra n. 72. The facts of that case have been described above at section 2.2.2.
 Anti-competitive agreements, decisions, practices 37

in isolation but in conjunction with the network of similar contracts that

existed in the same market, so that their cumulative effect on competition
could be appreciated.
The Court undertook a much more exhaustive and helpful analysis of
this issue in Delimitis v. Henninger Bräu.117 The analysis carried out by the
Court has been summarised in Figure 2.6.118 That case, like Brasserie de
Haecht, concerned an exclusive purchasing agreement in the beer market,
this time between a German publican and a German brewery. The Court
explained that an exclusive purchasing agreement does not have an
obvious anti-competitive object and therefore that the effects of the
agreement ought to be examined.119 The Court, drawing on its judgment
in Brasserie de Haecht, began by establishing that the agreement had to be
considered within the context of the network of similar agreements that
existed in the German market.120 It then explained that two cumulative
conditions had to be satisfied for the agreement to have the effect of
distorting competition: (a) that the network of agreements where it was
found should have the effect of denying competitors – whether national or
from other Member States – access to the market, and (b) that the agreement
in question should contribute significantly to the sealing-off effect of the
market.121 The two requirements entailed a logical and progressive
analytical sequence. Only if an examination of the first element revealed
that the effect of the network was to deny access to the market, did the
contribution of the individual agreement to the sealing-off effect have to
be considered.
The Court went on to elucidate in detail the steps that had to be
followed in the application of those cumulative requirements. The steps
will now be considered in turn.
First, the Court established that the basic premise in the application of
the requirements was the definition of the relevant market from the point of
view of the nature of the economic activity in question and from a
geographical perspective.122 In relation to the former, the Court held that

117
Case C-234/89 [1991] ECR I-935, [1992] 5 CMLR 210.
118
See infra p. 38.
119
Ibid. at paragraphs 10–13 of the judgment. At the time, exclusive purchasing agreements
fell within the scope of Regulation 1984/83 (OJ [1983] L 173/5). Under Article 1 of that
Regulation, the exclusive purchasing obligation was exempted from the prohibition in
Article 81(1) EC – provided it was not concluded for a period exceeding five years (Article
3(d) of the Regulation), on account of its overall beneficial effects on competition (see infra
section 2.5). In Delimitis, however, the national court asked whether an exclusive
purchasing agreement, considered within the framework of a network of similar
agreements fell within the scope of Article 81(1) EC.
120
Ibid., at paragraph 14 of the judgment.
121
Ibid., at paragraphs 15 and 24 of the judgment.
122
The definition of the relevant market is discussed in Article 82 EC cases (see infra Chapter
3, section 3.2.1).
38 EC Competition Law and Policy

Small number of breweries

Network of similar exclusive purchasing agreements

Network of similar exclusive purchasing agreements

Delimitis Purchaser X Purchaser Y Purchaser Z

Cumulative conditions:

1. The network of agreements = effect of denying competitors

access to the market
• definition of the market: relevant economic activity and
geographical area;
• mere existence of network per se not sufficient to render market
inaccessible;
• other important factors: opportunities for access and
conditions in which competitive forces operate in the market.

2. The agreement should contribute significantly to the sealing-off

effect
• market share of producer;
• number of outlets tied to it;
• duration of the agreement.

Figure 2.6 Delimitis: analysis of the effects on competition of an exclusive purchasing

agreement in the market of beer supply

the relevant market was that for the distribution of beer in premises for the
sale and consumption of drinks. In relation to the latter, it held that the
relevant geographic market was the national market – Germany – as most
beer supply agreements were entered into at the national level.123
Secondly, the Court laid down the basic criteria for deciding whether
the network of agreements had the effect of preventing access to the market. The
mere existence of a network of similar agreements – even if, as might be
expected, it had a considerable effect on market access – was held not to be

123
Case C-234/89, supra n. 117, at paragraphs 16–18 of the judgment.
 Anti-competitive agreements, decisions, practices 39

sufficient per se to render the market inaccessible.124 Other factors that had
to be taken into account were the opportunities for access – i.e. whether a
new entrant into the market could circumvent the network by opening
new public houses125 – and the conditions under which competitive forces
operate in the relevant market – i.e. the degree of saturation of that market
and customer loyalty to existing brands.126
Thirdly, the Court held that in order to assess the contribution of the
individual contract to the sealing-off effect, several indicators had to be
considered. Those indicators were: the market share of the brewery or the
group to which it belonged, the number of outlets tied to it (in relation to
the number of public houses found in the relevant market) and the
duration of the exclusive purchasing agreements.127
The Delimitis judgment constitutes a rare instance when the Court laid
down in great detail the parameters necessary to ascertain the restrictive
or distorting effect on competition of a particular type of agreement:
exclusive purchasing agreements found in the framework of a network of
similar agreements in the beer market. There are, however, countless other
types of agreement which do not have such a clear anti-competitive object.
There are indications in the Court’s judgments, especially over the last
decade, that economic analysis is crucial to the determination of the effect
of such agreements on competition,128 and the Court of First Instance has,
in some cases, scrutinised very carefully the economic analysis under-
taken by the Commission.129

Within the Common Market

The prevention, distortion or restriction of competition has to take place
within the Common Market. Therefore, if an anti-competitive agreement
is concluded within the European Community but has effects only outside
124
Ibid., at paragraphs 19–20 of the judgment.
125
Ibid., at paragraph 21 of the judgment.
126
Ibid., at paragraph 22 of the judgment.
127
Ibid., at paragraphs 25–7 of the judgment.
128
See Case 99/79 Lancôme v. Etos [1980] ECR 2511, [1981] 2 CMLR 164, at paragraph 24 of
the judgment (selective distribution agreement); Case C-250/92, supra n. 78, at paragraph
31 (provision in the statutes of a cooperative purchasing association forbidding members
to participate in other forms of cooperation in competition with it); Case C-399/93 Oude
Luttikhuis v. Verenigde Coöperatieve Melkindustrie [1995] ECR I-4515, [1996] 5 CMLR 178, at
paragraph 10 of the judgment (provision in statutes of a cooperative association for
processing milk imposing a fee payable by the members in the event of withdrawal or
expulsion); Joined Cases T-374–375, 384, 388/94 ENS v. Commission [1998] ECR II-3141, at
paragraph 136 of the judgment (agreements concerning the formation of a new inter-
national railway grouping and between five national railway undertakings and the
former).
129
See Joined Cases T-374–375, 384, 388/94 ENS v. Commission, supra n. 128, at paragraphs
135–60, where the Court reached the conclusion that the analysis of the Commission was
not sufficiently reasoned.
40 EC Competition Law and Policy

that territory, Article 81 EC does not apply to it. Thus, in Re Rieckermann

and AEG-Elotherm,130 the Commission examined the terms of an agency
agreement between two German companies that granted Reickermann
the exclusive right to sell AEG’s heating, fusion and induction-tempering
installations in the Japanese market. Under the terms of the agreement,
Reickermann – a company specialising in exports to countries in the Far
and Middle East – undertook not to sell AEG’s installations in countries
other than Japan and not to sell goods competing with AEG’s goods. AEG
in return undertook not to export directly to Japan and to forbid its other
purchasers to resell its goods in Japan. The Commission examined all
those clauses and concluded that none of them was likely to have a sub-
stantial effect on competition within the Common Market, and therefore
ruled out the application of Article 81 EC to that agreement.
However, as seen above,131 the Court has accepted that anti-competitive
agreements concluded outside the European Community, but im-
plemented within the Community, may be subject to the prohibition in
Article 81(1) EC.

2.2.4 Examples of practices that normally fall within the scope of

Article 81(1) EC
Article 81(1) EC includes a list of examples of practices that are normally
caught by the prohibition on anti-competitive agreements and concerted
practices. The list is by no means exhaustive, but provides a useful
summary of the main types of behaviour that are considered to fall foul of
Article 81(1) EC.

Article 81(1)(a): fixing of prices and trade conditions

Price fixing is a particularly objectionable practice with reference both to
horizontal and vertical agreements.132 In its decision in the Quinine
cartel,133 the Commission explained that price fixing is anti-competitive
because it restricts price competition between the members of the cartel.134

130
Decision 68/376/EEC, OJ [1968] L 276/25, [1968] CMLR D78.
131
See Chapter 1, section 1.7.2.
132
This is reflected in the Notice on Minor agreements of the Commission, where even
undertakings whose market shares fall below the established thresholds may fall within
the scope of Article 81(1) EC if they have entered into price-fixing agreements – either
vertical or horizontal; see supra n. 86.
133
Decision 69/240, OJ [1969] L 192/5, [1969] CMLR D41.
134
See also Case 73/74 Papiers Peints v. Commission (supra n. 78) at paragraphs 6–12 of the
judgment; Case 246/86 Belasco v. Commission (supra n. 25), at paragraph 12 of the
judgment, and the Decision of the Commission in Re FEG and TU [2000] 4 CMLR 1208, at
paragraphs 133–4 of the decision.
 Anti-competitive agreements, decisions, practices 41

In that case, the principal producers of quinine in the Common Market

had jointly agreed, inter alia, on uniform price increases for the sale of
quinine in that territory. The Commission pointed out the unfavourable
effects of those price increases for consumers, who had been deprived of
the possibility of obtaining supplies at lower prices.135 The prohibition of
price fixing at the horizontal level also extends to the fixing of minimum
prices136 and target prices,137 to the adoption of a common rebate or
discount policy138 and to indirect price fixing such as secret exchanges of
price information.139
In the context of vertical restraints, price fixing also comes under Article
81(1) EC. The most typical example is resale price maintenance (RPM),
whereby a supplier imposes on the distributor or retailer the resale price
for the contract goods.140 This has been duly reflected in Article 4(a) of the
new umbrella block exemption regulation on vertical restraints.141 That
provision deprives from the benefit of the exemption vertical agreements
that have as their direct or indirect object the fixing of a minimum resale
price or a fixed or minimum price level to be observed by the buyer.142
The fixing of other trading conditions is also prohibited by Article 81(1)
EC. Examples of this practice include the setting out of a common sales
policy or of common sales conditions. An early example of a common sales
policy is the decision of the Commission in Re French and Taiwanese
Mushrooms.143 In that instance, the Commission applied Article 81(1) EC to
an agreement between the principal French and Taiwanese producers of
mushrooms who agreed to coordinate their sales policy in Germany by
observing an annual export quota and a pricing policy and to provide each
135
Ibid., at paragraph 23 of the Decision.
136
Case 123/83 BNIC v. Blair (supra n. 75), at paragraph 26 of the judgment.
137
Case 8/72 Cementhandelaren (supra n. 74), at paragraphs 21–2 of the judgment. The Court
held that the fixing of a target price ‘… affects competition because it enables all the
participants to predict with a reasonable degree of certainty what the pricing policy
pursued by their competitors will be’.
138
Joined Cases 209–215 and 218/78 Van Landewyck v. Commission (supra n. 9). In that case, an
association of tobacco manufacturers issued a recommendation that set out an end-of-
year rebate to be paid to wholesalers and retailers. In the Commission’s view, that system
‘stifled all competition between the manufacturers … inasmuch as it removed the
incentive for intermediaries to make greater competitive efforts with a view to obtaining
improved benefits or to take their custom exclusively to a given manufacturer and made
it more difficult for manufacturers desirous of penetrating the market to do so’ (at
paragraph 144 of the judgment).
139
Case 66/86 Ahmed Saeed v. Zentrale zur Bekämpfung Unlauteren Wettbewerbs [1989] ECR
803, [1990] 4 CMLR 102, at paragraph 27 of the judgment.
140
Case 243/83 Binon v. Agence et messageries de la presse (supra n. 18), at paragraph 44 of the
judgment.
141
See Article 4(a) of Regulation 2790/99 (supra n. 95).
142
See paragraph 47 of the Guidelines on vertical restraints issued by the Commission on 20
May 2000 (OJ [2000] C 291/1, [2000] 5 CMLR 1074).
143
Commission Decision 75/77, OJ [1975] L 29/26, [1975] 1 CMLR D83.
42 EC Competition Law and Policy

other with all information relevant to the establishment and monitoring of

sales quotas for Germany. An example of the imposition of common sales
conditions is Van Landewyck v. Commission,144 where the fixing of uniform
maximum terms of payment by the members of an association of tobacco
manufacturers was held to be anti-competitive.145

Article 81(1) (b): limitation or control of production, markets, technical

development or investment
Agreements to limit or control production often appear in combination
with price fixing agreements as a means of supporting price controls. In Re
Italian Cast Glass,146 three Italian manufacturers of cast glass had agreed,
inter alia, to fix sales quotas for the Italian market. The Commission took
the view that such production quotas fell foul of Article 81(1) EC because
the agreement aimed to stabilise the production of those undertakings and
to enable them to protect the prices of their products.147
Research and development agreements may come under Article 81(1)
EC when they are agreed between competitor companies in either existing
technology markets or innovation markets,148 but they have frequently
benefited from automatic exemption under the block exemption regu-
lation on research and development agreements149 or given individual
exemption.150 Agreements that limit technological development or invest-
ment, however, are caught by Article 81(1) EC. For example, in Belasco v.
Commission151 the members of an association of roofing felt manufacturers
agreed, inter alia, on measures for the standardisation of their products.
The Court took the view that such measures were restrictive of com-
petition because they aimed to prevent the members from differentiating
their products and to obviate competition between them.152
Also relevant to limits on production are the so-called crisis cartels. The
term refers to agreements between undertakings – in industries suffering
from overcapacity and operating losses – as a means of reducing pro-

144
Joined Cases 209–215 and 218/78, supra n. 9. For a summary of the main facts, see supra
section 2.2.1.
145
Ibid., at paragraph 155 of the judgment.
146
Commission Decision 80/1334/EEC, OJ [1980] L 383/19, [1982] 2 CMLR 61.
147
Ibid., at paragraph 45. See also the Decision of the Commission in Re the Zinc Producer
Group (Commission Decision 84/405/EEC, OJ [1984] L 220/27, [1985] 2 CMLR 108),
where a group of zinc producers agreed on the prices that they would charge and to keep
within collectively agreed and allocated production quotas.
148
See the Commission Guidelines on the applicability of Article 81 EC to horizontal co-
operation, at paragraph 2.3.1.3 (OJ [2001] C 3/2).
149
See the new Commission Regulation on the application of Article 81(3) EC to categories of
research and development agreements, Regulation 2659/2000, supra n. 97.
150
See Wish, op. cit., at pp. 442–43.
151
Case 246/86, supra n. 25. For a summary of the facts, see supra section 2.2.1.
152
Ibid., at paragraph 30 of the judgment.
 Anti-competitive agreements, decisions, practices 43

duction so that the remaining capacity can be operated at a more

economical level. This was the case in Re Synthetic Fibres,153 where a group
of undertakings entered into such an agreement in order to combat the
overcapacity resulting from rapid technological advances and the trend
towards stationary demand in the market for synthetic fibres. Although in
principle that limitation of capacity came under Article 81(1) EC, because it
amounted to a restriction on investment,154 the Commission exempted the
agreement,155 after weighing up the economic and consumer benefits to
the market of synthetic fibres.156 Those benefits included the possibility of
eliminating heavy financial burdens, of keeping under-utilised capacity
available, of achieving a greater degree of specialisation and of improving
the quality of products. The Commission took the view that after the
restructuring of the industry, the undertakings would emerge more
profitable and competitive.157

Article 81(1)(c): sharing of markets or sources of supply

Market sharing agreements, like price fixing agreements, are dealt with
severely by the Commission and they invariably fall foul of Article 81(1)
EC.158 The reason why the Commission regards market sharing as
particularly harmful is twofold. First, such practice is clearly anti-com-
petitive because it allows undertakings, freed from any competitive
challenge, to charge high prices in their home markets, and because it
limits consumers in the choice of sources of supply. Secondly, it is inimical
to the idea of a common market, as it reinforces the division of markets
along national lines.
Competitors occasionally resort to market sharing in a bid to divide
either territories or customers among themselves. For example, in Re Soda
Ash159 the Commission investigated the activities of ICI and Solvay, the
153
Commission Decision 84/380/EEC, OJ [1984] L 207/17, [1985] 1 CMLR 787.
154
Ibid., at paragraph 26 of the Decision.
155
Ibid., at paragraphs 28–52 of the Decision.
156
The Commission, however, also ordered the deletion of certain clauses in that agreement,
which seemed unreasonably restrictive and were not necessary to achieve the aim of the
agreement, which was to rationalise the production process (see paragraph 19 of the
Commission Decision, supra n. 153). The approach of the Commission to crisis cartels is
outlined in the XIIth Report on Competition Policy [1982] (points 38–41) where the
Commission pointed out that such arrangements ‘… [C]an only be condoned if they are
aimed solely at achieving a co-ordinated reduction of overcapacity and do not in any
other way restrict the commercial freedom of the firms involved’.
157
Ibid. See also the Commission Decision in Stichting Baksteen (OJ [1994] L 131/15, [1995] 4
CMLR 646) and the decision of the Court of First Instance in Tréfilunion v. Commission
(supra n. 110, at paragraphs 116–17 of the judgment).
158
See the Notice on Minor agreements (supra section 2.2.2), where horizontal market sharing
agreements and vertical agreements that aim to secure territorial protection are given the
same treatment as price fixing agreements.
159
Commission Decision 91/297/EEC, OJ [1991] L 152/1, [1994] 4 CMLR 454.
44 EC Competition Law and Policy

two leading producers of soda ash within the Community. The Com-
mission concluded that a concerted practice had taken place between the
two companies, whereby ICI confined its activities to the United Kingdom
and Ireland, and Solvay to the continent. The facts at issue in Atka v. BP
Kemi/Danske Spritfabrikker160 constitute a good example of the sharing of
customers between competitors. In that instance, two Danish companies
agreed which customers each was to supply. The Commission took the
view that such customer allocation was contrary to Article 81 EC because it
hindered any competition between the companies and was detrimental to
consumers.161
The rigorous approach of the Commission to territorial protection
extends also to vertical agreements. Its decision in Re Volkswagen162 is very
illustrative. In that case, Volkswagen had imposed an export ban on its
Italian distributors. The system was enforced by means of penalties and by
prohibiting cross-supplies with other Volkswagen dealers in the Common
Market. The Commission took the view that the measures were clearly
anti-competitive because their effect was to partition the market and that,
by eliminating the Italian market as a source of imports, dealers in other
Member States could charge higher prices. Another clear example is the
decision of the Court in Consten and Grundig v. Commission,163 discussed
above.164 The new block exemption on vertical restraints165 also reflects
concerns to prevent territorial protection. Thus, Article 4(b) of the
Regulation withdraws the benefit of the exemption from vertical
agreements that provide for the restriction of the territory into which, or of
the customers to whom, the buyer may sell contract goods or services.

Article 81(1)(d): discriminatory trading conditions

Horizontal and vertical agreements that lay down discriminatory trading
conditions are always caught by Article 81 EC unless there is an objective
justification for that unequal treatment. In Re German Ceramic Tiles,166 the
German association of producers of ceramic tiles concluded a joint
discount agreement. Under the terms of that agreement, a sliding-scale
discount was to be given to purchasers on the basis of their total purchases
from all the producers belonging to the association. The Commission held
that Article 81(1) EC applied to the agreement because it resulted in
different treatment of trading partners for equivalent services. Thus
German purchasers would have a much greater incentive to buy ceramic
160
Decision 79/934/EEC, OJ [1979] L 286/32, [1979] 3 CMLR 684.
161
Ibid., at paragraph 80 of the decision.
162
Decision 98/273, OJ [1998] L 124/60, [1998] 5 CMLR 333.
163
Joined Cases 56 and 58/64, supra n. 22.
164
See supra section 2.2.3.
165
Regulation 2790/1999, supra n. 95.
166
Commission Decision 71/23/EEC, OJ [1971] L 10/15, [1971] CMLR D6.
 Anti-competitive agreements, decisions, practices 45

tiles consistently from members of the association rather than from non-
German producers.167 In Re Pittsburgh Corning Europe,168 an American
company – Pittsburgh Corning Europe (PCE) – and its Belgian and Dutch
concessionaires agreed on a discriminatory pricing arrangement intended
to protect the German subsidiary of PCE. For some years, the prices
charged for cellular glass by the German subsidiary of PCE were
substantially higher than those charged by PCE concessionaires in other
Member States. In order to prevent parallel imports of cellular glass into
Germany, PCE issued new price lists for its Belgian and Dutch con-
cessionaires. The new prices were high enough to render parallel imports
into Germany unfeasible, but a rebate of 20 per cent would be given if it
could be shown that the contract goods were destined for work sites in
Belgium or Holland. The Commission took the view that the arrange-
ments amounted to a (vertical) concerted practice between PCE and its
Dutch and Belgian concessionaires, with a clear anti-competitive object
because it sought to prevent imports of cellular glass at better prices from
Belgium and Holland.169

Article 81(1)(e): tie-in clauses

Tie-in clauses are those which oblige one of the contracting parties to
accept supplementary obligations – i.e. other goods or services – un-
connected with the subject of an agreement. In Windsurfing International,170
the Commission explained why a tie-in clause is anti-competitive. In that
case, Windsurfing International, the patent holder of a rig used in a
sailboard, licensed a number of companies to produce and sell the rigs.
One of the clauses in the licensing agreement stipulated that the rigs – the
subject of the contract – could only be sold in conjunction with sailboards
approved by Windsurfing. The Commission took the view that such a
clause was restrictive of competition for two reasons: first, because it
limited the freedom of licensees to produce their own sailboards or sell
only rigs to third parties; secondly, because it prevented other sailboard
manufacturers from supplying their boards to the licensees.171

167
Ibid., at paragraph 2(b) of the Decision.
168
Decision 72/403/EEC, OJ [1972] L 272/35, [1973] CMLR D2.
169
Ibid., at paragraph 15 of the Decision. See also the decision of the Commission in Re Kodak
(Decision 70/332, OJ [1970] L 147/24, [1970] CMLR D19).
170
Commission Decision 83/400/EEC, OJ [1983] L 229/1, [1984] 1 CMLR 1.
171
Ibid., at paragraph 82 of the Decision. See also the judgment of the Court (Case 193/83
Windsurfing International v. Commission, supra n. 79, at paragraph 56 of the judgment). In
its judgment (at paragraph 57), the Court indicated that the only possible justification for
the imposition of that obligation would have been that the proper exploitation of the
patent would have been impossible unless the rigs were mounted only on certain
sailboards. This was later reflected in Article 2(5) of the Technology Transfer Agreements
Regulation (Regulation 240/96, OJ [1996] L 31/2).
46 EC Competition Law and Policy

2.3 Article 81(2) EC: the sanction

Article 81(2) EC provides that any agreement, decision or concerted

practice that fulfils the conditions in Article 81(1) EC will be void
automatically. The Court has explained that the nullity referred to in
Article 81(2) EC is an absolute one; therefore an agreement that is void by
virtue of that provision has no effect as between the contracting parties
and cannot be enforced against third parties.172 This sanction of nullity
provided in Article 81(2) EC raises the important question of severance.
Can an agreement containing prohibited clauses stand after the deletion of
those clauses, or would the nullity of those clauses vitiate the agreement as
a whole? The approach of the Court has been that this is a matter for
national law and not for Community law to decide.173
In the framework of vertical agreements, the new umbrella block
exemption regulation on vertical restraints,174 has taken the novel step of
distinguishing between two sets of clauses restrictive of competition that
occur in vertical agreements. On the one hand, Article 4 of the regulation
refers to hardcore restrictions that per se are non-severable from the rest of
an agreement, e.g. resale price maintenance. If one of these restrictions
appears in a certain agreement, that clause cannot be severed from the rest
of the agreement and the whole agreement will automatically fall outside
the scope of the block exemption.175 On the other hand, Article 5 lists some
restrictive clauses that are severable from the rest of the agreement
e.g. non-compete obligations exceeding five years. Should one of these
clauses appear in a given agreement, then the remainder of the agreement
may still benefit from the block exemption after the deletion of that
clause.176

2.4 Article 81(3) EC: exemptions

As seen above, an agreement or concerted practice that fulfils all the

conditions laid down in Article 81(1) EC would in principle be null and

172
Case 22/71 Béguelin v. Import Export [1971] ECR 949, [1972] CMLR 81, at paragraph 29 of
the judgment.
173
Thus, the Court has explained that ‘it is for the national court to decide in accordance with
the relevant national law the extent and consequences, for the contractual relations as a
whole, of the nullity of certain contractual provisions by virtue of Article 85(2) [now 81(2)]
EC’ (Case 10/86 V.A.G. France v. Etablissements Magne SA [1988] 4 CMLR 98, at
paragraphs 14–15 of the judgment; see also Case 319/82 Société de Vente de Ciments et
Bétons de l’est v. Kerpen & Kerpen [1983] ECR 4173, [1985] 1 CMLR 511).
174
Regulation 2790/99, supra n. 61.
175
See Guidelines of the Commission on vertical restraints, supra n. 142, at paragraph 46.
176
Ibid., at paragraph 57.
 Anti-competitive agreements, decisions, practices 47

void. The third paragraph of Article 81 EC, however, allows the

prohibition set out in Article 81(1) to be declared inapplicable to an
agreement or concerted practice on account of its beneficial effects.

2.4.1. Power to grant exemptions

Although Article 81 EC is silent on this point, Article 9(1) of Regulation
17/62,177 the first regulation implementing Articles 81 and 82 EC, states
that the Commission has the sole power to grant exemption, subject to
review by the Court of Justice. As the Commission itself has explained,
that exclusive power was initially necessary to ensure the coherent and
uniform development of the interpretation and application of Article 81(3)
EC.178 In its new White Paper on Modernisation of the Rules Implementing
Articles 85 (now 81) and 86 (now 82) EC, the Commission has outlined a
radical programme of reform aimed at decentralising the application of
Article 81(3) EC. If this programme is carried through, Article 81(3) EC
would be rendered directly applicable by national courts and national
authorities. This does not mean that national courts and authorities would
issue decisions granting exemptions, but that they would be able to apply
the conditions in Article 81(3) EC when considering an agreement. In other
words, Article 81 EC as a whole would become directly effective and would
be applied by national courts and authorities just as they already apply
Article 82 EC.179

2.4.2. Types of exemption

Article 81(3) EC allows for two kinds of exemption. First, there are
individual exemptions, which are those granted for a particular agreement,
decision or concerted practice. Secondly, there are block exemptions, which
are provided for categories of agreements, decisions or concerted practices.
The Council enacted Regulations 19/65180 and 2821/71,181 enabling the
Commission to adopt block exemption regulations in pursuance of Article
81(3) EC concerning, respectively, certain types of vertical and horizontal
agreements.182 The system of block exemption regulations adopted by the
Commission is examined in section 2.4.5.

177
OJ Sp. Ed. [1962], 204/62, p. 87.
178
See White Paper on Modernisation of the Rules Implementing Articles 85 (now 81) and 86 (now
82) OJ [1999] C 132/1, at paragraph 17. See also the 7th recital in the Preamble to
Regulation 17.
179
See infra Chapter 4, section 4.4.1.
180
OJ Sp. Ed. [1965] 35.
181
OJ Sp. Ed. [1971] 1032.
48 EC Competition Law and Policy

2.4.3. Conditions for the granting of an exemption

There are two positive and two negative conditions that need to be
fulfilled for an agreement or concerted practice to benefit from exemption.
The two positive conditions are: (a) that the agreement must contribute to
the improvement, production or distribution of goods, or promote
technical progress, and (b) that it must allow consumers a fair share of the
resulting benefit. The two negative conditions are: (a) that the agreement
can only impose restrictions of competition which are indispensable to the
attainment of these benefits, and (b) that it should not afford the
undertakings concerned the possibility of eliminating competition in
respect of a substantial proportion of the products in question. These four
conditions are cumulative183 and, therefore, they all need to be satisfied for
the agreement to be exempted. They are, moreover, drafted in very general
terms, and the Commission has a very wide margin of discretion in their
application, as the Court of Justice has repeatedly emphasised.184 In the
case of individual exemptions, the Commission considers whether the
four requirements are satisfied in a specific agreement. In the case of block
exemptions, the Commission carries out that analysis generically for a
group of agreements (i.e. vertical agreements) and sets it out in the pre-
amble to the block exemption regulation.185

Positive conditions
How has the Commission interpreted the criteria laid down in Article
81(3) EC? The best way to illustrate its approach is by considering an
example where the Commission granted an individual exemption.
In Re Bayer & Gist-Brocades186 a series of specialisation agreements con-
cluded between Bayer, a German pharmaceutical company, and Gist-
Brocades, a Dutch company, were notified to the Commission.187 Under
the terms of the agreements, each of the firms had agreed to give up part of
its business in favour of the other. Thus Bayer undertook not to expand its
raw penicillin plant whereas Gist-Brocades undertook not to expand its 6-
aminopenicillanic acid (6-APA) plant. In return for financial assistance and
a long-term purchase agreement, Gist-Brocades agreed to expand its raw
penicillin plant and Bayer did the same in relation to its 6-APA plant. The
182
Regulation 1534/91 (OJ [1992] L 398/7) also allowed the Commission to enact block
exemption regulations in the insurance sector.
183
See Joined Cases 43/82 and 63/82 VBVB and VBBB v. Commission [1984] ECR 19, [1985] 1
CMLR 27, at paragraph 61 of the judgment, and Joined Cases T-39/92 and T-40/92 CB
and Europay v. Commission [1994] ECR II-49, at paragraph 110 of the judgment.
184
See Joined Cases T-39/92 and T-40/92, supra n. 183, at paragraph 109 of the judgment.
185
See, for example, Recitals 6 to 12 in the Preamble of Regulation 2790/99 (supra n. 61).
186
OJ [1976] L 30/13, [1976] 1 CMLR D98.
187
The Decision of the Commission was taken prior to the adoption of the first block
exemption on specialisation agreements (Regulation 417/85, OJ [1985] L 53/1).
 Anti-competitive agreements, decisions, practices 49

Commission took the view that such specialisation agreements were

restrictive of competition because the two companies had effectively
agreed not to compete with each other in the manufacture of the products
that each one assigned to the other when they could have continued to
produce them.188 The agreements did therefore fall, in principle, within the
scope of Article 81(1) EC. The Commission then went on to consider
whether the agreements could merit an exemption.
The Commission considered that the first positive condition, con-
tribution to economic progress, would only be fulfilled in those cases
where fair and undistorted competition is unable to produce the best
economic result or, in other words, in those cases where a restrictive
agreement is an improvement on the situation that would otherwise have
existed.189 It explained that, given that Bayer produced low-quality raw-
penicillin, the improvement and expansion of its raw penicillin plant was
not as economical as a jointly financed expansion of Gist-Brocades, raw
penicillin plant. At the same time, the agreements would enable Bayer to
concentrate its efforts on manufacturing 6-APA in more modern
conditions.190 The Commission therefore concluded that the agreements
contributed to the improvement of production.191
The Commission then turned to consider the second positive condition,
namely whether the agreements in question allowed consumers to enjoy a
fair share of the resulting benefits. This requirement was also satisfied. The
agreements would lead to an increase of production of both raw penicillin
and 6-APA, and to a drop in prices. As a result, other firms without raw
material production facilities would be able to produce larger quantities of
penicillin specialities in competition with those produced by Bayer and
Gist-Brocades.192 Finally, there would be an increase in the number of end-
products and a downward trend in prices, which would obviously benefit
the consumers.

Negative conditions
The first negative condition in Article 81(3) EC is a reflection of an
important principle in the Community legal order: the principle of
188
Ibid., at paragraphs 50–5 of the Decision.
189
Ibid., at paragraph 57 of the Decision.
190
Ibid., at paragraph 59 of the Decision.
191
As explained above, the Commission has broad discretion in ascertaining whether an
agreement produces economic benefits. There is evidence in some decisions that the
Commission, in applying this requirement, has taken into account social considerations,
i.e. the preservation of jobs (see Case 42/84 Remia v. Commission [1985] ECR 2545, [1987] 1
CMLR 1, at paragraph 42 of the judgment), or environmental ones. See Re Arssupol, which
concerned a co-reinsurance agreement for the covering of certain environmental damage
risks, (Commission Decision 92/96/EEC, OJ [1992] L 37/16, [1993] 4 CMLR 338 at
paragraph 38 of the agreement).
192
Ibid., at paragraph 60 of the Decision.
50 EC Competition Law and Policy

proportionality.193 It states that only restrictive clauses that are strictly

necessary to the attainment of the economic and consumer benefits
described above will be permitted.
The second negative condition, i.e. that an agreement should not afford
the participants the possibility of eliminating competition in respect of a
substantial part of the products in question, involves first the definition of
the relevant market and secondly the consideration of the market shares of
the undertakings involved. In Van Landewyck,194 a Belgian trade association
of tobacco manufacturers sought exemption for a recommendation issued
by the association which provided, inter alia, for the concerted setting of
credit facilities for customers and for measures to ensure a system of
minimum prices. In considering the second negative condition in Article
81(3) EC, the Commission explained that the members of the association
produced or imported 95 per cent of the cigarettes sold in Belgium and
that cigarette sales in Belgium were represented by only 10 brands, largely
marketed by members of the association. It was therefore clear that the
recommendation could potentially eliminate competition in relation to a
substantial proportion of the products in question.195
It follows from the consideration of the four conditions set out in Article
81(3) EC that the Commission carries out a careful balancing exercise in
deciding whether or not these conditions are met. The Commission has, in
short, to decide whether an agreement or concerted practice produces
overall benefits that compensate for the restrictions it imposes in the free
play competition, and whether the restrictions are really necessary for the
achievement of those benefits. That assessment is a complex one and it
requires a detailed economic analysis, which the Court is reluctant to
scrutinise unless the Commission decision involves a manifest error in fact
or in law, or a misuse of powers.196

2.4.4. The requirement of notification of agreements in order to

qualify for individual exemption
In the current system, agreements need to be notified to the Commission
in order to be considered for individual exemption. This is set out in

193
The principle of proportionality entails that limitations on basic freedoms will only be
tolerated to the extent that they are necessary to achieve certain legitimate objectives (see
Case 66/82 Fromançais v. Forma [1983] ECR 395, [1983] 3 CMLR 453, and Case C-331/88
Fedesa [1990] ECR I-4023). The principle has been widely used as a ground for review of
EC legislation (Case 114/76 Bela-Mühle [1977] ECR 121, [1979] 2 CMLR 83) and as a
ground for review of national measures derogating from the EC Treaty freedoms (Case
40/82 Commission v. UK (Newcastle disease) [1982] ECR 2793, [1982] 3 CMLR 497).
194
Joined Cases 209–215 and 218/78, supra n. 9.
195
Ibid., at paragraphs 188–9 of the judgment.
196
See Joined Cases T-39/92 and T-40/92, supra n. 183, at paragraph 109 of the judgment.
 Anti-competitive agreements, decisions, practices 51

Article 4(1) of Regulation 17/62.197 Until an agreement is notified, the

Commission cannot adopt a decision under Article 81(3) EC.198 There is,
however, no need to notify an agreement that falls within the scope of a
block exemption regulation. The agreement receives an automatic
exemption.
The centralised system of notifications imposed a crushing adminis-
trative burden on the Commission, which soon faced an increasing
backlog of cases waiting to be considered for individual exemption. The
Commission took steps to reduce the number of notifications, such as the
Notice on minor agreements,199 the block exemption regulations, the so-
called ‘comfort letters’,200 and the notices on cooperation between the
Commission and the national courts201 and between the Commission and
national competition authorities.202 These proved to be helpful but
insufficient. The most radical proposal so far, however, is the White Paper
of the Commission on the modernisation of the rules implementing
Articles 81 and 82 EC. It suggests the abolition of the system of notifi-
cations and its replacement by a system in which Article 81(3) EC would be
directly applicable by national courts and national authorities. This system
would imply that agreements that fall within the Article 81(1) EC
prohibition, but which fulfil the conditions in Article 81(3) EC, would be
valid from the time they are concluded, without the need to notify the
agreement. Unlike the system of notifications, which is a centralised and ex
ante method of control, the system of directly applicable exception
suggested in the White Paper is a decentralised system of control that
would allow for an ex post supervision of restrictive practices by the
national courts and national authorities. The Commission would then be
allowed to concentrate its efforts and resources on policy aspects and on
the consideration of the most serious infringements of EC competition
law.203

2.4.5. Block exemption regulations

The Council enacted three basic regulations empowering the Commission
to adopt block exemption regulations for certain categories of agreements.
These are Council Regulation 19/65 for vertical agreements,204 Council

197
See supra n. 177.
198
Article 4(1) of Regulation 17/62.
199
See supra section 2.2.2.
200
See infra Chapter 4, section 4.2.1 (Phase five).
201
OJ [1993] C 39/6, [1993] 5 CMLR 95 and infra Chapter 4, section 4.3.
202
OJ [1997] C 313/3 [1997] 5 CMLR 884 an infra Chapter 4, section 4.3.
203
On the reforms suggested by the White Paper, see Chapter 4, section 4.4.1.
204
See supra n. 180.
52 EC Competition Law and Policy

Regulation 2821/71205 for horizontal agreements and Council Regulation

1534/91206 for insurance agreements.
On the basis of Council Regulation 19/65, the Commission adopted five
block exemption regulations concerning vertical agreements: Regulation
1983/83 on exclusive distribution agreements,207 Regulation 1984/83 on
exclusive purchasing agreements,208 Regulation 4087/88 on franchise
agreements,209 Regulation 1475/95 on motor vehicle distribution and
servicing agreements210 and Regulation 240/96 on technology transfer
agreements.211 There was no general block exemption covering selective
distribution agreements212 and those agreements were considered in the
light of the guidelines set out by individual Commission decisions and by
the case law.213
205
See supra n. 181.
206
See supra n. 182.
207
OJ [1983] L 173/1, as amended by Regulation 1582/97 (OJ [1997] L 214/2). An exclusive
distribution agreement is one ‘to which only two undertakings are party and whereby one
party agrees with the other to supply certain goods for resale within the whole or defined
area of the Common Market only to that other’ (Article 1 of Regulation 1983/83).
208
OJ [1983] L 173/5, as amended by Regulation 1582/97 (supra n. 207). An exclusive
purchasing agreement is one ‘to which only two undertakings are party and whereby one
party, the reseller, agrees with the other, the supplier to purchase certain goods specified
in the agreement for resale only from the supplier or from a connected undertaking or
from another undertaking which the supplier has entrusted with the sale of his goods’
(Article 1 of Regulation 1984/83). Initially, there was only one block exemption regulation
on exclusive dealing agreements (Regulation 67/67, OJ Eng. Sp. Ed. [1967], 10), which
was replaced by Regulation 1983/83 and Regulation 1984/83, on exclusive distribution
and exclusive purchasing respectively.
209
OJ [1988] L 359/46. A franchise agreement is one ‘whereby one undertaking, the
franchiser, grants the other, the franchisee, in exchange for direct or indirect financial
consideration, the right to exploit a franchise for the purposes of marketing specified
types of goods and/or services’ (Article 1(3)(b) of Regulation 4087/88). A franchise is
defined as a ‘package of industrial or intellectual property rights relating to trade marks,
trade names, shop signs, utility models, designs, copyrights, know-how or patents, to be
exploited for the resale of goods or the provision of services to end users’ (Article 1(3)(a)
of Regulation 4087/88).
210
OJ [1995] L 145/25. A motor vehicle distribution and servicing agreement is ‘an
agreement to which only two undertakings are party and in which one contracting party
agrees to supply within a defined territory of the Common Market only to the other party,
or only to the other party and to a specified number of undertakings within the
distribution system, for the purpose of resale of certain motor vehicles intended for use on
public roads and having three or more road wheels together with spare parts therefor’
(Article 1 of Regulation 1475/95).
211
OJ [1996] L 31/2. The term ‘technology transfer agreements’ ‘encompasses patent and
know-how licensing agreements, namely ‘agreements where one undertaking which
holds a patent or know-how (‘the licensor’) permits another undertaking (‘the licensee’)
to exploit the patent thereby licensed, or communicates the know-how to it, in particular
for purposes of manufacture, use or putting into the market’ (5th recital of the Preamble of
Regulation 240/96).
212
For a definition of a selective distribution agreement, see supra n. 61.
213
See infra section 2.5.
 Anti-competitive agreements, decisions, practices 53

On the basis of Council Regulation 2821/71, the Commission adopted

Regulation 417/85 on specialisation agreements214 and Regulation 418/85
on research and development agreements.215
The typical structure of these block exemption regulations consisted of:
(a) a white list: clauses commonly found in agreements which are
restrictive of competition but which are exempted;216 (b) a black list: clauses
which are restrictive of competition and which do not benefit from the
exemption.217 In some block exemption regulations, provision is made for
an opposition procedure that allows certain clauses to be notified to the
Commission and gives the Commission a certain time limit to decide that
the clauses do not benefit from the exemption. If the Commission keeps
silent, the clauses will benefit from the exemption.218
The advent of the block exemption regulations eased to some extent the
pressure on the Commission due to the large number of notifications of
agreements seeking individual exemption. As seen above, agreements
falling squarely within the scope of the block exemption automatically
benefited from the exemption, without the need for prior notification.
National courts and national authorities were therefore able to ascertain
whether the terms of an agreement complied exactly with the white clauses
in the relevant block exemption regulation. If they did, the agreement
would benefit from the exemption. If they did not, or some clauses were
black clauses, the benefit of the exemption was removed. It then fell to the
parties either to modify the agreement to bring it within the scope of the
block exemption or to notify the Commission in order to obtain an indi-
vidual exemption. As a result, the Commission still received many
214
OJ [1985] L 53/1, as amended by Regulation 2236/97 (OJ [1997] L 306/12). A
specialisation agreement was defined as one ‘whereby, for the duration of the agreement,
undertakings accept reciprocal obligations: (a) not to manufacture certain products or
have them manufactured, but leave it to other parties to manufacture or have them
manufactured or (b) to manufacture certain products or have them manufactured only
jointly’ (Article 1 of Regulation 417/85). The new block exemption regulation on
specialisation agreements provides a similar definition (see Article 1 of Regulation 2658/
2000, OJ [2000] L 304/3, [2001] 4 CMLR 800).
215
OJ [1985] L 53/5, as amended by Regulation 2236/97 (OJ [1997] L 306/12). A research and
development agreement is ‘one entered into between undertakings for the purpose of: (a)
joint research and development of products or processes and joint exploitation of the
results of that research and development; or (b) joint exploitation of the results of research
and development of products or processes jointly carried out pursuant to a prior
agreement between the same undertakings; or (c) joint research and development of
products or processes excluding joint exploitation of the results, in so far as such
agreements fall within the scope of Article [81](1)’ (Article 1 of Regulation 418/85). The
new block exemption regulation on research and development agreements provides a
similar definition (see Article 1 of Regulation 2659/2000, OJ [2000] L 304/7, [2001] 4
CMLR 808).
216
See, for example, Article 2 of Regulation 1983/83, supra n. 207.
217
See, for example, Article 3 of Regulation 1984/83, supra n. 208.
218
See, for example, Article 6 of Regulation 4087/88, supra n. 209.
54 EC Competition Law and Policy

notifications for agreements that did not conform precisely to the terms of
the block exemptions. The system of block exemptions had, moreover,
other important drawbacks, notably this excessive formalism and straight-
jacket effect, and insufficient emphasis on economic analysis.
In 1997, the Commission initiated a radical process of reform in the field
of vertical restraints that has culminated in the adoption of a new umbrella
block exemption regulation, Regulation 2790/99,219 and of the Guidelines
on vertical restraints that set out the principles for the assessment of
vertical restraints.220 The regulation has replaced the current system of
different block exemptions for different categories of vertical agreements
and covers all vertical agreements that would normally fall within the
scope of Article 81(1) EC.221 The regulation was adopted in December 1999,
entered into force on 1 June 2000 and will remain valid for a period of 10
years.222 Agreements in force on 31 May 2000 that satisfied the conditions
of the previous block exemption regulations – Regulation 1983/83,
Regulation 1984/83 and Regulation 4087/88 – will continue to have the
benefit of the exemption until 31 December 2001.223 The process of reform
undertaken by the Commission and the new regulation itself are ex-
amined in detail in section 2.4.6.
In the field of horizontal agreements, the Commission carried out a
similar process of reform that culminated in the adoption, in November
2000, of two new block exemption regulations on specialisation agree-
ments224 and on research and development agreements.225 A set of guide-
lines on horizontal agreements followed in January 2001.226

2.4.6. The process of reform of the Commission’s policy

on vertical restraints
Four preparatory steps
The new Commission regulation was preceded by four landmarks that
progressively outlined the reform of vertical restraints. These steps are
now only of historical importance, but they are essential to an
understanding of the way in which the Commission’s policy was shaped.

219
See supra n. 61.
220
See supra n. 142.
221
The only exceptions are those vertical agreements expressly excluded from the scope of
the Regulation. See Articles 2(2), 2(3), 2(4), and 2(5) of the Regulation.
222
See Article 13 of Regulation 2790/99.
223
See Article 12 of Regulation 2790/99.
224
Regulation 2658/2000, supra n. 96.
225
Regulation 2659/2000, supra n. 97.
226
OJ [2001] C 3/2, [2001] 4 CMLR 819.
 Anti-competitive agreements, decisions, practices 55

Step I : The 1997 Commission’s Green Paper on Vertical Restrants227

In its Green Paper, the Commission launched a radical review of its policy
on vertical restraints. That review was timely because the existing block
exemption regulations were about to expire and they were outdated given
changes in the traditional methods of distribution that resulted from the
information technology revolution. The Commission set out in the Green
Paper the results of recent economic analysis suggesting that it could not
be assumed that vertical restraints per se were either beneficial or detri-
mental to competition, but rather that market structure was crucial in
determining the impact of vertical restraints. Vertical agreements could
have both pro-competitive effects (through the reduction in transaction
and distribution costs) and anti-competitive effects (through restrictive
clauses), and the Commission was required to balance the two in order to
establish a coherent policy on vertical restraints. The Green Paper
suggested that the question of whether the pro-competitive effects out-
weighed the anti-competitive effects would largely depend on the
economic power of the undertakings involved. As the Commission
explained, ‘the fiercer is inter-brand competition, the more likely are pro-
competitive and efficiency effects to outweigh any anti-competitive effects
of vertical restraints. Anti-competitive effects are only likely where inter-
brand competition is weak and there are barriers to entry at either
producer or distributor level’.228
Following interviews with the socio-economic operators concerned –
i.e. manufacturers, retailers, trade and consumer associations, etc. – the
Commission established the key drawbacks of the system of block
exemptions that had been in place since the 1980s. Essentially, these block
exemptions were too rigid and legalistic. Thus, unless the clauses of an
agreement fell squarely within the white list in the relevant block
exemption, the benefit of the exemption was removed. Naturally, the
presence of black-listed clauses also meant the agreement was outside the
scope of a block exemption. Clauses in the agreement that did not cor-
respond to those set out in the regulation had to be notified to the
Commission in order to be considered for individual exemption.229
Moreover, the block exemptions did not take account of the market shares
of the undertakings participating in agreements. Agreements conforming
to the terms of a block exemption were exempted irrespective of the
market power of the contracting parties, and therefore irrespective of their
impact on market structure. Small companies suffered excessive and
unnecessary regulation, whereas agreements between companies with
large market power could still benefit from the exemption regardless of

227
[1997] 4 CMLR 519.
228
See paragraph 10 of the Green Paper.
229
See supra section 2.4.5.
56 EC Competition Law and Policy

their real impact on the market. A less formalistic, more ‘economic effects’
based approach was therefore necessary.
The Commission suggested five possible options for reform, which can
be outlined as follows:

• Option 1: Maintain the current system.

• Option 2: Wider block exemptions without a market share cap.230 This
option would entail giving more flexibility to the existing block
exemptions and the adoption of a block exemption regulation for
selective distribution agreements.
• Option 3: (1) More focused block exemptions with a market share cap
of 40 per cent; (2) Above the market share cap, an agreement may need
individual examination by the Commission. The result of that
examination may be: (a) negative clearance (confirming the agreement
does not breach Article 81 EC), (b) individual exemption or (c) pro-
hibition.

Market share below 40% Market share above 40%

Application of focused block Agreements may require
exemptions to vertical individual examination by the
agreements Commission

• Option 4-I: (1) Negative clearance presumed up to 20 per cent market

share cap. (2) Wider block exemptions without a market share cap apply
above 20 per cent market share.

Market share below 20% Market share above 20%

Presumption of legality of the Application of wider block
agreement exemptions

• Option 4-II: (1) Negative clearance presumed up to 20 per cent market

share. (2) Wider block exemptions apply between 20 per cent and 40 per
cent market share. (3) Above the market share cap (40 per cent), agree-
ment may need individual examination by Commission. The result of
that examination can be: (a) negative clearance, (b) individual ex-
emption or (c) prohibition.

Market share below Market share between Market share above

20% 20 and 40% 40%
Presumption of Wider block exemptions Agreement may
legality of the apply require individual
agreement examination by
Commission.
230
The market share is that of the undertakings participating in the agreement.
 Anti-competitive agreements, decisions, practices 57

Step II: The 1998 Commission’s Communication on the application of EC

competition rules to vertical restraints: A follow-up to the Green Paper on
Vertical Restraints231
Following the debate generated by the Green Paper, the Commission’s
Communication set out the key aspects of its new policy on vertical
restraints.232
First, the Commission suggested the adoption of one umbrella block
exemption regulation that would cover all vertical agreements, instead of
the existing system of different block exemptions for each category of
agreements (i.e. exclusive distribution, exclusive purchasing, franchising,
etc.).
Secondly, the new regulation would only have a list of ‘black clauses’, but
not a list of ‘white clauses’. The regulation would therefore define only
clauses that are not exempted. This would have the effect of leaving the
parties much more freedom in the configuration of their agreements and
removing the straightjacket effect of the existing block exemption
regulations. It was anticipated that those hardcore clauses would include,
inter alia, resale price maintenance and attempts to grant absolute
territorial protection.233
Thirdly, the Commission signalled its intention to use market share caps to
link exemption to market power. The Commission still debated whether one
or two market share thresholds should be set. On the one hand, the
adoption of one market threshold (25–35 per cent), as suggested in both
Options III and IV-II in the Green Paper, had the advantages of clarity and
simplicity. On the other hand, the adoption of two market thresholds,
which mirrored Option IV-II in the Green Paper, would allow a
graduation of the treatment of vertical restraints with a better economic
justification.

Step III: Council Regulation 1215/99234 and Council Regulation 1216/99235

These two regulations embody the legislative changes that were necessary
to enable the Commission to carry out its programme of reform of block
exemptions. On the one hand, Regulation 1215/99 extended the powers of
the Commission under Regulation 19/65,236 thus allowing the Com-
mission to enact regulations to cover all types of vertical agreement. This
was necessary because Regulation 19/65 in its original form only allowed
the Commission to adopt block exemption regulations with reference to
certain types of vertical agreements.237
231
[1999] 4 CMLR 281.
232
See Section V.2 of the Commission’s Communication.
233
See supra section 2.2.2.
234
OJ [1999] L 148/1.
235
OJ [1999] L 148/5.
236
See supra n. 204.
237
See Articles 1(1)(a) of Regulation 19/65.
58 EC Competition Law and Policy

On the other hand, Regulation 1216/99 amended Article 4(2)(2) of

Regulation 17/62, which in its original form exempted a number of
agreements from notification before an individual exemption could be
granted.238 That dispensation did not cover most vertical agreements
whereas Regulation 1216/99 has amended it to cover all vertical
agreements. Therefore, if a vertical agreement does not come under the
scope of a block exemption regulation, the parties can still apply for
individual exemption, regardless of the fact that the agreement was not
notified. If the exemption is granted, it will be backdated to the date when
the agreement was concluded.239 This Regulation removes the un-
necessary administrative burden on the Commission and allows a more
efficient treatment of vertical restraints.

Step IV: The Draft block exemption regulation on vertical restraints

and the Draft Guidelines on vertical restraints240
In September 1999, the Commission published the eagerly awaited draft of
the umbrella block exemption regulation on the application of Article 81(3)
EC to vertical agreements, together with a draft set of Guidelines on
vertical restraints. The Guidelines aim to set out the principles that will
allow undertakings to make their own assessment of vertical agreements.
As in the case of the Green Paper, the Commission opened a public
consultation by inviting all interested parties to submit comments, within
a time limit of one month with reference to the draft regulation and two
months in respect of the draft Guidelines. One of the most important
aspects of the draft regulation was the fact that the Commission finally
opted for the use of one market share threshold (30 per cent) that would act
as a ceiling for the application of the block exemption.241 Since the text of
the draft regulation largely agrees with the final text of the umbrella block
exemption regulation, any important differences between the two will be
highlighted in the next section, where the structure and provisions of the
new regulation are set out in detail.

The provisions of the new umbrella block exemption Regulation 2790/99 on

vertical agreements and the Guidelines on vertical restraints
Following the preparatory steps outlined above, in December 1999, the
Commission adopted Commission Regulation 2790/99,242 the new
umbrella block exemption regulation on vertical agreements, and, in
238
See supra section 2.4.4.
239
See Articles 6(1) and 6(2) of Regulation 17/62. And see supra section 2.4.4, for those
agreements where notification is a necessary requirement, the exemption is backdated to
the date of notification.
240
OJ [1999] C 270/7.
241
See Article 3 of the draft block exemption regulation, supra n. 240.
242
See supra n. 61.
 Anti-competitive agreements, decisions, practices 59

May 2000, the definitive set of Guidelines on vertical restraints.243 The

Regulation itself is a relatively brief document, but the Guidelines, finally
published in the form of a Commission Notice, are both lengthy and
intricate. The first part of the Guidelines is devoted to clarifying and
facilitating the application of the provisions of the block exemption, while
the second part sets out the economic principles applicable to individual
vertical agreements that do not fall within the scope of the block
exemption. This book will only examine the principles concerning the
application of the block exemption.244

Key definitions
Article 1 of the Regulation provides a useful set of definitions for some of
the key concepts that appear in the Regulation, such as ‘competing
undertakings’, ‘non-compete obligation’, ‘exclusive supply obligation’,
‘selective distribution system’, etc.245

Scope of the Regulation

Articles 2 and 3 set out the scope of application of the Regulation. It is
necessary first to define two key concepts in the Regulation, which are
essential to an understanding of the scope of the block exemption: vertical
agreements and vertical restraints.
What are vertical agreements for the purposes of the Regulation? Article
2(1)(1) defines them as ‘agreements or concerted practices entered into
between two or more undertakings, each of which operates, for the
purposes of the agreement, at a different level of the production or
distribution chain, and relating to the conditions under which the parties
may purchase, sell or resell certain goods or services’. The Guidelines246
elucidate three elements in that definition. First, the agreement must be
between two or more undertakings. This is not only different from the
former block exemptions, which only covered bilateral agreements, but
also has the effect of excluding agreements with consumers. Secondly, the
participant undertakings must operate at a different level of the pro-
duction or distribution chain. Thirdly, the agreement must relate to the
conditions under which the parties may ‘purchase, sell or resell certain
goods or services’. Again this constitutes an expansion of the earlier block
exemption regulations, which only covered goods and not services.

243
The Commission Guidelines were adopted on 24 May 2000 and published on 13 October
2000 in the Official Journal in the form of a Commission Notice; see supra n. 142.
244
For an exhaustive study of the criteria set out in the Guidelines for the evaluation of
particular vertical restraints, see P. Taylor, Vertical Agreements: The New Regulation in
Context (Sudbury, 2000).
245
The draft of the block exemption did not contain such a list.
246
See paragraph 24 of the Guidelines.
60 EC Competition Law and Policy

What are vertical restraints? According to Article 2(1)(2), these are

‘restrictions of competition falling within the scope of Article 81(1) EC’ that
are included in a vertical agreement.
The scope of the Regulation is exceptionally wide. In principle, all
vertical agreements containing clauses restrictive of competition benefit
from the exemption, with the exception of those expressly excluded from
the Regulation.247 This is the case, provided that the market share of the
supplier – or of the buyer in the case of exclusive supply obligations248 –
does not exceed 30 per cent of the relevant market249 and provided the
agreement does not contain hard-core restrictions.250 Above that market
share, the agreement is subject to individual consideration by the
Commission.
This could be represented as follows:

Market share below 30% Market share above 30%

Application of umbrella
block exemption to vertical
agreements
Agreements may require individual
examination by the Commission
Result of individual examination:
(a) negative clearance, (b) individual
exemption or (c) prohibition

The block exemption thus creates a safe harbour for vertical agreements that
contain no hardcore restrictions, on condition that the market share held by the
supplier does not exceed 30 per cent of the relevant market on which the
goods or services are sold. In the case of agreements concerning exclusive
supply obligations, it is the market share of the buyer that should not
exceed 30 per cent of the relevant market.251 The rules for the calculation of
the market share are set out in Article 9 of the Regulation. Furthermore, the
Guidelines shed light both on the criteria for the definition of the relevant
market and on the methods for the calculation of the market share held by
the supplier or by the buyer.252
Certain agreements are excluded from the scope of application of the
Regulation. Thus the Regulation applies to agreements concluded by
associations of retailers with their members or their suppliers only in cases

247
See Articles 2(2), 2(3), 2(4) and 2(5) of the Regulation.
248
An ‘exclusive supply obligation’ is defined by Article 1(c) of the Regulation as ‘any direct
or indirect obligation causing the supplier to sell the goods or services specified in the
agreement only to one buyer inside the Community for the purposes of a specific use or
for resale’.
249
See Articles 2(1) and 3 of the Regulation.
250
Hard-core restrictions are those restrictions of competition, the presence of which with-
draws the benefit of the exemption. They are listed in Article 4 of the Regulation (see infra
nn. 260–264 and accompanying text).
251
See Article 3 of the Regulation.
252
See paragraphs 88–99 of the Guidelines.
 Anti-competitive agreements, decisions, practices 61

where all the members of the association are retailers of goods (not
services) and where no individual member of the association has a total
annual turnover exceeding 50,000,000 EUR.253 The Regulation applies also
to vertical agreements containing provisions on intellectual property
rights only if the five conditions set out in Article 2(3) of the Regulation are
fulfilled. The Regulation will apply to agreements between competing
undertakings only when they are non-reciprocal and the three conditions
in Article 2(4) are satisfied. Finally, under Article 2(5), the Regulation will
not apply to agreements the subject matter of which falls within the scope
of another (specific) block exemption regulation, such as vertical agree-
ments covered by the technology transfer regulation,254 by the regulation
on car distribution255 and by the regulations exempting vertical agree-
ments concluded in connection with horizontal agreements.256
Likewise, the Guidelines make it clear that certain vertical agreements
generally do not infringe Article 81(1) EC and therefore need not be subject
to the application of the block exemption regulation. These include
agreements of minor importance, agreements between small and
medium-size undertakings and agency agreements.257 Quite naturally, the
block exemption only applies to agreements that are caught by Article
81(1) EC. If the agreement does not infringe Article 81(1) EC in the first
place, there is no need to exempt it.258

‘Black-clauses’
Unlike the ‘old’ system of block exemption regulations, the new regulation
does not set out lists of ‘white, grey’.259 One of the reasons why the
Commission initiated its programme of reform of vertical agreements was
the excessive formalism and straightjacket effect of the ‘old’ system of
block exemptions. The new regulation only defines what is not exempted,
thus leaving the parties to an agreement a much greater degree of
flexibility. There are two lists of ‘black clauses’ in the new Regulation, in
Articles 4 and 5 respectively. The Guidelines explain the essential
distinction between the two lists. The list in Article 4 is a list of hard-core
restrictions. If one of those clauses is found in an agreement, the whole
agreement will be deprived of the benefit of the block exemption.260

253
Article 2(2) of the Regulation.
254
Regulation 240/96 (OJ [1996] L 31/2).
255
Regulation 1475/95 (OJ [1995] L 145/25).
256
See Regulation 2658/2000 on specialisation agreements (supra n. 214) and Regulation
2659/2000 on research and development agreements (supra n. 215).
257
See Section II of the Guidelines.
258
See further, R. Whish, ‘Regulation 2790/99: the Commission’s ‘new style’ block
exemption for vertical agreements’, [2000] 37 CMLRev 887, at pp. 897–8.
259
See supra nn. 216–218 and accompanying text.
260
See paragraphs 46 and 66 of the Guidelines.
62 EC Competition Law and Policy

Article 5, however, contains a list of ‘black clauses’, which are severable

from the agreement. In other words, once the ‘black clauses’ have been
‘deleted’ from the agreement, the remaining parts of the agreement may
still benefit from the block exemption.261
The list of hard-core restrictions in Article 4 is as follows:

• Resale price maintenance (Article 4(a)): establishment of a fixed or

minimum resale price level to be observed by the buyer in respect of its
customers (the establishment of a maximum resale price or the recom-
mendation of a resale price is allowed). The prohibition also includes
indirect means of fixing resale prices (grant of rebates, threats, penalties,
suspension of deliveries, etc.) (paragraph 47 of the Guidelines).
• Territorial and customer restrictions (Article 4(b)): establishment of
restrictions of the territory into which or of the customers to whom the
buyer may sell the contract goods. The only territorial and customer
restrictions allowed under the regulation are:
(a) A restriction of active sales [i.e. canvassing for orders] into the exclusive
territory or to an exclusive customer group reserved to the supplier or
allocated by the supplier to another buyer. A restriction on passive
sales [i.e. general advertising, promotion in the media or on the
Internet, response to unsolicited orders, etc.] is, however, not
permitted;262
(b) A restriction of sales (both active and passive) to end users by a buyer
operating at the wholesale level of trade;
(c) A restriction of sales (both active and passive) to unauthorised distributors
by members of a selective distribution system [this is a logical
consequence that follows from the nature of selective distribution
agreements];263
(d) A restriction of a buyer’s ability to sell components supplied for the
purposes of incorporation, to customers who would use them to
manufacture the same type of goods produced by the suppliers.
• Restriction of active or passive sales to end users by members of a selective
distribution system operating at the retail level of trade (Article 4(c)). The
Guidelines also explain that selective distribution may be combined
with exclusive distribution, provided that active and passive sales are
not restricted anywhere.264

261
See paragraphs 57 and 67 of the Guidelines.
262
See paragraphs 50–1 of the Guidelines.
263
This provision was not found in the draft of the block exemption regulation. See OJ [1999]
C 270/7, and supra n. 240 and accompanying text.
264
See paragraph 53 of the Guidelines.
 Anti-competitive agreements, decisions, practices 63

• Restriction of cross-supplies within a selective distribution network (Article

4(d)). Restrictions of cross-supplies between distributors in a selective
distribution system are not allowed, and include distributors operating
at different levels in the market.
• Restrictions on the supplier’s ability to supply components to third parties not
appointed by the buyer (Article 4(e)). This ‘black clause’ aims to prevent
agreements whereby a manufacturer of spare parts may not sell them to
end-users or repairers not appointed by the buyer.

The list of black clauses in Article 5 of the Regulation is as follows:

• Non-compete obligations, the duration of which is indefinite or exceeds five

years (Article 5(a)). A non-compete obligation is any ‘direct or indirect
obligation causing the buyer not to manufacture, purchase, sell or resell
goods or services which compete with the contract goods or services’. It
is also any obligation ‘that require the buyer to purchase from the
supplier or from another undertaking designated by the supplier more
than 80% of the buyer’s total purchases during the previous year of the
contract goods or services which compete with the contract goods or
services and their substitutes’ (see paragraph 58 of the Guidelines and
Article 1(b) of the Regulation). Non-compete obligations tacitly
renewable beyond a period of five years are deemed to have been
concluded for an indefinite duration.
• Non-compete obligations imposed following the termination of the agreement
(Article 5(b)). This clause refers to obligations imposed on a buyer, post-
termination of the agreement, not to manufacture, purchase, sell or
resell goods or services.
• Obligations imposed on members of a selective distribution system not to sell
the brands of particular competing suppliers (Article 5(c)).265 While it is
permissible to impose on a selective distributor an obligation not to
resell competing brands in general, Article 5(c) aims to prevent the
exclusion of particular competitors. As the Guidelines explain, the
objective of this is ‘to avoid a situation whereby a number of suppliers
using the same selective distribution outlets prevent one specific
competitor or certain specific competitors from using these outlets to
distribute their products-foreclosure of a competing supplier which
would be a form of collective boycott’.266

265
There is an interesting variation in the form of words used in the draft block exemption
regulation.
266
See paragraph 61 of the Guidelines.
64 EC Competition Law and Policy

Withdrawal of the block exemption

The benefit of the block exemption may be withdrawn in certain
circumstances by the Commission or by the national authorities. Under
the ‘old’ system of block exemptions, the possibility of withdrawal of the
exemption by the Commission was provided by all the block exemption
regulations for agreements that, although formally qualifying for
exemption, had certain effects incompatible with Article 81(3) EC.267
Article 6 of the new Regulation also permits the Commission to withdraw
the benefit of the exemption in these circumstances.268 Article 7 of the new
Regulation, however, contains the novel feature of allowing national
authorities to withdraw the benefit of the exemption in respect of
agreements whose effects are felt in the territory of a Member State, or in
part thereof, which has all the characteristics of a distinct geographical
market. The Guidelines explain that the Commission has competence to
withdraw the benefit of the block exemption for vertical agreements that
cover a relevant geographical market wider than the territory of one
Member State, whereas the national authorities normally have com-
petence when that market covers the territory of one Member State or part
thereof. 269 In the latter case, however, the Commission reserves the right to
act in cases displaying a ‘particular Community interest’.270

Disapplication of the block exemption regulation

Article 8 enables the Commission, by issuing a regulation, to declare the
block exemption inapplicable where parallel networks of agreements,
including similar vertical restraints, cover more than 50 per cent of a
relevant market. The difference between the withdrawal procedure in
Article 6 and the disapplication procedure in Article 8 is explained by the
Guidelines. Withdrawal implies the adoption of a decision that brings an
individual agreement within the scope of Article 81(1) EC. A regulation
dissapplying the block exemption regulation merely removes, with
reference to the restraints and the markets concerned, the application of the
block exemption, thus restoring the full application of Articles 81(1) and
(3) EC.271

267
See Article 6 of Regulation 1983/83 EEC on exclusive distribution agreements (see supra
n. 207); Article 14 of Regulation 1984/83 on exclusive purchasing agreements (see supra n.
208); Article 8 of Regulation 4087/88 on franchise agreements (see supra n. 209); Article 8
of Regulation 1475/95 on motor-vehicle distribution and servicing agreements (see supra
n. 210), and Article 7 of Regulation 240/96 on technology transfer agreements (see supra n.
211).
268
Article 6 explains that this would be the case and ‘in particular where access to the
relevant market is significantly restricted by the cumulative effect of parallel networks of
agreements’.
269
See paragraph 77 of the Guidelines.
270
Ibid.
271
See paragraph 81 of the Guidelines.
 Anti-competitive agreements, decisions, practices 65

Entry into force and transitional provisions

Article 13 of the regulation provides that the regulation entered into force
on 1 January 2000 and it began to apply on1 June 2000. It will expire on 31
May 2010. Transitional arrangements for agreements exempted under the
‘old’ system of block exemption regulations and in force on 31 May 2000
are covered by Article 12 of the Regulation. Under that provision, those
agreements will continue to benefit from the exemption – even if they do
not satisfy the conditions for exemption in Regulation 2790/99 – until 31
December 2001.

How to apply the new block exemption regulation

The new block exemption regulation may seem a daunting and difficult
piece of legislation. Figures 2.7 and 2.8 describe the basic steps suggested
for the application of the Regulation.272

2.4.7 The process of reform of the Commission’s policy

on horizontal restraints
In the final stages of its programme of reform of vertical restraints, the
Commission also completed the reform of its policy on horizontal
cooperation between undertakings. Thus, in April 2000, the Commission
issued two draft block exemption regulations concerning respectively
research and development agreements273 and specialisation agreements274
as well as a set of Draft Guidelines on the application of Article 81 EC to
horizontal cooperation between undertakings.275 In November 2000, the
new regulations on research and development agreements276 and on
specialisation agreements277 were published, and the Guidelines followed
shortly afterwards at the beginning of 2001.278 The scope of the Guidelines
is wider than that of the two block exemption regulations. They are also
concerned with agreements on joint production, joint purchasing,
commercialisation, standardisation and the environment.279
The two new regulations reflect the same economics-based approach
present in the new umbrella block exemption regulation on vertical
restraints. Thus both regulations move away from the ‘old’ style of block
exemption regulation that included lists of exempted and non-exempted

272
See infra pp. 66–7.
273
OJ [2000] C 118/4.
274
OJ [2000] C 118/10.
275
OJ [2000] C 118/14.
276
Regulation 2659/2000, supra n. 97.
277
Regulation 2658/2000 supra n. 96.
278
OJ [2001] C 3/2, [2001] 4 CMLR 819.
279
See section 1.2, paragraph 10, of the Guidelines.
66 EC Competition Law and Policy

Does the agreement fall within the scope of the block exemption?

Is it a vertical agreement (Art. 2(1)(1))?

• between two or more undertakings
• undertakings operate at different economic levels
• relates to the conditions of purchase, sale or resale
of goods and services

▼ ▼
YES NO

▼
▼
Regulation does not apply
Does it contain clauses restrictive
of competition (Article 2(1)(2))?

▼ ▼
YES NO

▼
▼
Regulation does not apply
Is the agreement excluded from
the scope of the block exemption
(Articles 2(2)(3)(4) and (5))?

▼ ▼
NO YES

▼ ▼
Is the market share of the supplier – Regulation does not apply
or of the buyer in exclusive supply
obligations – less than 30% of the
relevant market? (Article 3)

▼ ▼
YES NO

▼ ▼
Block exemption prima facie applies Individual by the Commission:
• negative clearance
(See Figure 2.8) • individual exemption
• prohibition
▼
Figure 2.7 The application of Regulation 2790/99 (I)
 Anti-competitive agreements, decisions, practices 67

Does the agreement include any black clauses?

▼ ▼
YES NO

Block exemption applies

▼
What type of black clauses?

▼
Hard-core restrictions Other ‘black clauses’
(Article 4) (Article 5)

▼
The entire agreement
excluded from the scope
of the block exemption. ▼
Individual exemption Deletion of black clauses.
unlikely. The rest of the agreement
is not deprived of the
benefit of the block exemption.

Figure 2.8 The application of Regulation 2790/99 (II)

clauses in favour of block exemptions for agreements which do not

include hard-core restrictions and provided that the market share of the
parties does not exceed 25 per cent and 20 per cent of the relevant
market for research and development and specialisation agreements,
respectively.280 The central idea is therefore that, below a certain market
power, the pro-competitive effects of these agreements outweigh their
anti-competitive effects.281

280
See Article 3 of the Regulation on research and development agreements and Articles 1, 2
and 3 of the Regulation on specialisation agreements.
281
See the 5th recital to the Preamble to the Regulation on research and development
agreements and the 3rd recital to the Preamble to the Regulation on specialisation
agreements.
68 EC Competition Law and Policy

2.5. The ‘rule of reason’ in EC competition law

The so-called ‘rule of reason’ approach has its origins in US anti-trust

law.282 In its White Paper on modernisation,283 the Commission defines
this approach as one ‘in which the authorities or courts responsible for
competition law balance the pro-competitive aspects of an agreement
against its anti-competitive aspects in deciding whether to prohibit it’.284
In the American system, this means that, with the exception of a few types
of agreement which are regarded as illegal per se, courts have in each case
to assess the overall economic impact of an agreement in a particular
market before deciding whether to prohibit it or not.
The structure of Article 81 EC is such that any agreement or concerted
practice that fulfils the conditions in Article 81(1) EC, namely effect on
trade between the Member States and anti-competitive object or effect, is
automatically caught by the prohibition laid down in that provision. If the
agreement displays some beneficial effects, then it may be exempted
under Article 81(3) EC. Were a ‘rule of reason’ approach to be applied,
when the pro-competitive effects of an agreement outweigh the anti-
competitive effects, the prohibition in Article 81(1) EC would be deemed
not to have been breached. Proponents of the ‘rule of reason’ approach
have traditionally identified two main advantages in its application to EC
competition law.285
First, it would shift the emphasis from a formalistic approach to Article
81(1) EC to a balanced and economics-based approach. In other words,
agreements that display some anti-competitive effects but which are
mostly economically beneficial would not need to be prohibited and then
exempted; they would not come under the prohibition in the first place.
Secondly, it would have some procedural advantages. In the current
system, only the Commission can grant exemptions. Two different
scenarios may arise before national courts. On the one hand, an agreement
may fall within the scope of a block exemption. On the other, the
agreement may not fall within the scope of a block exemption and may
require individual consideration.
If an agreement falls within the scope of a block exemption,286 the
national court can examine the compatibility of the agreement with the
block exemption. The ‘new’ system of block exemptions only includes a
list of ‘black clauses’ and therefore the national court can decide that the

282
See R. Whish and B. Sufrin, ‘Article 85 and the Rule of Reason’, [1987] 7 YEL 1.
283
See n. supra 178.
284
Ibid., at paragraph 56.
285
See V. Korah, ‘The rise and fall of provisional validity – the need for a rule of reason in
EEC antitrust’ [1981] Northwestern Journal of International Law and Business 320; M.
Schechter, ‘The rule of reason in European competition law’ [1986] 2 LIEI 1.
286
See supra sections 2.4.6 and 2.4.7.
 Anti-competitive agreements, decisions, practices 69

agreement benefits from the block exemption when it does not include any
of the non-exempted clauses. In the ‘old‘ system, the national courts were
much more restricted because agreements had to comply with the list of
specifically exempted or ‘white clauses’ as well as not include any of the
‘black clauses’.
If, on the other hand, an agreement does not fall within the scope of a
block exemption regulation, the national court can, in principle, only
decide whether an agreement is or is not in breach of Article 81(1) EC. If the
agreement infringes that provision but it is, on the whole, economically
beneficial, the national court may apply the prohibition in Article 81(1) EC
or suspend proceedings pending a decision of the Commission on
whether or not an individual exemption should be granted.287 The
introduction of a ‘rule of reason’ approach would have the advantage of
allowing national courts to balance the anti-competitive and pro-
competitive effects of an agreement and to conclude that the prohibition in
Article 81(1) EC has not been infringed. Moreover, it would lighten the
workload of the Commission, which is beset by large numbers of
applications for exemptions.
The European Court of Justice has never expressly accepted the
American-style ‘rule of reason’ but in some cases, other than those
concerning agreements with a clear anti-competitive object,288 it has
engaged in a balancing exercise. This raises the question of whether the
Court has in fact adopted a ‘rule of reason’ approach. These cases include
Société Technique Minière v. Maschinenbau Ulm,289 where the Court
considered an exclusive sales agreement. A German company granted a
French company the exclusive right to sell certain machines used by public
utilities in France and its overseas territories. One of the questions referred
by the national court to the European Court was whether that exclusive
right of sale was contrary to Article 81(1) EC. It is clear that the ‘exclusivity’
element inherent in such a right was anti-competitive, but the agreement
also had some important pro-competitive effects. This was well reflected
in the Opinion of the Advocate General:

… in reality, it is often impossible for small undertakings to get a foot-hold in a

foreign market without concentrating their sales capacity in the hands of a
single dealer, especially when their products have to be assembled before being
sold and when it appears necessary to run a repairs service and to maintain a
stock of spare parts. In cases of this sort, a comparison with the situation which
would prevail on the market without the exclusive dealership may lead to the
287
See further the principles set out by the Court in Delimitis (Case C-234/89 [1991] ECR I-
935, [1992] 5 CMLR 210), discussed infra Chapter 4, section 4.3.3.
288
Thus agreements that fix prices, share markets or purport to grant absolute territorial
protection would always be regarded as infringing the prohibition in Article 81(1) EC; see
supra section 2.2.4.
289
Case 56/65, supra n. 67.
70 EC Competition Law and Policy

conclusion that the absence of such an agreement leads directly to a decrease in

competition, because it goes together with a reduction in what is offered.290

Similarly, the Court took the view that an exclusive sales agreement cannot
automatically come under Article 81(1) EC and that it seemed to be ‘really
necessary for the penetration of a new area by an undertaking’.291 In other
words, Société Technique Minière would probably not have taken the risk of
introducing a product in a new market unless it was guaranteed a certain
measure of protection against competition – which was represented by the
guarantee of exclusivity.
Another example frequently invoked is the decision of the Court in
Metro v. Commission,292 a leading case on selective distribution agreements.
In that case, Metro, a German wholesaler of electrical goods, was refused
access to the distribution system operated by SABA. Metro complained to
the Commission that SABA’s distribution system was in breach of Article
81(1) EC. The Commission concluded that some aspects of the distribution
system did not come under Article 81(1) EC, whereas other aspects did fall
within that prohibition, but benefited from an exemption under Article
81(3) EC. Metro challenged the Commission’s decision before the
European Court. The Court agreed with the Commission that in the sector
covering the production of high quality and technically advanced
consumer durables, selective distribution systems were generally
compatible with Article 81(1) EC. This compatibility was presumed where

resellers were chosen on the basis of objective criteria of a qualitative nature

relating to the technical qualifications of the reseller and his staff and the
suitability of his trading premises and that such conditions are laid down
uniformly for all potential resellers and are not applied in a discriminatory
fashion.293

This approach was reiterated when the Court considered in detail the
clauses in the system of selective distribution. For example, an obligation
imposed upon a non-specialist wholesaler to set up a special department
for electronic equipment fell outside the prohibition in Article 81(1) EC
because it was necessary to ensure that the goods were sold under
appropriate conditions.294 On the other hand, an obligation imposed on
these wholesalers to achieve a turnover comparable to that of a specialist
wholesaler was not a qualitative criterion inherent in a system of selective
distribution and came, in principle, under Article 81(1) EC.295
290
Ibid., at p. 257.
291
Ibid., at p. 250.
292
Case 26/76 [1977] ECR 1875, [1978] 2 CMLR 1.
293
Ibid., at paragraph 20 of the judgment.
294
Ibid., at paragraph 37 of the judgment.
295
Ibid.
 Anti-competitive agreements, decisions, practices 71

Finally, the decision of the Court in Pronuptia v. Schillgalis,296 has also

been regarded as a fitting example of a similar balancing exercise by the
Court. The case concerned a franchising agreement concluded between
Pronuptia, a French manufacturer of wedding dresses, and one of its
German franchisees. Following a dispute about the payment of arrears of
royalties, the franchisee claimed before the national court that the
franchise agreement was contrary to Article 81(1) EC. Following a
preliminary reference by the national court, the European Court had the
opportunity of examining in detail the compatibility of certain clauses
commonly found in franchise agreements with Article 81(1) EC. Again, the
Court took the view that it could not be said that franchise agreements fall
automatically under the prohibition in Article 81(1) EC.297 The Court first
defined a distribution franchise agreement as one where ‘an undertaking
which has established itself as a distributor in a given market and thus
developed certain methods grants independent traders, for a fee, the right
to establish themselves in other markets using its business name and the
business methods which have made it successful’.298 It followed from this
that any franchisor would want to take precautions: first, to ensure that its
know-how does not benefit competitors and secondly, to maintain the
identity and reputation of the network.299 Those clauses which, although
they were potentially restrictive of competition, were necessary to protect
those two objectives and were held to be compatible with Article 81(1) EC.
Thus the Court took the view that a prohibition on the franchisee’s
opening a shop of the same or a similar nature in an area where it might
compete with a member of the franchise network was necessary to protect
the first objective. Likewise, an obligation imposed on the franchisee to sell
the contract goods only in premises laid out and decorated according to
the franchisor’s instructions was essential to safeguard the second
objective. Conversely, a prohibition on the franchisee’s opening a second
shop in order to sell the contract goods outside their own territory came
under Article 81(1) EC and should be assessed within the framework of
Article 81(3) EC, as it constituted an attempt to secure territorial
protection.
Do these cases reflect the acceptance by the Court of a ‘rule of reason’
approach? Some commentators have cogently argued that the adoption of
this terminology is not without its dangers. In particular, they have argued
that the profound differences between EC and US anti-trust law and the
inherent risk of increasing uncertainty among the business community
counsel against the adoption of the expression.300 Moreover, it is suggested

296
Case 161/84 [1986] ECR 353, [1986] 1 CMLR 414.
297
Ibid., at paragraph 14 of the judgment.
298
Ibid., at paragraph 15 of the judgment.
299
Ibid., at paragraphs 16 and 17 of the judgment.
300
See Whish and Sufrin, op. cit., supra n. 282, at pp. 36–7.
72 EC Competition Law and Policy

that a widespread application of the ‘rule of reason’ runs counter to a

literal interpretation of Article 81EC, because it would render the third
paragraph of that provision superfluous. As Whish comments, ‘the fact
that the ECJ has handed down reasonable judgments does not mean that it
has adopted the rule of reason’.301
This view is confirmed by more recent decisions of the Community
Courts which show that it is not clear that the principle applies in EC
competition law. Thus in Montecatini v. Commission,302 the Commission
fined Montecatini for taking part in a Community-wide polypropylene
cartel. The company had argued before the Court of First Instance, which
first considered the action for the annulment of the Commission’s
decision, that a balancing exercise should have been carried out between
the anti-competitive and pro-competitive effects of the agreement. The
Court of First Instance took the view, confirmed by the European Court,
that even if the rule of reason applied in EC competition law, it would not
operate in a situation like the one at issue, i.e. an agreement to share
markets and fix prices, which is contrary per se to Article 81(1) EC.303 In its
decision in Métropole v. Commission,304 the Court of First Instance went
further and stated that the case law of the Community judicature cannot
be interpreted as establishing a ‘rule of reason’ approach in EC Com-
petition law. It explained that judgments normally considered as examples
of such an approach could be construed as an attempt by the Court to
prevent a rigid application of Article 81(1) EC to any agreement that would
restrict freedom of action of one or more parties to an agreement.305 This,
however, would not mean that ‘it is necessary to weigh the pro and anti-
competitive effects of an agreement when determining whether the
prohibition laid down in Article 81(1) EC applies’.306
Be that as it may, the debate surrounding the ‘rule of reason’ is likely to
be mainly of academic interest if the reforms suggested by the
Commission in its White Paper are carried through. The introduction of a
system of directly applicable exception would mean that national courts
would be able to apply the third paragraph of Article 81 EC and to decide
that an agreement falls within the prohibition in Article 81(1) EC but which
satisfies the conditions in Article 81(3) is lawful from the time it is
concluded, without the need for any prior decision from the Commission.
As a result, the procedural advantages promoted by the advocates of the

301
See Whish, op. cit., supra n. 45, at p. 209.
302
Case C-235/91P [2000] 4 CMLR 691.
303
See Case T-14/89 Montecatini v. Commission [1992] ECR II-2409, at paragraph 265 of the
judgment, and Case C-235/91P, supra n. 302, at paragraph 133 of the judgment.
304
Case T-112/99, Judgment of 18 September 2001, not yet reported.
305
Ibid. at paragraph 76 of the judgment.
306
Ibid. at paragrah 77 of the judgment.
 Anti-competitive agreements, decisions, practices 73

‘rule of reason’ approach, would not longer be pertinent. It must be

emphasised, however, that the introduction of a system of directly
applicable exception does not amount to ultimate acceptance of the ‘rule of
reason’ approach. Important differences exist between the two. In its
White Paper on Modernisation, the Commission considered as one way of
overcoming the significant procedural problems associated with a
centralised system of exemptions the introduction of a ‘rule of reason’
approach in the interpretation of Article 81(1) EC. Although the
Commission recognised that it had adopted a ‘rule of reason’ approach ‘to
a limited extent’ and that the European Court had endorsed the approach
in some cases, it rejected this option on three grounds. First, it would have
the potential to make Article 81(3) EC redundant, when this could only be
the result of an amendment of the EC Treaty.307 Secondly, the process of
modernisation of competition law could not be made contingent on
developments upheld by the Community judicature.308 Thirdly, there are
the dangers of diverting the purpose of Article 81(3) EC, which is ‘to
provide a legal framework for assessment of restrictive practices and not
to allow the application of the competition rules to be set aside because of
political considerations’.309

307
See paragraph 57 of the White Paper (op. cit., supra n. 178).
308
Ibid.
309
Ibid.
74 EC Competition Law and Policy

3
Abuses of dominant position
by one or more undertakings:
Article 82 EC

3.1 Introduction

Article 82 EC covers abuses of dominant position by one or more

undertakings. It reads as follows:

Any abuse by one or more undertakings of a dominant position within the

common market or in a substantial part of it shall be prohibited as incompatible
with the common market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(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, thereby placing them at a competitive disadvantage;
(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.

Article 82 EC benefits from a simpler structure than Article 81 EC. It lays

down in one paragraph a prohibition on abuses of dominant position which
affect trade between Member States and a list of examples of abusive
practices. Unlike Article 81 EC, it makes no provision for exemption.
The aim of Article 82 EC is clear: it aims to control the activities of firms
whose economic strength makes them immune from the influence of
competitive forces in a given market. It covers the activities of monopolists
(dominant sellers), monopsonists (dominant buyers) and also situations
of joint dominance.
 Abuses of dominant position 75

3.2 The prohibition on abuses of dominant position by

one or more undertakings

The prohibition in Article 82 EC includes three elements. First, one or more

undertakings need to hold a position of dominance within the Common
Market or in a substantial part of it. Second, the undertaking or
undertakings must have abused that position of dominance. Third, the
abuse must have an effect on intra-Community trade. These elements are
cumulative. Dominance itself is not prohibited, only the abuse of that
dominance.1 Likewise, abusive practices by non-dominant companies do
not come within the scope of Article 82 EC.2 Finally, if the abuse of
dominant position has no effect on intra-Community trade, Article 82 EC
will not apply. These elements are set out in Figure 3.1.3

3.2.1 Dominance within the Common Market or a substantial

part of it
In Continental Can,4 the Commission implicitly, and the Court explicitly,
referred to the fact that dominance does not exist in the abstract, but in
relation to a particular market.5 Therefore, the first step to determine the
existence of a position of dominance is the identification of the relevant
market. That market, as the Court held in United Brands v. Commission,6
needs to be defined both in its product and in its geographical
dimensions.7 The relevant market, the test of dominance and whether

1
In Continental Can (Case 6/72 Europeanballage Corporation and Continental Can Co. Inc. v.
Commission [1973] ECR 215, [1973] CMLR 199), the Court held that the exploitation of a
dominant position must be abusive to come within the prohibition in Article 82 EC (at
paragraph 26 of the judgment). Likewise, in Michelin v. Commission (Case 322/81 [1983]
ECR 3461, [1985] 1 CMLR 282), the Court held that ‘a finding that an undertaking has a
dominant position is not in itself a recrimination but simply means that, irrespective of the
reasons for which it has such a dominant position, the undertaking concerned has a
special responsibility not to allow its conduct to impair genuine undistorted competition
on the Common Market’ (at paragraph 57 of the judgment).
2
Case 247/86 Alsatel v. Novasam ([1988] ECR 5987, [1990] 4 CMLR 434, at paragraph 23 of
the judgment).
3
See infra p. 76.
4
See supra n. 1.
5
See Case 6/72, supra n. 1, at paragraph 32 of the judgment. See also United Brands v.
Commission (Case 27/76 [1978] ECR 207, [1978] 1 CMLR 429, at paragraph 10 of the
judgment) and L’Oréal v. PVBA De Nieuwe (Case 31/80 [1980] ECR 3775, [1981] 2 CMLR
235, at paragraph 25 of the judgment).
6
Case 27/76, supra n. 5, at paragraph 10 of the judgment.
7
In its 1997 Notice on market definition, the Commission explained that: ‘Market
definition is a tool to identify and define the boundaries of competition between firms. It
serves to establish the framework within which competition policy is applied by the
Commission … The objective of defining a market in both its product and geographic
76 EC Competition Law and Policy

Step 1: Dominance within the Common Market or a substantial part

of it

(a) Identification of the relevant market:

• Relevant product market:

Demand side substitutability:

– cross-elasticity of demand
– physical characteristics
– price
– intended use
– consumer preference, etc.

Supply side substitutability

• Relevant geographical market

– Test of dominance (market share, barriers of entry, legal provisions,

superior technology, vertical integration, etc.)

– Within the Common Market or a substantial part of it (may include

national or even regional markets)

Step 2: Abuse

Two different types of abuse: exploitative and anti-competitive abuse

Step 3: Effect on inter-state trade

Broad test (as in Article 81 EC)

Figure 3.1 Basic steps in the application of Article 82 EC: abuse of dominant position
 Abuses of dominant position 77

dominance has been exerted within the Common Market or a substantial

part of it will now be considered in turn.

The relevant product market

In Continental Can,8 the Court established that the notion of
interchangeability was at the core of the definition of the relevant product
market.9 If two products are interchangeable, it means that they belong to
the same relevant market. This is clearly illustrated in United Brands v.
Commission.10 In that case, United Brands, an American company and a
main operator in the world banana market, challenged a Commission
decision that had found the company to be in breach of Article 82 EC on
account of several abusive practices. These included discriminatory
pricing conditions, unfairly high pricing and refusal to supply to one of its
Danish distributors. The applicant contended that bananas were part of
the market of fresh fruit because they could be ‘reasonably
interchangeable’11 with other kinds of fresh fruit such as apples, oranges,
kiwis, strawberries, etc. from the point of view of the consumers. The
Commission, however, argued that bananas formed a market on their own
in that they were only to a limited extent interchangeable with other
products. In particular, it referred to the fact that the prices and available
quantities of other fresh fruit had little effect on the prices and availability
of bananas even during the summer months when seasonal fruits were
plentiful. Furthermore, bananas had special characteristics that made
them a very important part of the diet of the very young, the sick and the
very old. As a result, the choice of bananas was a matter of consumer
preference and consumers would not accept other fruits as a substitute.12
The tension illustrated in the United Brands proceedings has appeared in
many other cases.13 Undertakings accused of abusing their dominant

dimensions is to identify those actual competitors of the undertakings involved that are
capable of constraining those undertakings’ behaviour and of preventing them from
behaving independently from effective competitive pressure. It is from this perspective
that the market definition makes it possible inter alia to calculate market shares that would
convey meaningful information regarding market power for the purposes of assessing
dominance … ’ (at paragraph 2 of the Notice).
8
Case 6/72, supra n. 1.
9
Ibid., at paragraph 32 of the judgment. The Commission also adopted this approach in its
definition of the relevant products market as ‘those products and/or services which are
regarded as interchangeable or substitutable by the consumer by reason of the products’
characteristics, price and intended use’ (paragraph 7 of the Commission Notice on Market
definition, supra n. 7).
10
Case 27/76, supra n. 5.
11
Case 27/76, supra n. 5 at p. 224.
12
See the Commission Decision (OJ [1976] L 95/1, [1976] 1 CMLR D28) at paragraph 77.
13
See, inter alia, Case 22/78 Hugin v. Commission [1979] ECR 1869, [1979] 3 CMLR 345, at
paragraph 4 of the judgment; Case 85/76 Hoffmann-La Roche v. Commission [1979] ECR
78 EC Competition Law and Policy

position have consistently argued for market definitions as broad as

possible, whereas the Commission has been predisposed to define the
market much more narrowly.14 The reason for this is clear: the wider the
market, the more difficult it is to show dominance. In United Brands, the
applicant held a position of dominance in the market of bananas, but it
would have been much more difficult to show dominance in the wider
market of fresh fruits.
The Court confirmed the test of interchangeability – or substitutability –
as being of the essence in the definition of the relevant product market and
held that:

… For the banana to be regarded as forming a market which is sufficiently

differentiated from other fruit markets it must be possible for it to be singled out
by such special features distinguishing it from other fruits that is only to a
limited extent interchangeable with them and is only exposed to their
competition in a way that is hardly perceptible.15

It then agreed with the Commission that bananas belonged to a market

that was sufficiently distinct from the other fresh fruit markets and it held:

… a very large number of consumers having a constant need for bananas are not
noticeably or even appreciably enticed away from the consumption of this
product by the arrival of other fresh fruit on the market and that even the

461, [1979] 3 CMLR 211, at paragraph 24 of the judgment, and Case T-30/89 Hilti v.
Commission [1991] ECR II-1439, [1992] 4 CMLR 16, at paragraph 48 of the judgment.
14
In some cases, the Commission adopted very narrow market definitions which were
systematically upheld by the Court. In General Motors (Commission Decision 75/75/EEC,
OJ [1975] L 29/14, [1975] 1 CMLR D20), General Motors Continental was, according to
Belgian law, the only agent authorised to issue certificates of conformity with Belgian
regulations for Opel/Vauxhall cars imported into Belgium by independent parties. The
relevant market was defined by the Commission not as the market for the issue of
conformity certificates for all motor vehicles but as the market of conformity certificates
for Opel/Vauxhall vehicles imported into Belgium by third parties (see paragraphs 11
and 26 of the decision and also Case 26/75 General Motors v. Commission [1975] ECR 1367,
[1976] 1 CMLR 95, at paragraphs 7–9 of the judgment). Similarly, in Hugin v. Commission
(Case 22/78, supra n. 13), the relevant market was held to be the market for spare parts for
Hugin’s cash register machines instead of the market of cash registers as a whole, as
maintained by the applicant (at paragraph 8 of the judgment). The Court first decided
that there was a specific market for spare parts – and more particularly for the spare parts
manufactured by the applicant – mainly because Hugin’s spare parts were not
interchangeable with other spare parts and because independent repairers needed them
to carry out their business. See also Deutsche Bahn v. Commission (Case T-229/94, [1997]
ECR II-1689, [1998] 4 CMLR 220), where the Court of First Instance upheld the
Commission’s view that the rail services market was a distinct market from the market of
rail transport in general (at paragraphs 54–6 of the judgment).
15
Case 27/76, supra n. 5 at paragraph 22 of the judgment.
 Abuses of dominant position 79

seasonal peak periods only affect it for a limited period of time and to a very
limited extent from the point of view of substitutability.16

In United Brands,17 the Court and the Commission focused on demand

elasticity to define the relevant product market,18 an approach that has
been routinely applied in the Court’s case law subsequently. But how do
we measure demand substitutability? Several elements have proved
relevant.
First, the physical characteristics and intended uses of the products in
question are of crucial importance. Thus, in United Brands,19 both the
Commission and the Court referred to the fact that bananas had some
physical characteristics that set them apart from other kinds of fruits, with
which they were not interchangeable in the eyes of the consumers.20 If two
different products can be put to the same use, the implication may be that
they belong to the same relevant market. Conversely, if the same product
can be used in two wholly different ways, that may indicate that the same
product belongs to two different markets and that in each one of these
markets, it will compete with a different range of potential substitutes. In
Hoffmann-La Roche v. Commission,21 the Commission found that Hoffmann-
La Roche, a vitamin manufacturer, was dominant in the markets of seven
groups of vitamins (A, B2, B3, B6, C, E and H) and that it had abused its
position of dominance. The Commission took the view that each of the
groups of vitamins constituted a separate and self-contained market, but
Hoffmann-La Roche considered that the vitamin groups C and E belonged
to a much wider market because they were also sold for other uses
(antioxidants, fermentation agents and additives). The Court held that it
was not evident that these vitamins and their substitutes – when put to
technological uses – formed one single market.22 For that to happen, it
would be necessary to demonstrate that there was a sufficient degree of

16
Ibid., at paragraph 34 of the judgment.
17
Case 27/76, supra n. 5.
18
In its Notice on market definition (see supra n. 7), the Commission defined demand
substitutability as follows: ‘the question to be answered is whether the parties’ customers
would switch to readily available substitutes or to suppliers located elsewhere in response
to a hypothetical small (in the range of 5 to 10 per cent) but permanent relative price
increase in the products and areas being considered. If substitution were enough to make
the price increase unprofitable because of the resulting loss of sales, additional substitutes
and areas are included in the relevant market’ (at paragraph 17 of the Notice).
19
Case 27/76, supra n. 5.
20
See the Decision of the Commission (supra n. 12, at paragraph 77) and the Court’s
judgment at paragraph 31, where it held that: ‘The banana has certain characteristics,
appearance, taste, softness, seedlessness, easy handling, a constant level of production
which enable it to satisfy the constant need of an important section of the population
consisting of the very young, the old and the sick.’
21
Case 85/76, supra n. 13.
22
Ibid., at paragraph 28 of the judgment.
80 EC Competition Law and Policy

interchangeability between them.23 In the case there was no evidence that

the products that could substitute vitamins of the groups C and E in their
use as antioxidants, fermentation agents and additives could also be used
as vitamins. There was, therefore, no cross-elasticity between the two in
terms of that specific use. That case was interestingly distinguished in
TetraPak v. Commission (TetraPak II).24 In that case, TetraPak, a company
specialising in the manufacture of cartons (for liquid food and in
particular for milk) and of carton-filling machines, both in the aseptic and
non-aseptic packaging sectors, was found in breach of Article 82 EC. The
Commission defined four relevant markets in the packaging of liquid
food: the market in machinery for aseptic packaging, the corresponding
market for cartons, the market in machinery for non-aseptic packaging
and the corresponding market for cartons. The applicant argued, inter alia,
that these markets should be further subdivided in both the aseptic and
non-aseptic sectors, depending on whether the cartons or machinery were
used for the packaging of milk or other liquid food products such as fruit
juices. The Court upheld the findings of the Commission and found that in
both the aseptic and non-aseptic sectors, the packaging machinery and the
cartons shared the same characteristics and satisfied identical economic
needs whether they were used for packaging milk or other products.
Therefore, and unlike the situation in Hoffmann-La Roche,25 it could not be
said that the same product could be used in two wholly different ways
and, hence, that two different sub-markets should be defined within each
of the four markets identified by the Commission.26
Secondly, the Commission and the Court have considered other factors
in order to measure cross-elasticity of demand such as price. For example
in TetraPak (II),27 the Court took the view that TetraPak’s machinery and
cartons of the same type were uniformly priced whether they were
intended for packaging milk or other products, which indicated that they
belonged to a single product market.28 Consumer preference is another
important element, as illustrated by the decision of the Commission in
TetraPak (I).29 In that case, the Commission explained that different types
of milk (fresh, UHT and sterilised), although technically adequate
substitutes for one another, were not regarded by consumers as
interchangeable because they tasted different. There was therefore limited
cross-elasticity between the various types of milk. 30 Finally, the different
23
Ibid.
24
Case T-83/91 [1994] ECR II-755.
25
Case 85/76, supra n. 21.
26
Case T-83/91, supra n. 24 at paragraph 64 of the judgment.
27
Case T-83/91, supra n. 24.
28
Ibid., at paragraph 64 of the judgment. See also Hoffmann-La Roche (Case 85/76, supra n.
21, at paragraph 20 of the judgment).
29
See Decision 88/501 of the Commission (OJ [1988] L 272/27, [1990] 4 CMLR 47.
30
Ibid., at paragraph 32 of the Decision.
 Abuses of dominant position 81

nature of the distribution channels may also determine the lack of cross-
elasticity in the demand for two products. For example, in Michelin v.
Commission,31 the Court explained that the sale of heavy-vehicle tyres
required a specialised distribution network, as buyers expected advice
and long-term services adapted to their needs, whereas buyers of car or
van tyres did not require such specialised services. This was one of the
factors used by the Court to confirm the Commission’s conclusion that the
two types of tyre belonged to different markets.32
Although, as highlighted by the Commission’s Notice on market
definition,33 demand substitution is the most important factor in the
determination of the product market,34 there is another competitive
constraint that is significant in the definition of the relevant market:
supply substitution.35
If there is high cross-elasticity in supply between two products – that is,
if the producer of one of them can easily adapt its production plant to
produce the other – the implication may be that the two products belong to
the same relevant market.36 In Michelin v. Commission,37 the Court upheld
the Commission’s contention that there was no cross-elasticity of supply
between tyres for heavy vehicles and car tyres:

… The fact that time and considerable investment are required in order to
modify production plant for the manufacture of light vehicle tyres or vice-versa
means that there is no discernible relationship between the two categories of
tyres enabling production to be adapted to demand on the market. Moreover,
that was why, in 1977, when the supply of tyres for heavy vehicles was
insufficient, Michelin NV decided to grant an extra bonus instead of using
surplus production capacity for car tyres to meet demand.38

31
Case 322/81, supra n. 1.
32
Ibid., at paragraph 40 of the judgment.
33
See supra n. 7.
34
The Commission explained that ‘demand substitution constitutes the most immediate
and effective disciplinary force on the suppliers of a given product in particular in relation
to their pricing decisions. A firm or a group of firms cannot have a significant impact on
the prevailing conditions of sale, such as prices, if its customers are in a position to switch
easily to available substitute products or to suppliers located elsewhere’ (ibid., at
paragraph 13 of the Notice).
35
Ibid., at paragraphs 13 and 14 of the Notice.
36
In the Notice (supra n. 7) the Commission explains that supply substitution means that
‘suppliers are able to switch production to the relevant products and market them in the
short term without incurring significant additional costs or risks in response to small and
permanent changes in relative prices’ (at paragraph 20).
37
Case 322/81, supra n. 1.
38
Case 322/81, supra n. 1, at paragraph 41 of the judgment. See also the Decision of the
Commission in TetraPak (I) (supra n. 29, at paragraphs 30 and 36–7 of the decision) and the
Court’s judgment in Continental Can (Case 6/72, supra n. 1, at paragraphs 33–6 of the
judgment).
82 EC Competition Law and Policy

In addition to cross-elasticity in demand and supply, other elements have

proved relevant in the definition of the product market. For example, in
Hilti v. Commission,39 the Commission took the view that Hilti had abused
its position of dominance in the market for cartridge strips and nails
compatible for use with its own-branded nail guns. The Court agreed with
the Commission in that there were three separate markets of nail guns,
cartridge strips and nails compatible with Hilti’s tools, contrary to the
applicant’s suggestion that there was one single market for all three
products. One of the elements used by the Court to emphasise the separate
nature of these three markets was the fact that there were specialised
independent producers making nails for use in nail guns and even some who
just made nails specifically designed for Hilti’s tools. There was therefore a
specific market for nails compatible with Hilti’s tools.40

The relevant geographic market

In United Brands v. Commission, the Court defined the geographic market
as a ‘clearly defined geographic area where a product is marketed and
where the conditions of competition are sufficiently homogeneous for the
effect of the economic power of the undertaking to be evaluated’.41 This
definition has been adopted by the Commission in its Notice on market
definition.42 In United Brands,43 and although United Brands sold in all
Member States of the European Community (nine at the time), the
Commission and the Court excluded the French, British and Italian
markets from the definition of the geographic market, which only
encompassed the remaining six Member States. This was explained by the
fact that in those three Member States, United Brands’ bananas did not
compete on equal terms with other bananas (as they did in the other six
Member States) given the existence of preferential systems or special
circumstances. Thus, in France there was a preferential system for bananas
originating in certain overseas departments and countries historically
linked with France, such as the Ivory Coast, Madagascar and Cameroon.
The same was true in the United Kingdom for bananas originating in
certain Commonwealth countries. In Italy, following the abolition of the
state monopoly responsible for marketing bananas, a system of quota
restrictions and of imports supervision had been introduced.44
39
Case T-30/89, supra n. 13.
40
Ibid., at paragraph 67 of the judgment.
41
Case 27/76, supra n. 5., at paragraph 11 of the judgment.
42
The geographic market is defined as ‘the area in which the undertakings concerned are
involved in the supply and demand of products or services, in which the conditions of
competition are sufficiently homogeneous and which can be distinguished from neigh-
bouring areas because the conditions of competition are appreciably different in those
areas’ (see the Commission’s Notice on market definition, supra n. 7, at paragraph 8).
43
Case 27/76, supra n. 5.
44
Ibid., at paragraphs 49–51 of the judgment.
 Abuses of dominant position 83

There is evidence both in the Commission’s decisions and in the case

law of the Court of the kind of factors that are relevant to the definition of
the geographic market. For example, and as seen above in United Brands,45
specific commercial policies followed by Member States may have an influence
in the delimitation of the geographic market. Likewise, transport costs are
significant. Where the cost of transporting a product is very high in
relation to its price, this will reflect the existence of economic barriers to the
importation of the product and will limit the market geographically,
generally on a national46 or even smaller territorial scale.47 In Hilti v.
Commission,48 the Commission took the view that the substantial price
differences for Hilti’s products between the Member States could not be
explained on the basis of transport costs, as these were low, and concluded
that the relevant geographical market was the Community as a whole.
Similarly, in TetraPak (II),49 the geographic market was also the
Community as a whole, due to the low cost of transporting cartons and
machines, which meant they could easily and rapidly be traded between
states.50 In some cases, consumer preference for local sources offering security in
supply has been shown to contribute to the separation of markets,
generally along national lines.51 Thus, in Michelin v. Commission,52 the fact
that Dutch dealers obtained their supplies only from suppliers operating
in the Netherlands confirmed the Commission’s view that the relevant
geographical market was the national one, rather than a much wider one –
as the applicants claimed.53 Finally, in cases where a market is subject to a
state monopoly, the relevant geographical market tends to be national, even
if private firms are authorised to provide some of the relevant services and
hold large market shares in some regional sub-markets.54
In the Notice on market definition, the Commission referred to the
types of evidence used to delimit the relevant geographical market. These
include evidence on changes in prices between different areas, basic
demand characteristics, views of customers and competitors, examination
45
Case 27/76, supra n. 5.
46
See the British Plasterboard Decision (Commission Decision 89/22/EEC, OJ [1989] L 10/
50, [1990] 4 CMLR 464, at paragraphs 111 to 113), where the high costs of transporting
plasterboard determined the existence of two separate markets: the Irish and the British.
47
Thus in the British Sugar Decision (Commission Decision 88/518/EEC, OJ [1988] L 284/
41, [1990] 4 CMLR 196, at paragraphs 44–8 of the Decision), the high costs of transporting
sugar meant that the relevant geographic market was limited to mainland Britain
(excluding Northern Ireland).
48
Case T-30/89, supra n. 13.
49
Case T-83/91, supra n. 24.
50
Ibid., at paragraph 94 of the judgment.
51
See Re Soda Ash (Commission Decision 91/297/EEC, OJ [1991] L 152/1, [1994] 4 CMLR
454, at paragraph 42 of the decision).
52
Case 322/81, supra n. 1.
53
Ibid., at paragraph 26 of the judgment.
54
Case 247/86 Alsatel v. Novasam (supra n. 2).
84 EC Competition Law and Policy

of customers’ current geographical pattern of purchases and the existence

of various barriers to entry.55

Dominance within the Common Market or a substantial part of it

There are two issues that need to be considered under this heading: the
concept of dominance and the fact that it needs to be held within the
Common Market or a substantial part of it.

The notion of a dominant position

Article 82 EC does not define what constitutes a dominant position and
again it fell to the Commission and the European Court to elaborate that
term. In its decision in Continental Can,56 the Commission explained that
undertakings are in a dominant position ‘when they have the power to
behave independently, which puts them in a position to act without taking
into account their competitors, purchasers or suppliers’.57 In similar terms,
the Court held in United Brands v. Commission,58 that a dominant position
refers to ‘a position of economic strength enjoyed by an undertaking
which enables it to prevent effective competition being maintained on the
relevant market by giving it the power to behave to an appreciable extent
independently of its competitors, customers and ultimately of its
consumers’.59 The gist of these definitions seems to be, therefore, that a
dominant undertaking enjoys such economic power that it is immune
from any competitive pressures.
The Commission and the Court have also set out the main indicators of
market power. The first and obvious one is market share. If an undertaking
has a very large market share in a certain market, it is likely that it will hold
a position of dominance in that market.60 Thus, in Hoffmann-La Roche,61 the
Court held that ‘very large market shares are in themselves, and save in
exceptional circumstances, evidence of the existence of a dominant
55
See the Commission’s Notice on market definition (supra n. 7) at paragraphs 44 to 52.
56
See supra n. 1.
57
Ibid., at paragraph II.B.3 of the Decision.
58
Case 27/76, supra n. 5.
59
Ibid., at paragraph 65 of the judgment.
60
In Continental Can (see the Commission Decision, O.J. [1972] L 7/25, [1972] CMLR D11),
the Commission took the view that the subsidiary of Continental Can in Germany had a
position of dominance in each one of the three product markets defined by the
Commission on the basis of the large market shares (80 per cent, between 80 and 90 per
cent and between 50 and 55 per cent) held by the latter in those markets (see paragraphs
II.B.5, 6 and 7 of the Decision). The Court did not consider this issue because it annulled
the Commission’s decision on grounds of lack of appropriate reasoning in the definition
of the relevant product market. Likewise, in Re Irish Sugar (Commission Decision 97/624,
OJ [1997] L 258/1, [1997] 5 CMLR 666), the Commission held that a firm holding 90 per
cent of the overall granulated sugar market enjoyed a position of dominance in that
market.
61
Case 85/76, supra n. 21.
 Abuses of dominant position 85

position [emphasis added]’.62 The Court has been mindful, however, to

emphasise that a large market share does not per se indicate that the
undertaking is dominant. For example, in United Brands v. Commission, the
Court explained that the fact that United Brands had a market share
between 40 and 45 per cent of the market for bananas did not, on its own,
determine that the company was dominant.63 In particular, the Court
referred to the fact that United Brands’ position had to be considered in the
light of the strength and number of its competitors.64 In other words, if the
rest of the market looked very fragmented, i.e. with many small
competitors holding very small market shares, United Brands would be
dominant. If, however, there had been just one competitor with a large
market share, United Brands would not have been dominant. On the facts
of the case, United Brands had a market share several times greater than its
nearest competitor and was, therefore, dominant. The important, but not
conclusive, character of large market shares has been repeatedly
underlined by the Court in numerous cases. A particularly clear statement
is found in the preliminary ruling of the Court in Gøttrup-Klim,65 where the
Court held, in reference to an undertaking that had a market share of 36
per cent of the Danish fertiliser market and 32 per cent of the market in
plant protection products:

It is true that in certain cases, the fact that an undertaking holds a large market
share may be considered a strong indication of the existence of a dominant
position … While an undertaking which holds market shares of that size, may,
depending on the strength and number of its competitors, be considered to be in
a dominant position, those market shares cannot on their own constitute
conclusive evidence of the existence of a dominant position.66

In addition to the existence of a large market share, there are other factors
which are relevant to a finding of a position of dominance and to which
the Commission and the Court have frequently alluded. Thus, the size of
an undertaking is an important indicator. In Hoffmann-La Roche v.
Commission,67 the Court took into account the fact that Hoffmann-La Roche
was the world’s largest vitamin manufacturer, with a turnover that
62
Ibid., at paragraph 41 of the judgment. See also the judgment of the Court of First Instance
in Hilti v. Commission (Case T-30/89, supra n. 13), where it was held that a market share
between 70 and 80 per cent was itself a clear indication of dominance in the market (at
paragraph 92 of the judgment). In some cases, as in Hoffman-La Roche v. Commission
(supra) and in Compagnie Maritime Belge v. Commission (Joined Cases C-395/96P and C-
396/96P [2000] 4 CMLR 1076), the Court added a temporal dimension and explained that
the very large market share needs to be held for some time for the undertaking to be
dominant.
63
Case 27/76, supra n. 5, at paragraphs 109 and 110 of the judgment.
64
Ibid.
65
Case C-250/92 [1994] ECR I-5641, [1996] 4 CMLR 191.
66
Ibid., at paragraph 48 of the judgment.
86 EC Competition Law and Policy

exceeded that of all other vitamin manufacturers, and that it was head of
the largest pharmaceutical group in the world.68 Similarly, in Michelin v.
Commission,69 the Court referred to the fact that Michelin had a clear lead
in investment and research over its competitors.70 Three other factors
closely related to the size and resources of an undertaking are the quality of
the service network, the degree of vertical integration and the technological lead of
the undertaking. A clear example of the first is found in the judgment in
Michelin v. Commission,71 where the Court underlined the undisputed
superiority of Michelin’s network in terms of efficiency and quality of
service as an indicator of dominance.72 In United Brands v. Commission,73
the Court explained in detail the importance of the degree of vertical
integration. Thus, the fact that United Brands was vertically integrated to a
high degree was relevant to the finding of their position of dominance. In
particular, it meant that the company knew it was able to transport
regularly, whatever the prevalent market situation, at least two- thirds of
their average volume of sales of bananas, which in turn guaranteed it
commercial stability and well-being.74 Finally, the technological
advantages enjoyed by an undertaking are important and often take the
form of intellectual property rights. Thus, in its decision in Continental Can,
the Commission explained that the technological lead of Continental Can
over its competitors was ensured by the patents and technical know-how
it held.75 Likewise, in its decision in TetraPak (I),76 the Commission took the
view that the large market share held by TetraPak together with its
acquisition of an exclusive combined patent and know-how licence
indicated a position of dominance.
The Commission and the Court have also referred to barriers to entry as
an indicator of dominance. The Commission mentioned them expressly in
its XXIVth Report on Competition Policy, the main question being
‘whether producers outside the product or geographic market could make
a timely and significant entry so as to create an effective counterweight to
incumbents already operating on the market.77 This implies a very wide
construction of the term, but unfortunately not a precise definition of it.78
67
Case 85/76, supra n. 21.
68
Ibid., at paragraph 47 of the judgment.
69
Case 322/81, supra n. 1.
70
Ibid., at paragraph 55 of the judgment.
71
Case 322/81, supra n. 1.
72
Ibid., at paragraph 58 of the judgment.
73
Case 27/76, supra n. 5.
74
Case 27/76, supra n. 5, at paragraphs 70–81 of the judgment. See also the Decision of the
Commission in Continental Can (supra n. 60) at paragraph II.B.9 of the decision.
75
See supra n. 60, at paragraph II.B.10 of the decision.
76
See supra n. 29.
77
See XXIVth Report on Competition Policy (1994) at point 203.
78
The use of barriers to entry as an indicator of dominance has been controversial. Thus
some academic writers have warned of the risks of attacking efficiency in using this
 Abuses of dominant position 87

Implicit references to barriers to entry are found both in Commission79 and

European Court80 decisions. Examples of such barriers include the
existence of a high initial cost of establishment in a market. In the British
Plasterboard Decision,81 the Commission concluded that, at the time, the
impact of potential competition on the plasterboard market was limited
due, in particular, to the high cost of establishing new plasterboard
production and sales and technical networks. In the same Decision, the
Commission underlined that financial risk could also operate as an entry
barrier. Thus a potential new competitor in the plasterboard market
would have to develop mines of gypsum, the raw material needed to
manufacture plasterboard, or to accept the cost disadvantage of importing
gypsum.82 Statutory monopolies and other regulatory barriers also have a
crucial impact on potential competition. In General Motors,83 General
Motors Continental was the sole agent authorised by Belgian law to issue
certificates of conformity for imported Opel/Vauxhall vehicles. This fact
alone meant that General Motors Continental held a position of
dominance.84 Similarly, in Irish Sugar,85 Irish sugar was held to be
dominant not only because it held over 90 per cent of the total granulated
sugar market in Ireland but also because it was annually allocated the
entire Community sugar quota for Ireland.86
Finally, the position of dominance may be held by a seller

concept to find dominance (see R. H. Bork, The Antitrust Paradox; A Policy at War with Itself
(New York, 1978, reprinted with a new introduction and epilogue, 1993), at pp. 310–11).
Others have criticised the Commission and the Court for not clarifying the notion of
barriers to entry and for focusing on costs of entry rather than on real economic barriers
(See S. Turnbull, ‘Barriers to entry, Article 86 EC and the abuse of a dominant position: an
economic critique of European Community competition law’, [1996] 2 ECLR 96 at 97).
79
See the Commission’s decisions in Re Soda Ash (supra n. 51). Thus in Decision 91/299
(Solvay), the Commission, inter alia, referred to the ‘improbability of any new producer of
synthetic ash entering the market and setting up manufacturing facilities in the
Community’ (at paragraph 45) as one of the factors used to assess the market power of
Solvay. See also Decision 91/300 (ICI) at paragraph 48.
80
See Case 85/76 Hoffmann-La Roche (supra n. 21) at paragraph 48 of the judgment, where
the Court considered the absence of potential competition as a relevant element in
assessing Hoffmann-La Roche’s dominant position.
81
Supra n. 46, at paragraph 120.
82
Ibid. Interestingly enough, the situation in the plasterboard market was soon to change
and within two years the market share of British Gypsum had dropped from 96 per cent
to 65 per cent and two new competitors, Knauf and Large, had penetrated the market (see
XXIInd Report on Competition Policy, (1992) Annex III, p. 423).
83
Commission Decision 75/75/EEC, supra n. 14.
84
Ibid., at paragraph 11 of the Decision. See also Case T-229/94 Deutsche Bahn v. Commission
(supra n. 14) at paragraphs 56–7 of the judgment.
85
See supra n. 60.
86
Ibid., at paragraph 104 of the Decision. See also the Decision of the Commission in British
Midland Airways v. Aer Lingus (Decision 92/213/EEC, OJ [1992] L 96/34, [1993] 4 CMLR
596), at paragraph 19 of the decision.
88 EC Competition Law and Policy

(monopolist),87 by a buyer (monopsonist)88 or jointly by one or more

undertakings (collective or joint dominance).89

‘Within the Common Market or a substantial part of it’

Article 82 EC provides that the position of dominance needs to be held
throughout the Common Market or a ‘substantial part of it’. No market
share percentages have been laid down to determine what constitutes a
substantial part of the Common Market, but both the Commission and the
Court have followed a generous interpretation of this condition. Thus,
national markets have been held to constitute a substantial part of the
Common Market. In Michelin v. Commission,90 the Dutch market was a
substantial part of the Common Market.91 There is also evidence that
regional markets can fulfil this requirement. Thus, in Suiker Unie,92 the
Court upheld the Commission’s findings that the southern part of
Germany was a substantial part of the Common Market. In deciding so,
consideration was given not only to the dimensions of the territory itself
but also to other factors. Thus the facts that two of the largest Community
producers of sugar had their main place of business in the area and that
there were a large number of consumers in the region in relation to the
Community as a whole proved to be relevant considerations.93

3.2.2 Abuse
A dominant company needs to abuse its position of economic strength to
come under Article 82 EC. Two main issues need to be considered: the
concept of abuse and the different examples of abuse.

The concept of abuse

In Hoffmann-La Roche,94 the Court defined abuse as follows:

The concept of abuse is an objective concept relating to the behaviour of an

undertaking in a dominant position which is such as to influence the structure

87
The overwhelming majority of cases under Article 82 EC concern dominant sellers. See
infra section 3.2.2.
88
See Re UK Small Mines (XXIst Report on Competition Policy (1991) at paragraph 107),
where the Commission found two UK electricity companies, National Power and
PowerGen, dominant purchasers of electricity generating coal.
89
For a detailed consideration of collective dominance, see infra section 3.2.4.
90
Case 322/81, supra n. 1.
91
Ibid., at paragraph 28 of the judgment.
92
Cases 40–48/73, 50/73, 54–56/73, 111/73, 113–114/73 [1975] ECR 1663, [1976] 1 CMLR
295.
93
Ibid., at paragraphs 441–9 of the decision.
94
Case 85/76, supra n. 21.
 Abuses of dominant position 89

of a market where, as a result of the very presence of the undertaking in

question, the degree of competition is weakened and which, through recourse
to methods different from those which condition normal competition in
products or services on the basis of the transactions of commercial operators,
has the effect of hindering the maintenance of the degree of competition still
existing in the market or the growth of that competition.95

This definition has not been widely used in the case law. The Court has
preferred instead to consider forms of abuse on a case-to-case basis.

Examples of abuse
Article 82 EC provides a list of examples of abusive conducts, which, as the
Court emphasised in Continental Can, is non-exhaustive.96 In the same
decision, the Court also referred implicitly to two different types of abuse:
exploitative abuse and anti-competitive abuse.97 Exploitative abuse is
characterised by the direct prejudice caused to consumers, e.g. the
imposition of unreasonably high prices by a dominant company. Anti-
competitive abuse, by contrast, is directed at competitors and the
prejudice to the consumer is indirect. For example, if a dominant company
drastically lowers its prices in order to drive a new competitor out of the
market, that reduction in prices may temporarily benefit the consumer. In
the long run, however, and once the competitor has been ousted from the
market, the dominant company is likely to raise its prices again and hence
harm consumers’ interests.
The examples of abuse listed in Article 82 EC and some of those that
have been added by the case law of the Court will be considered in turn.

Article 82(1)(a): imposition of unfair purchase or selling prices or other unfair

trading conditions
In General Motors98 and in United Brands,99 the Court confirmed that the
imposition by a dominant company of a price that is excessive in relation
to the economic value of the service or goods provided could be abusive.
In practice, however, it is difficult to prove that the price of a product is
unfair, and the fact that it is considerably higher when compared to that of
competing products is not sufficient. In particular, not only are there con-
siderable difficulties in working out production costs and indirect costs,
but it is also necessary to explore whether there is an objective justification
for such high prices.100 In both these cases, the European Court annulled

95
Ibid., at paragraph 91 of the judgment.
96
Case 6/72 (supra n. 1), at paragraph 26 of the judgment.
97
Ibid.
98
Case 26/75 (supra n. 14), at paragraphs 11–24 of the judgment.
99
Case 27/76 (supra n. 5), at paragraphs 248–9 of the judgment.
100
See Case 27/76 (supra n. 5), at paragraphs 253–4 of the judgment.
90 EC Competition Law and Policy

the respective Commission decisions, finding the companies in breach of

Article 82 EC on account of their charging excessive prices: in the first case,
and even though the company had an administrative monopoly, because
the excessive prices were temporary and objectively justified,101 and in the
second because the Commission failed to prove that the price – even
though it was high – was unfair.102
The imposition of unfair trading conditions is another example of
abuse. In BRT v. SABAM (II),103 a Belgian association for the management
of copyright included in its standard form contracts with its members a
clause providing for the compulsory assignment of all copyright, both
present and future, in its favour. Furthermore, the clause gave the
association the right to retain those rights for five years following the
member’s withdrawal from the association. The national court had
ascertained that the association had a dominant position in a substantial
part of the Common Market and asked the Court to rule whether the
clause mentioned was abusive. The Court acknowledged that an
association formed for the protection of copyright would need to enjoy a
position based on the assignment of rights in its favour in order to
safeguard those rights effectively. If, however, the association imposed
obligations on its members that went beyond what was necessary to
achieve that objective and encroached unfairly on a member’s freedom to
exercise its copyright, then those obligations would be unfair and
therefore abusive.104 The Court indicated that the clause at issue could be
an unfair trading condition, although it was, of course, left to the national
court to apply the Court’s ruling to the facts of the case.105
In United Brands,106 the clause inserted by United Brands in its general
conditions of sale, forbidding its distributors to resell bananas while still
green to foreign dealers, was held to be abusive. The Commission had
taken the view, upheld by the Court, that this obligation had an effect akin
to a prohibition on exports because it made any trade in green bananas
almost impossible. Moreover, the effect of the clause was further enhanced

101
Thus the Court accepted that the applicant had given ‘an adequate explanation’ of the
circumstances in which high prices had been charged. The Court also took into account
that, following complaints, the applicant had brought its prices into line with the real
economic cost of the operation and had reimbursed complainants even before the
Commission’s intervention (see Case 27/76 (supra n. 5) at paragraphs 20–3 of the
judgment). See also Case C-323/93 Centre d’insémination de la Crespelle v. Coopérative de la
Mayenne ([1994] ECR I-5077) at paragraphs 25–7 of the judgment.
102
See Case 27/76 (supra n. 5) at paragraphs 248-67 of the judgment. For a case where the
Court upheld claims that high prices were abusive, see British Leyland v. Commission (Case
226/84 [1986] ECR 3263, [1987] 1 CMLR 185, at paragraphs 27–30 of the judgment).
103
Case 127/73 [1974] ECR 313, [1974] 2 CMLR 238.
104
Ibid., at paragraphs 10–11.
105
Ibid., at paragraphs 12–13.
106
Case 27/76 (supra n. 5).
 Abuses of dominant position 91

by the fact that United Brands traditionally supplied its distributors with
smaller quantities of bananas than those ordered, hence tightening its
economic hold over them and preventing them from developing a
competitive response to United Brands’ tactics deterring export in the
Community market.107 Likewise, in Ahmed Saeed108 the Court held that the
imposition by a dominant airline on other small airlines of a single tariff
for a given route could be abusive if it arose as a result of the attempt of a
dominant company to eliminate any price competition rather than from
the policy of the aeronautical authorities.109

Article 82(1)(b): limiting production, markets or technical development to the

prejudice of consumers
Several cases illustrate that the unjustified limitation of production,
markets or technical development by a dominant company can also be
abusive.110 The recent decision of the Commission in Re The 1998 Football
World Cup111 constitutes a clear example of this form of abuse. The Comité
Français d’organisation de la Coupe du monde de football 1998 (CFO) was
one of the official ticket distributors for the 1998 World Cup. CFO only
sold ‘blind tickets’ (i.e. those for matches where the identities of the
participating teams were unknown at the time of purchase) directly to
consumers who were able to provide a postal address in France. The
Commission took the view that such practice discriminated against the
general public outside France and resulted in a limitation of the market for
ticket sales to the prejudice of that public, which was contrary to Article
82(b) EC.112 The Commission, moreover, rejected CFO’s attempt to justify
objectively the discrimination on security grounds.

Article 82(1)(c): applying dissimilar conditions to equivalent transactions with

other trading parties.
This example of abuse in Article 82 EC has produced an abundant body of
case law and has been used to define a panoply of abusive practices. In
trying to understand the approach of the Commission and of the Court in
this field, it is essential to bear in mind that one of the main aims of EC
competition law is to uphold the single market ideal of the Treaty.113 The
principle of non-discrimination lies at the core of the internal market and
breaches of that principle have met with the robust disapproval of the
European Court in its case law on the four freedoms. This approach has

107
Ibid., at paragraphs 155–61 of the judgment.
108
Case 66/86 [1989] ECR 803, [1990] 4 CMLR 102.
109
Ibid., at paragraph 44 of the judgment.
110
See Case C-41/90 Höfner [1991] ECR I-1979 and Case C-179/90 Merci [1991] ECR I-5889.
111
Commission Decision 2000/12/EC OJ [2000] L 5/55 [2000] 4 CMLR 963.
112
Ibid., at paragraph 91 of the decision.
113
See supra Chapter 1, section 1.5.
92 EC Competition Law and Policy

also decisively influenced the decisions of the Commission and of the

Court on discriminatory practices under Article 82(1)(c) EC, just as it
penetrated the case law of the Court under Article 81(1)(d) EC.114
First and foremost, discrimination on grounds of nationality carried out
by a dominant company is regarded as abusive. In GEMA,115 the German
music performing rights society was found by the Commission to have
abused its position of dominance by discriminating against non-German
nationals, who in practice could not become members of the society.
Likewise, in another copyright case, GVL v. Commission,116 the Court
upheld a Commission decision that the refusal of a German performer’s
rights collecting society to allow non-German artists not resident in
Germany to benefit from rights of secondary exploitation was abusive.117
Second, discriminatory pricing also comes under Article 82 EC. The
leading case in this area is United Brands.118 The facts of this case have been
set out above.119 The Court confirmed the Commission’s view that, by
charging different prices to its ripeners/distributors in the various
Member States without an objective justification, United Brands had
abused its position of dominance.120 The reasoning of the Court was
sharply criticised as being economically flawed.121 In particular, it was
argued that it has not been demonstrated that discriminatory pricing
reduces efficiency and that such practice is per se undesirable from an
economic perspective.122 There is evidence in the judgment that the Court
considered the discriminatory pricing by United Brands in conjunction
with its ban on the export of green bananas123 and its practice of supplying
distributors with lower quantities of bananas than those ordered.124 The
Court then held that the combination of the resale restrictions and
discriminatory pricing led to a rigid partitioning of the national markets. It
seems, therefore, as the Court’s critics have already suggested, that the
issue of market integration promoted by the Treaty might have
underpinned the judgment. The Court of First Instance has applied the
same reasoning in TetraPak (II ),125 where the different prices charged by

114
See Chapter 2, section 2.2.4.
115
Commission Decision 71/224/EEC, OJ [1971] L 134/15, [1971] CMLR D35.
116
Case 7/82 [1983] ECR 483, [1983] 3 CMLR 645.
117
See also the Decision of the Commission on Re The 1998 Football World Cup (supra n. 111).
118
Case 27/76, supra n. 5.
119
See supra nn. 10–12 and accompanying text.
120
Case 27/76, supra n. 5 at paragraphs 227–31 of the judgment.
121
See W. Bishop, ‘Price discrimination under Article 86: political economy in the European
Court’, [1981] 44 CMLRev 282; M. Siragusa, ‘The application of Article 86 to the pricing
policy of dominant companies: discriminatory and unfair prices’ [1979] 16 CMLRev 179.
122
See Bishop, op. cit., supra n. 121, at p. 287.
123
See supra nn. 106–107 and accompanying text.
124
Case 27/76, at paragraphs 155–61 of the judgment.
125
See Case T-83/91, supra n. 24.
 Abuses of dominant position 93

TetraPak in the various Member States were held to be abusive,126 and

more recently in its decision in Aéroports de Paris v. Commission.127
Other overtly discriminatory practices, such as the discriminatory
allocation of products during supply shortages, have received similar
treatment from the Court. Thus, in BPB v. Commission,128 BPB, a dominant
company in the plasterboard market, and its British subsidiary granted
priority deliveries to customers who obtained supplies exclusively from
them, to the detriment of customers who imported supplies of
plasterboard produced by some of BPB’s competitors. The Court
acknowledged that it would be legitimate for a dominant company, in
times of shortage, to lay down criteria for according priority in meeting
orders. Those criteria, however, had to be objective and non-
discriminatory, conditions not fulfilled in that case.129 The Court expressly
mentioned that such discrimination was anti-competitive because it had
an exclusionary effect.130 When considering the effect that such practices
had on intra-Community trade, the Court held that they had the effect of
isolating the United Kingdom market by hindering imports of
plasterboard.131
The Court has also used discrimination as the basis for a range of
abusive practices not expressly mentioned in Article 82 EC. The typical
example is the grant of certain types of discounts (or rebates) by a
dominant company. In the Sugar cartel case,132 the Court upheld the
Commission’s view that the rebates offered by a dominant company to
customers who agreed not to buy supplies from other sources was
abusive. In the Court’s view, the effect of this system was that ‘different
prices were charged to two economic operators that bought the same
amount of sugar from the dominant company if one of them purchased
from another producer as well’.133 As a result, dissimilar conditions were
applied to equivalent transactions in the sense of Article 82(c) EC. This
treatment of rebates, normally known as loyalty – or fidelity – rebates, was
further confirmed and explained in Hoffmann-La Roche v. Commission.134 In

126
Ibid., at paragraphs 160–70 and 207–9 of the judgment. See also Case 395/87 Ministère
Public v. Jean-Louis Tournier [1988] ECR 2521, [1991] 4 CMLR 248, where the Court took the
view that the charging of different royalties to discotheques in the various Member States
by a dominant copyright management society was abusive, in the absence of any
objective justification for such unequal treatment
127
Case T-128/98, [2000] ECR II-3929.
128
Case T-65/89 [1993] ECR II-389, [1993] 5 CMLR 32.
129
Ibid., at paragraph 94 of the judgment.
130
Ibid.
131
Ibid., at paragraph 135 of the judgment.
132
Cases 40–48/73, etc. [1975] ECR 1663, [1976] 1 CMLR 295.
133
Ibid., at paragraph 522 of the judgment.
134
Case 85/76, supra n. 21. In Coca-Cola, the Commission investigated the activities of this
company in the Italian market. In particular, the company offered loyalty rebates to its
94 EC Competition Law and Policy

that case, the Court took the view that fidelity rebates are abusive for three
reasons. First, they are abusive because they are not based on an economic
transaction but are intended to deprive the customer of the choice of other
sources of supply and therefore they deny to other producers access to the
market.135 By way of contrast, quantity discounts are economically
justified and therefore fall outside the scope of Article 82 EC.136 Secondly,
they are abusive because they are discriminatory, in that their effect is to
apply dissimilar conditions to equivalent transactions. As a result, a
different price is paid depending on whether or not the customer agrees to
buy exclusively from the dominant supplier.137 Thirdly, they are abusive
because they distort competition by strengthening the position of
dominance of the supplier.138 This principle was applied equally to fixed
rebates as well as those on a sliding scale that increased progressively as
the percentage of the purchases increased.139
In a later case, the Court considered a different type of rebate, so-called
target discounts, which are those given to customers that meet specified
sales targets. The Court considered these in Michelin v. Commission,140 after
the Commission, having been alerted to the system of target discounts and
bonuses offered by Michelin, concluded that they were abusive. As seen
above, Michelin was found to be dominant in the market of replacement
tyres for heavy vehicles in the Netherlands.141 The Court started by
distinguishing the system of discounts operated by Michelin from the
ones at issue in Hoffmann-La Roche.142 In particular, those imposed by
Italian distributors on condition that the latter undertook not to sell cola flavoured drinks
other than ‘Coca-Cola’. The Commission took the view that such discounts infringed
Article 82 EC and had the effect of preventing access to the market for competing
producers. The investigation was terminated by the Commission without a formal
decision, following the undertaking given by Coca-Cola to amend its distribution
agreements in order not to include the clauses concerning the discounts (see, XIXth
Report of Competition Policy at paragraph 50).
135
Ibid., at paragraph 90 of the judgment.
136
See the Decision of the Commission in Re Irish Sugar, OJ [1997] L 285/1, [1997] 5 CMLR
666, where the Commission explained that quantity discounts are allowed in reference to
individual orders because they reflect the cost saving achieved by the supplier (at
paragraph 153 of the decision).
137
See Case 85/76, supra n. 21 at paragraph 90 of the judgment.
138
Ibid.
139
See paragraphs 92–101 of the judgment. Hoffmann-La Roche tried to argue that the latter
category of discounts were quantity related and therefore should escape the application
of Article 82 EC. The Court, however, dismissed this argument and held that, unlike
quantity discounts, they were ‘not dependent on quantities fixed objectively and
applicable to all possible purchasers but on estimates made, from case to case, for each
customer according to the latter’s presumed capacity of absorption, the objective which it
is sought to attain being not the maximum quantity but the maximum requirements’ (see
paragraph 100 of the judgment).
140
Case 322/81, supra no. 1.
141
See supra n. 71 and accompanying text.
142
See Case 85/76, supra n. 21.
 Abuses of dominant position 95

Michelin did not require dealers to enter into any exclusive dealing
agreements or to obtain a specific proportion of their supplies from the
dominant company. The Court then considered that target discounts were
abusive mainly because they bound the dealers to the dominant company.
This was achieved mainly through the pressure inherent in reaching the
purchase threshold, which had the effect of discouraging them from
buying supplies from Michelin’s competitors, especially when the latter
could not match Michelin’s discounts. The discounts were therefore
loyalty related rather than cost-saving related.143 Interestingly, however,
the Court annulled the Commission’s decision in so far as it declared that
such rebates were discriminatory and therefore amounted to the
application of dissimilar conditions to equivalent transactions within the
meaning of Article 82(1)(c). The Court explained that although the system
involved the application of different rates to different dealers, the
discounts depended on the dealers’ turnover in sales of Michelin’s tyres in
general and not on the number of heavy-vehicle tyres purchased by the
dealers.144
The Commission, in its recent decision in Virgin/British Airways,145
considered the legality of the commission schemes operated by British
Airways. British Airways offered a performance reward scheme to travel
agents where the percentage commission paid to the agent increased every
time that a threshold sales target had been met or was exceeded by
reference to the previous year’s sales. The Commission, after deciding that
British Airways was dominant in air travel agency services in the United
Kingdom, equated its commission system to the system of target rebates in
Michelin and took the view that it was abusive because it was based on
loyalty rather than on efficiency and it had the effect of harming BA’s
competitors. This was the case, even though BA competitors had been able
to gain market share from BA since the liberalisation of the United
Kingdom transport market.146 Furthermore, the Commission took the
view that the system was discriminatory. The Commission explained that
two travel agents selling exactly the same number of tickets could receive
different commission, depending on whether or not they had exceeded
their previous year’s sales.147
Looking at the approach of the Court to discounts, it appears more than
ever that a dominant company has a ‘special responsibility’, in the sense
underlined in Michelin, not to impair or distort competition.148 Thus, while
loyalty and target discounts or increased commissions can be used

143
Case 322/81, supra n. 1, at paragraphs 81–6 of the judgment.
144
Ibid., at paragraphs 87–91 of the judgment.
145
OJ [2000] L 30/1.
146
Ibid., at paragraphs 97–107 of the decision.
147
Ibid., at paragraphs 108–9 of the decision.
148
See supra n. 1.
96 EC Competition Law and Policy

legitimately as part of normal business activities by non-dominant

companies, they will come within the scope of Article 82 EC when offered
by a dominant company. The economic power held by the dominant
company has the effect of enhancing the exclusionary effect of this type of
practice and can effectively result in a substantial hindrance to market
access, which not only produces a distortion of competition but also is
inimical to internal market principles.149

Article 82(1)(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
This abusive practice, otherwise known as ‘tying’, involves the dominant
company forcing its customers to buy additional goods or services from
them. In Hilti,150 the Commission took the view that the company had
abused its position of dominance by making the sale of its cartridge strips
conditional upon customers buying also their nails from them. The reason
was twofold. First, consumers were restricted in their choice of sources of
supply and, second, this clause had the effect of foreclosing the market to
other nail manufacturers.151 When the decision was challenged before the
Court of First Instance,152 Hilti tried to justify its tying clause objectively on
safety grounds, alleging that it was unsafe to use their guns with any other
type of nails and sought to demonstrate this point on the basis of expert
opinion.153 The Court, however, rejected this argument on the basis that, if
safety were a real concern for Hilti, it ought to have relied on the relevant
legislation on the sale of dangerous products in the United Kingdom and
applied to the pertinent enforcement authorities rather than take steps on
its own initiative to eliminate products which were supposedly
dangerous. In TetraPak (II),154 where TetraPak sold packaging machines on
condition that only TetraPak cartons were used on them, the Court of First
Instance confirmed the Commission’s view that this practice fell within
the scope of Article 82(1)(d) EC. The applicants tried to objectively justify
this clause, taking a literal view of Article 82(1)(d) EC by arguing that the
system of tied sales was objectively justified on considerations of
commercial usage and the protection of public health. In relation to the
commercial usage, the Court interpreted Article 82 EC teleologically. It
decided, on the facts of the case, not only that the tied sales were not
justified on grounds of commercial usage but that, even if these sales had
149
On the single market objective of EC competition law, see Chapter 1, section 1.5.
150
Commission Decision 88/138/EEC, OJ [1988] L 65/19, [1989] 4 CMLR 677. For a
description of the background of that decision, see supra nn. 39–40 and accompanying
text.
151
Ibid., at paragraph 75 of the decision.
152
Case T-30/89 [1991] ECR II-1439, [1992] 4 CMLR 16.
153
Ibid., at paragraphs 102–7 of the judgment.
154
Case T-83/91, supra n. 24.
 Abuses of dominant position 97

been in accordance with commercial usage, that fact alone would not
justify a system of tied sales by a dominant company.155 This view was
expressly upheld by the European Court on appeal.156 The attempt to
justify the system on grounds of public health and consumer protection
also failed, mainly because it ran contrary to the principle of
proportionality. There were other less stringent means to achieve the
objective such as informing customers of the technical specifications that
cartons should meet when used on TetraPak machines.157 In this respect,
the judgment bears a close resemblance to the case law of the Court on the
four freedoms that underpin the Common Market.158

Other forms of abuse

The Court has repeatedly emphasised that the notion of abuse is a flexible
notion and that the list of examples in Article 82 EC is non-exhaustive.159
The case law of the Court has therefore encompassed practices which,
although not mentioned in Article 82 EC, distort or eliminate competition
or exploit consumers. Three practices merit particular attention:160 first,
predatory pricing, secondly, refusals to supply and to grant access to
essential facilities and thirdly, the controversial use of dominance in one
market to carry out abuses in a related or ancillary market.
The pricing practices listed in Article 82(1)(a) and(c) EC refer mainly to
the behaviour of a dominant company directly in relation to customers.

155
Ibid., at paragraph 137 of the judgment.
156
Case C-333/94P TetraPak International v. Commission [1996] ECR I-5951, [1997] 4 CMLR
662, at paragraph 37 of the judgment, where the Court held: ‘It must, moreover, be
stressed that the list of abusive practices set out in the second paragraph of Article 86
[now 82] of the Treaty is not exhaustive. Consequently, even where tied sales of two
products are in accordance with commercial usage or there is a natural link between the
two products in question, such sales may still constitute abuse within the meaning of
Article 86 [now 82] unless they are objectively justified.’
157
Case T-83/91, supra n. 24, at paragraph 139 of the judgment.
158
See, for example, in the framework of free movement of goods, the decision of the Court
in Commission v. United Kingdom (Newcastle disease) (Case 40/82 [1982] ECR 2793, [1982] 3
CMLR 497), where the United Kingdom had banned the importation of poultry from
other Member States except Denmark and Ireland. The United Kingdom authorities
argued that the ban was justified on grounds of protection public health, i.e. in particular
the prevention of the spread of Newcastle. The Court took the view that a total ban was
far too disproportionate a measure and that there were less stringent measures that could
be used to achieve the same result (see paragraphs 40–1 of the judgment).
159
See Case C-333/94P, supra n. 156. at paragraph 37 of the judgment.
160
But there are other forms of abuse that have been recognised by the case law. A recent
example is the decision of the Court of First Instance in ITT Promedia v. Commission (Case
T-111/96 [1998] ECR II-2937, [1998] 5 CMLR 491), where the Court decided that a
dominant company would be in breach of Article 82 EC if it started legal proceedings not
with the intention of asserting its rights but as a means of harassing the opposing party.
98 EC Competition Law and Policy

Predatory pricing is a form of abuse whereby the dominant company

reduces its prices drastically, with the aim of driving a competitor out of
the market. Although this may appear to be beneficial to consumers, this is
only the case in the short term. In most cases, the intention of the dominant
undertaking is to raise its prices again, and enjoy monopoly profits as soon
as the competitor has been eliminated. This form of abuse is particularly
damaging not only because it aims to eliminate of competition but also
because it hinders market access and encourages market partitioning, in
direct opposition to the market integration objective of the Treaty.
The leading case on predatory pricing is AKZO.161 AKZO, a large Dutch
company with subsidiaries throughout the Common Market, produced,
inter alia, a chemical called benzoyl peroxide that could be used in the
manufacture of plastics and also as a bleaching agent for flour. ESC, a
small UK-based company, traditionally produced flour additives based on
benzoyl peroxide, which it bought from AKZO. From 1977, it began to
produce benzoyl peroxide itself with remarkable success and at a price
lower than that charged by AKZO. Two years later, ECS decided to sell
benzoyl peroxide to plastic manufacturers and managed to attract some of
AKZO’s erstwhile customers. At a meeting between the two companies,
AKZO’s managers threatened ECS that they would reduce their prices for
flour additives even below cost if ECS did not withdraw from the plastic
sector. ECSC obtained a temporary injunction from the High Court to
prevent AKZO implementing these threats, but AKZO later carried them
out and approached ECS’s customers in the flour sector, offering them
substantially lower prices over a prolonged period of time, as well as a
whole range of incentives to entice them away from ECS, with the ultimate
aim of driving this company out of the plastic sector. The Court took the
view that there would not be an abuse if, by lowering its prices, an
undertaking aimed to attain an optimum selling price and a positive
coverage margin. So when do low prices become predatory? The Court
adopted cost-related criteria and took the view that if prices fall below
average variable costs162 they must be regarded as abusive because a
‘dominant undertaking has no interest in applying these prices except that
of eliminating competitors’.163 The Court went on to say that if prices were
above average variable costs but below average total costs164 the prices
must also be regarded as abusive if they are part of a plan by the dominant

161
Case C-62/86 [1991] ECR I-3359, [1993] 5 CMLR 215.
162
Variable costs are those that vary according to the quantities produced. By contrast fixed
costs are those that do not change. Average variable cost results from the addition of all
the variable costs divided by the number of units of output.
163
Case C-62/86, supra n. 161, at paragraph 71 of the judgment.
164
Average total cost is the sum of the total fixed and variable costs divided by the number of
units of output.
 Abuses of dominant position 99

undertaking to drive a competitor out of the market.165 The AKZO criteria

were confirmed in TetraPak (II).166
Another common form of abuse is the refusal to supply by a dominant
company. One of the very early cases in this field was Commercial Solvents
v. Commission.167 In that case, Commercial Solvents, an American
company, made two products used for the manufacture of a drug to cure
tuberculosis. Its Italian subsidiary refused to supply one of these products
to Zoja, a long-standing customer that manufactured the anti-tuberculosis
drug. This refusal to supply took place shortly after Commercial Solvents’
Italian subsidiary itself started manufacturing the same drug in
competition with Zoja. Following a complaint from Zoja, the Commission
found Commercial Solvents in breach of Article 82 EC. The Court upheld
that Decision and based its reasoning on the evidence that Zoja was a long-
standing customer and that Commercial Solvents intention after it had
decided to vertically integrate, had been to drive Zoja out of the market
and to fill that gap in the market itself.168 In United Brands,169 the Court
considered again a refusal to supply and emphasised the significance of
refusing to supply a long-standing customer. In this case, United Brands
refused to supply Olesen, one of its Danish wholesalers, on the grounds
that it engaged in an advertising campaign to promote a brand of
competing bananas. The Court took the view that a dominant company
‘cannot stop supplying a long-standing customer who abides by regular
commercial practice if the orders placed by this customer are in no way out
of the ordinary’.170 What makes a refusal to supply to a long-standing
customer more reprehensible is the fact that the latter relies on the
dominant company for the continuity of supplies and is, in a sense,

165
Case C-62/86, supra n. 161, at paragraph 72 of the judgment.
166
Case C-333/94P, supra n. 156. Recent case law has established that selective price cutting
may also be abusive, even if the prices do not fall below cost, if there is an intention on the
part of the dominant company to eliminate a competitor. The Court held in Compagnie
Maritime Belge (Cases C-395 and C-396/96P [2000] 4 CMLR 1076) that if a ‘dominant
company selectively cuts its prices in order deliberately to match those of a competitor, it
derives a dual benefit. First, it eliminates the principal, and possibly the only, means of
competition open to the competing undertaking. Secondly, it can continue to require its
users to pay higher prices for the services which are not threatened by that competition’
(at paragraph 117 of the judgment).
167
Cases 6–7/73 [1974] ECR 223, [1974] 1 CMLR 309.
168
Ibid., at paragraph 25 of the judgment, where the Court held: ‘However, an undertaking
being in a dominant position as regards the production of raw material and therefore able
to control the supply to manufacturers of derivatives 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 have
amounted to eliminating one of the principal manufacturers of ethambutol in the
Common Market.’
169
Case 27/76, supra n. 5.
170
Ibid., at paragraph 182 of the judgment.
100 EC Competition Law and Policy

dependent on it.171 United Brands made an attempt to justify objectively

their refusal to supply on the grounds of protecting their commercial
interests. While the Court accepted that it should be possible for United
Brands to take steps to protect these, the refusal to supply was too
disproportionate a response and hence it was abusive.172
Would a refusal to supply a casual customer be considered abusive? In
1977, BP was found to be in breach of Article 82 EC by the Commission
because it reduced substantially, and proportionately to a greater extent
than in relation to other traditional customers, its supplies of oil to one of
its casual Dutch customers.173 The cutback in supplies took place in 1973,
at the height of the world-wide oil crisis. The Court annulled the
Commission’s Decision and found that in time of shortage of supplies, it
could not be expected that a dominant company would apply an identical
rate of reduction to casual customers than to erstwhile customers.174 It
was, therefore, legitimate for the company to set a system of priorities in
meeting orders and to apply a different rate of reduction to casual
customers. Later case law has emphasised that these criteria for according
priority should be objective and non-discriminatory.175 There are, thus,
two fundamental differences between the judgment of the Court in this
case and in Commercial Solvents. In BP, not only was the victim of the
refusal to supply a casual customer, but there was also an objective
justification for the refusal to supply, namely the shortage of petroleum
products. If there had been no objective justification for the refusal to
supply, it seems likely that BP would have been found guilty of abuse even
if the customer was a casual one, as the Magill cases demonstrate.176
The extent to which a refusal to supply should constitute an act of abuse
is of particular importance to intellectual property cases, where the owner
of an intellectual property right (i.e. holder of a patent, an industrial
design right or a copyright) refuses to issue a licence or otherwise to give
access to the items protected by intellectual property. This is because the
holder of an intellectual property right can always be considered to be a
monopolist, or quasi-monopolist, whose monopoly is, moreover, pro-

171
The Advocate General explained that ‘refusal to sell to a long-standing customer, who
cannot make any call upon suppliers other than the one with whom he has regular
dealings, is an abuse prohibited by Article 86 [now 82] in so far as it may affect trade
between Member States, and this occurs if a ripener/distributor may very well disappear
from the market and the pattern of the supply of bananas may be appreciably modified in
a substantial part of the Common Market’ (Case 27/76, supra n. 5, at p. 334 (ECR) and
p. 466 [CMLR]).
172
Ibid., at paragraphs 190–3 of the judgment.
173
Commission Decision 77/327/EEC, OJ [1977] L 117/1, [1977] 2 CMLR D1.
174
Case 77/77 BP v. Commission [1978] ECR 1513, [1978] 3 CMLR 174.
175
See BPB v. Commission (Case T-65/89, supra n. 128) at paragraph 94 of the judgment, and
supra nn. 128–131 and accompanying text.
176
See infra nn. 180–189 and accompanying text.
 Abuses of dominant position 101

tected by law. If that dominance extends to a substantial part of the

Common Market, the holder of the right will enjoy a position of
dominance within the meaning of Article 82 EC.177 In its early case law, the
Court held that a refusal to license is not abusive per se, although the
concurrence of certain circumstances, might make it so. For example, in
Volvo v. Veng178 the Court took the view that the refusal of a car
manufacturer to license a third party to manufacture its car parts was not
abusive per se, but there were certain circumstances that could render that
refusal abusive, such as the arbitrary refusal to supply spare parts or the
charging of unreasonably high prices for these spare parts.179 In RTE and
ITP v. Commission,180 otherwise known as the Magill cases, three television
companies were found to be in breach of Article 82 EC for refusing to
supply to an Irish company (Magill) information, which was protected by
copyright, on the programmes they would be showing on their respective
channels. The three television companies traditionally produced their own
separate listings of the programmes that they would be showing on their
respective channels, but Magill wanted to produce a combined guide that
would give information on the programmes that would be shown on all
three channels. This comprehensive guide, would, of course, be most
attractive from the consumer’s point of view. Why was the refusal to
supply labelled as abusive? The Court took the Volvo v. Veng judgment as a
starting point and confirmed that there were circumstances in the case that
rendered the refusal abusive. In particular, three circumstances were held
to be crucial in this determination. First was the fact that the TV companies
were, by their actions, preventing the emergence of a product, for which
there was ‘a potential consumer demand’.181 Second was the absence of an
objective justification for the refusal to supply.182 Third – and here the
Court referred back to the Commercial Solvents judgment – and it explained
that the companies, which had statutory monopolies in television
broadcasting in Ireland and the United Kingdom, were trying to maintain
their stronghold over the secondary market of television guides.183 In
other words, in line with Commercial Solvents, the ultimate aim of the
companies was to exclude competition in the market for television guides.
Does the judgment of the Court in Magill represent an intolerable
intrusion on the rights of intellectual property rights holders or just a
consistent development of the case law? It would seem that the latter view
177
As the Court indicated in Deutsche Grammophon (Case 78/70 [1971] 1 CMLR 631, only if
this dominance extended to a ‘substantial part of the Common Market’ would the
undertaking have a dominant position within the meaning of Article 82 EC.
178
Case 238/87 [1988] ECR 6211, [1989] 4 CMLR 122.
179
Ibid., at paragraph 9 of the judgment.
180
Cases C-241/91P, etc. [1995] ECR I-797, [1995] 4 CMLR 718.
181
Ibid., at paragraph 54 of the judgment.
182
Ibid., at paragraph 55 of the judgment.
183
Ibid., at paragraph 56 of the judgment.
102 EC Competition Law and Policy

is a more balanced one. The interface between intellectual property rights

and the Treaty provisions, in particular those for the free movement of
goods and competition, has never been smooth. The reason is simple and
well-known. Intellectual property rights have some inherent qualities
such as territoriality and exclusivity, which are inconsistent with the single
market objective of the Treaty. As a result, and in the absence of Treaty
guidance on how to address this conflict, the Court reached a compromise
by distinguishing between the existence of an intellectual property right
and the exercise of such a right. While the existence of the right is
unaffected by the Treaty provisions, the exercise of the right may be
limited if it contravenes the principles underlying either the provisions on
free movement of goods or those on competition.184 This aspect of the case
is reflected in the judgment of the Court of First Instance, rather than in the
judgment of the Court, which is couched more in terms of a mere refusal to
supply. Thus, the Court of First Instance emphasised that the exclusive
right to reproduce the protected work is part of the essence or subject
matter of copyright, and as such, it is unaffected by Article 82 EC.185 If,
however, that right were exercised in an abusive way, then Article 82 EC
would apply.186 In a later case, Tiercé Ladbrooke,187 the Court of First
Instance took the view that a refusal of French race-course societies to
license Ladbrooke to show television broadcasts of French horse races in
Belgium was not abusive. What is more, it helpfully distinguished this
case from Magill, by explaining that the effect of the refusal to supply was
not to prevent the entrance of Ladbrooke into the market as Ladbrooke
already had the largest share of the betting market within which the
product (sound and pictures) was offered.188 As the French race-course
societies were not exploiting their intellectual property rights in the
Belgian market, it could not be said that the refusal to license led to a
restriction on competition in the sense present in Magill.189
The Magill cases sparked the debate on whether the Court was prepared
to uphold the doctrine of essential facilities in EC competition law. In the
words of the Commission, which seemed keen to apply this doctrine in the

184
See Case 24/67 Parke, Davis v. Centrafarm [1968] ECR 55, [1968] CMLR 47, at paragraph 6
of the judgment and, more clearly, Case 40/70 Serena v. Eda [1971] ECR 69, [1971] CMLR
260, where the Court held that ‘… even if the rights recognised by the legislation of a
Member State on the subject of industrial and commercial property are not affected, so far
as their existence is concerned, by Articles 85 and 86 EC of the Treaty, their exercise may still
fall under the prohibitions imposed by those provisions [emphasis added]’.
185
See Cases T-69/70/89, etc. RTE v. Commission [1991] ECR II-485, [1991] 4 CMLR 586, at
paragraphs 70–1 of the judgment.
186
Ibid.
187
Case T-504/93 [1997] ECR II-923, [1997] 5 CMLR 309.
188
Ibid., at paragraph 130 of the judgment.
189
Ibid.
 Abuses of dominant position 103

early 1990s,190 an ‘essential facility’ is ‘a facility or infrastructure without

access to which competitors cannot provide services to their customers’.191
According to the doctrine, a dominant undertaking that owns or controls
such a facility and refuses, without an objective justification, to make it
available to competitors – or makes it available in discriminatory terms –
abuses its position of dominance. Could it be said that the programme
listings of the television companies known only to them was an essential
facility and therefore that it should have been made available to Magill?
This approach, however desirable from the point of view of competitors,
has the potential to threaten incentives for investment and research and
development by large firms and may, in the long run, have a negative
effect on competition. The important decision of the European Court in
Oscar Bronner v. Mediaprint192 has shed light on this point and has
established clear limits to the application of the doctrine to EC competition
law. Bronner, a small publisher in the Austrian daily newspaper market,
brought an action before the national courts against Mediaprint, a
company with a very large share of that market. It claimed that
Mediaprint’s refusal to grant it access to its system of home-delivery of
newspapers was contrary to Article 82 EC. The main argument was,
therefore, that the system of home-delivery of newspapers operated by
Mediaprint was an ‘essential facility’ that should be made available to
competitors. The Court held that the refusal to admit Bronner to the
Mediaprint delivery network was not abusive and distinguished this case
from Magill on two counts: first, because alternative methods of distri-
bution of newspapers were available to Bronner, whereas Magill could
only penetrate the market for television guides if it had the information
held by the television companies; second, because it was not impossible
for Bronner to set up its own home-delivery system scheme, whereas it
was impossible for Magill to have access to the information by way of a
normal process of investment and research. The Bronner decision therefore
elucidates the limited extent to which the doctrine of essential facilities
applies in the context of Article 82 EC. Thus, only if a facility owned by a
dominant company is indispensable to and impossible to replicate by a
competitor would a refusal to grant access constitute an abuse.193
Finally, a controversial development in the case law has been the
possible application of Article 82 EC to companies that, dominant in one
190
See Commission Decision in B&I Line plc v. Sealink Harbours [1992] 5 CMLR 255 and in Sea
Containers v. Stena Sealink (Decision 94/19/EC OJ [1994] L 15/8, [1995] 4 CMLR 84).
191
See B&I Line plc v. Sealink Harbours, supra n. 190, at paragraph 41 of the decision.
192
Case C-7/97 [1998] ECR I-7791, [1999] 4 CMLR 112.
193
The judgment has not been free from criticism. See M. A. Bergman, ‘Editorial, the Bronner
case: a turning point for the Essential Facilities doctrine?’, [2000] ECLR 59, and, L.
Hancher, ‘Oscar Bronner v. Mediaprint’, [1999] 36 CMLRev 1289. For a very helpful
analysis of the case law on essential facilities, see B. Doherty, ‘Just what are essential
facilities?’, [2001] 38 CMLRev [2001], 397.
104 EC Competition Law and Policy

market, carry out abuses in a related market where they have not been
proven to be dominant. The key case in this area is the decision of Court of
First Instance in TetraPak (II),194 which was confirmed on appeal by the
European Court of Justice.195 In that case, the Commission found TetraPak
to be dominant in the aseptic market196 but no finding of dominance was
made in the non-aseptic market. The Commission then decided that
Article 82 EC could be applied to the abusive practices carried out by
TetraPak in the non-aseptic market because of the close association
between these two markets. TetraPak argued before the Court of First
Instance that since the Commission had not proved dominance in the non-
aseptic market, Article 82 EC could not apply to practices in that market, as
only abuse carried out by a dominant company can fall within the scope of
Article 82 EC.197 It also argued that the Commission had not demonstrated
the existence of a causal link between the abuses carried out in the non-
aseptic market and the dominance of TetraPak in the aseptic market.198
The Court of First Instance highlighted the two circumstances that
made Article 82 EC applicable to the practices of TetraPak in the non-
aseptic market. First, there were close links between the two markets.
These included the fact that the key products packaged in the aseptic and
non-aseptic markets were the same, i.e. dairy products and fruit juice, and
that many of TetraPak’s customers operated in both markets.199 Second, it
was the quasi-monopoly held by TetraPak in the aseptic market that
enabled it to carry out the abusive practices in the non-aseptic market. The
Court held that:

The fact that TetraPak held nearly 90% of the markets in the aseptic sector meant
that, for undertakings producing both fresh and long-life liquid food products,
it was not only an inevitable supplier of aseptic systems but also a favoured
supplier of non-aseptic systems. Moreover, by virtue of its technological lead
and its quasi-monopoly in the aseptic sector, TetraPak was able to focus its
competitive efforts on the neighbouring non-aseptic markets, where it was
already well-established, without fear of retaliation in the aseptic sector, which
meant that it also enjoyed freedom of conduct compared with the other
economic operators on the non-aseptic markets as well.200

The judgment of the European Court upheld the decision of the Court of
First Instance, but it also helpfully indicated the exceptional nature of the
case by explaining that:

194
Case T-83/91, supra n. 24.
195
Case C-333/94P, supra n. 156.
196
For a description of the facts, see supra section 3.2.1.
197
Case T-83/91, supra n. 24, at paragraph 102 of the judgment.
198
Ibid., at paragraph 104 of the judgment.
199
Ibid., at paragraph 120 of the judgment.
200
Ibid., at paragraph 121 of the judgment.
 Abuses of dominant position 105

It is true that the application of Article 86 EC [now 82 EC] presupposes a link

between the dominant position and the alleged abusive conduct, which is
normally not present where conduct on a market distinct from the dominated
market produces effects on that distinct market. In the case of distinct, but
associated markets, as in the present case, application of Article 86 [now 82] to
conduct found on the associated, non-dominated market and having effects on
that associated market can only be justified by special circumstances [emphasis
added].201

It seems, therefore, that the decision in TetraPak should be confined to the

facts of that particular case and not treated as introducing a new principle
that could be dangerously wide. Thus it cannot automatically be assumed
that if a company is dominant in one market, abuses carried out in a
related market, where dominance has not been established, will come
within the scope of Article 82 EC. Only the existence of exceptional
circumstances would trigger the application of that provision.

3.2.3 Effect on intra-Community trade

This condition is analogous to the one set out in Article 81 EC and
therefore it has the primary function of delimiting the boundary between
the application of EC and of national competition law.202 There are
important similarities between the interpretation of this requirement in
the framework of Articles 81 and 82 EC.
First, the test of effect on intra-Community trade has been construed as
widely as its equivalent in Article 81 EC.203 Any effect, direct or indirect,
actual or potential, will be relevant to determine whether or not this
condition is fulfilled. Thus, in Michelin v. Commission,204 the applicant
argued that it had not been shown that its behaviour had actually affected

201
Case C-333/94P, supra n. 156, at paragraph 27 of the judgment.
202
See supra Chapter 2, section 2.2.2. See also Hugin v. Commission (Case 22/78, supra n. 13),
where the Court held: ‘The interpretation and application of the conditions relating to
effects on trade between Member States contained in Articles 85 and 86 [now 81 and 82]
must be based on the purpose of that condition, which is to define, in the context of the
law governing competition, the boundary between the areas respectively covered by
Community law and the law of the Member States. Thus Community law covers any
agreement or any practice which is capable of constituting a threat to the freedom of trade
between Member States in a manner which might harm the attainment of the objectives of
a single market between the Member States, in particular, by partitioning the national
markets or by affecting the structure of competition within the Common Market. On the
other hand, conduct the effects of which are confined to the territory of a single Member
State is governed by the national legal order.’
203
See the test devised by the Court in STM v. Maschinenbau Ulm (Cases 56 and 58/65 [1966]
ECR 234 and supra Chapter 2, section 2.2.2) in the framework of Article 81 EC.
204
Case 322/81, supra n. 1.
106 EC Competition Law and Policy

trade between Member States. The Court, however, took the view that, for
that requirement to be met, it was not necessary that the abusive
behaviour had affected trade between Member States. It sufficed that it was
capable of having that effect.205
Second, this limb of Article 82 EC has also been used a means to uphold
the single market objective of competition law, Thus, for example, in
Solvay,206 the Commission, after finding that the loyalty rebates and other
inducements to exclusivity applied by Solvay were abusive, concluded
that the practices affected trade between Member States. This was because
they hindered access to the market by competing suppliers and had a
market-splitting effect.207 In the case of abusive practices which can
effectively eliminate competition, such as refusals to supply and predatory
pricing, the Court has held that there is a per se effect on intra-EC trade. In
Commercial Solvents,208 this company argued that it had not been proved
that its refusal to supply Zoja had an effect on trade. In particular, it argued
that 90 per cent of Zoja’s sales were conducted outside the Common
Market, and even sales within the Common Market were greatly reduced
by reason of the patents held by other companies. Consequently, it could
not be demonstrated that the elimination of Zoja from the market would
have a significant effect on imports or exports within the EC. The Court
took the view that if the aim of a dominant company was to eliminate a
competitor, the effect on trade would be automatic, because the conduct
would alter the competitive structure in the Common Market.209 Although
the Court did not allude to the single market objective of the Treaty, that
objective nevertheless seemed to influence this aspect of the judgment.
The exclusion of competition will encourage market isolation and render
access to the market difficult, and will enlarge the scope for further
abusive practices such as the imposition of unfairly high prices. This
approach is reminiscent of the Consten and Grundig approach in the
framework of Article 81 EC.210
Third, even if the abusive practices are carried out in a national market
only, the requirement of effect on intra-EC trade can still be made out if the
practices alter the competitive structure in the Common Market. This was
expressly acknowledged by the Court in Michelin,211 where the Court held
that ‘when the holder of a dominant position obstructs access to the
205
Ibid., at paragraph 104 of the judgment. See also Case C-41/90 Höfner v. Macroton [1991]
ECR I-1979, [1993] 4 CMLR 306, at paragraphs 32–3 of the judgment.
206
Commission Decision 90/299/EC, OJ [1991] L 152/21, [1994] 4 CMLR 645.
207
Ibid., at paragraph 65 of the decision.
208
Cases 6 and 7/73, supra n. 167. See supra nn. 167–168 and accompanying text, for a
summary of the facts.
209
Ibid., at paragraph 33 of the judgment. See also the decision of the Court of First Instance
in the Magill cases (Case T-69/89, supra n. 185, at paragraphs 76–7 of the judgment).
210
See supra Chapter 2, section 2.2.3
211
Case 322/81, supra n 1.
 Abuses of dominant position 107

market by competitors, it makes no difference whether such conduct is

confined to a single Member-State as long as it is capable of affecting
patterns of trade and competition in the Common Market.’212
One difference in the interpretation of this condition in Articles 81 and
82 EC is that, in the absence of a de minimis rule akin to the one that applies
in the framework of Article 81 EC, it is not necessary to show at this stage
that the effect on trade is ‘appreciable’. Article 82 EC already establishes
that dominance must be held ‘over a substantial part of the Common
market’, which presumes that if an abuse of that position has an effect on
trade, that effect will be deemed to be significant enough.213 However,
some decisions of the Commission have made reference to the
requirement of ‘appreciability’.214

3.2.4 Joint dominance215

Article 82 EC expressly acknowledges that an abuse of dominant position
can be carried out by ‘one or more undertakings’. The provision, however,
remains silent about the elements necessary to determine the existence of a
position of joint or collective dominance. The concept of joint dominance
was first defined by the Court of First Instance in its landmark decision in
Società Italiana Vetro v. Commission (Italian Flat Glass).216 In that case, the
Commission found three Italian producers of flat glass, whose aggregate
shares of that market in Italy amounted to 95 per cent, to be in breach of
Article 81 EC on the basis that they had engaged in a concerted practice
aimed, inter alia, at fixing prices and sharing markets. It also found them in
breach of Article 82 for having abused their position of joint dominance by
preventing customers from bargaining with them on prices and sales
terms. The Commission highlighted the participation of the companies in
a tight oligopoly and used two elements to decide that the companies were
jointly dominant. First, the companies together had a very large share of
the Italian market for flat glass and belonged to groups with multinational
dimensions which controlled more than half of the EC production and

212
Ibid., at paragraph 103 of the judgment.
213
See supra section 3.2.1
214
Thus in Hugin Commission Decision 78/68 OJ [1978] L22/23, [1978] 1 CMLR D19, the
Commission took the view that Hugin’s practices ‘appreciably’ affected trade between
Member States (ibid., at paragraph 72 of the Decision). The Court annulled the
Commission’s Decision in appeal, on the grounds that the practices did not affect trade
between Member States (see Case 22/78 [1979] 3 CMLR 345, at paragraphs 15–26 of the
judgment).
215
For an exhaustive analysis of this topic, see R. Whish, ‘Collective dominance,’ in
D. O’Keefe and M. Andenas, Liber Amicorum for Lord Slynn (The Netherlands, 2000), Vol. I,
p. 581.
216
Cases T-68, 77 and 78/89 [1992] ECR II-1403, [1992] 5 CMLR 302.
108 EC Competition Law and Policy

supply in these products.217 Second, the undertakings presented them-

selves as a single entity. This was reflected in their business decisions,
which displayed a marked degree of interdependence with regard to
prices and terms of sale and also in the existence of structural links
concerning production between them.218 The Court of First Instance
partially annulled the Commission’s decision on the grounds that there
was insufficient evidence to show the existence of a concerted practice
between the companies.219 It also found that the Commission had not
proved the existence of a collective dominant position. More importantly,
it defined that term as follows:

There is nothing, in principle, to prevent two or more independent economic

entities from being, on a specific market, united by such economic links that, by
virtue of that fact, together they hold a dominant position vis-à-vis the other
operators in the same market. This could be the case, for example, where two or
more independent undertakings jointly have, through agreements or licences, a
technological lead affording them the power to behave to an appreciable extent
independently of their competitors, their customers and ultimately, of their
consumers.220

It would seem, therefore, that, in order to be jointly dominant, two or more

undertakings need to be, firstly, independent, and secondly, united by
economic links. In the context of mergers, the Court has defined joint
dominance in similar terms.221 Again reference was made to the existence
of ‘factors giving rise to a connection’ between the undertakings, as a
result of which they ‘could adopt a common policy in the market [emphasis
added]’.222
The Court, however, did not define an economic link in these cases and
preferred instead to give an example of what could constitute one, i.e. a
technological agreement that would give the parties a lead over their
competitors. This raised the issue of the exact meaning of the expression
‘economic links’. Did it mean structural links, as in the example in Italian
Flat Glass, or did it represent a wider concept?

217
Commission Decision 89/93/EEC, OJ [1989] L 33/44, [1990] 4 CMLR 535, at paragraph
79 of the decision.
218
Ibid.
219
Cases T-69, 77 and 78/89, supra n. 216.
220
Ibid., at paragraph 358 of the judgment.
221
See France v. Commission (Case C-68/94 [1998] ECR I-1375), where the Court recognised
that the EC Merger Regulation could apply to the creation or the strengthening of a
collective dominant position and then defined the concept of joint dominance.
222
This emphasis on the ability to adopt a common market policy has also underlined some
of the Article 82 EC cases, like the decision of the Court of First Instance in Irish Sugar
(Case T-228/97 [1999] ECR II-2969, [1999] 5 CMLR 1300, at paragraph 46 of the
judgment), where the Court cross-referred to France v. Commission on the definition of
joint dominance.
 Abuses of dominant position 109

The question remained open for several years,223 and was clarified by
the Court of First Instance in Gencor v. Commission,224 a merger case which
concerned the proposed merger of the platinum and rodhium operations
of Gencor, a South African company, and of Lonrho, a company in-
corporated under English law.225 The Commission issued a decision under
the EC Merger Regulation declaring that the proposed concentration was
incompatible with the Common Market because it would lead to the
creation of a collective dominant position between the entity arising from
the concentration and Amplats, the leading world-wide supplier of
platinum metal. Gencor’s main criticism of the Commission’s approach
was that it had failed to show the presence of ‘economic links’ between the
potential duopolists within the meaning of the case law. The Court of First
Instance interpreted its ruling in Italian Flat Glass and explained both that
the reference to a technological agreement in that case had only been made
by way of example and that the concept of ‘economic links’ was much
wider in content and did not merely refer to structural links. Thus, the
Court held that ‘the relationship of interdependence existing between the
parties to a tight oligopoly’ could, in itself, constitute an economic link. 226
This wide construction of the notion of economic links, has recently
been echoed in the context of an Article 82 EC case. In Compagnie Maritime
Belge,227 a case where structural links within the meaning of the case law
did exist,228 the Court specifically held:

the existence of an agreement or of other links in law is not indispensable to a

finding of a collective dominant position; such a finding may be based on other
connecting factors and would depend on an economic assessment and, in
particular, on an assessment of the structure of the market in question.229

Two main conclusions flow from this judgment. First, the decision seems
to confirm that the wide interpretation of the notion of economic links
adopted in Gencor is not confined to merger cases, but that it could also
extend to Article 82 EC cases. This is a very important policy development,
particularly because in Compagnie Maritime, the Court could simply have
relied on the existence of structural links between the undertakings, just as

223
See the judgment of the Court of First Instance in Joined Cases T-24–26 and 28/93
Compagnie Maritime Belge v. Commission [1996] ECR II-1201, where shipping conferences
concluded between shipowners (i.e. agreements regulating the operation of cargo trade
on certain routes) were held to be ‘economic links’ within the meaning of the case law.
224
Case T-102/96 [1999] ECR II-753, [1999] 4 CMLR 971.
225
For a summary of the jurisdictional aspects of the case, see Chapter 1, section 1.7.2.
226
Case T-102/96, supra n. 224, at paragraph 276 of the judgment.
227
Joined Cases C-395/96P and C-396/96P [2000] 4 CMLR 1076.
228
See supra n. 223. The companies participated in the so-called ‘maritime conferences’
referred to above.
229
Ibid., at paragraph 45 of the judgment.
110 EC Competition Law and Policy

the Court of First instance had done in its decision.230 Second, the decision
could also pave the way for the use of this provision in order to control
non-colluding oligopolists.231 In an oligopoly, parallel behaviour is the
norm and therefore it could easily be said that undertakings adopt a
‘common position in the market’. Furthermore, if the relationship of
interdependence between parties to a tight oligopoly is in itself an
economic link, it would follow that participants in an oligopolistic market
can easily be found to be jointly dominant and their behaviour, if abusive,
can be assessed within the parameters of Article 82 EC.
This more interventionist approach to oligopolies232 could be a double-
edged sword. On the one hand, it would allow the Commission to control
more effectively anti-competitive practices by oligopolists where there is
no evidence of collusion. Participants in these markets can predict with
great accuracy what their competitors will do, given the degree of
interdependence between them, and can therefore engage in anti-
competitive practices without the need to collude. Of these anti-
competitive practices, the most obvious one would be a parallel increase in
prices that is not objectively justified. On the other hand, if used too
extensively, it could bring innocent behaviour within the scope of Article
82 EC.

3.2.5 Is there room for objective justification in the framework of

Article 82 EC?
One of the main differences between Articles 81 and 82 EC is that the latter
does not make any provision for exemption. However, the case law on
Article 82 EC seems to bear out the principle that, sometimes, behaviour
that may seem abusive is objectively justified and therefore escapes the
application of Article 82 EC. However, objective justification is a different
concept from an exemption. In the context of Article 81 EC, the reasoning
would be that an agreement caught by the prohibition in Article 81(1) can
be exempted under Article 81(3) EC, if it fulfils the two positive and two
negative conditions set out in this provision. The notion of objective
justification in Article 82 EC is used to conclude that the behaviour of a

230
See supra n. 223.
231
If there was evidence of collusion between them, then, of course, Article 81 EC would
apply (see Chapter 2, section 2.2.1
232
In earlier cases, the Court had tried to distance oligopolistic markets from the concept of
joint dominance. Thus, in Hoffmann-La Roche (Case 85/76, supra n. 21), where the Court
held: ‘A dominant position must also be distinguished from parallel courses of conduct
which are peculiar to oligopolies in that in an oligopoly the courses of conduct interact,
while in the case of an undertaking occupying a dominant position, the conduct of the
undertaking which derives profits from that position is to a great extent determined
unilaterally’ (at paragraph 39 of the judgment).
 Abuses of dominant position 111

dominant company which bears the hallmarks of abuse is to be treated as

non-abusive if it can be explained on the basis of reasons other than the
intention to weaken or eliminate competition or to exploit consumers. The
result would be that if the behaviour is ultimately non-abusive, then the
prohibition in Article 82 EC would not apply.233
Several decisions of the Court have developed the notion of objective
justification in the framework of Article 82 EC. The decisions of the Court
in General Motors and in United Brands are two clear examples which have
been discussed above.234 In the first case, the Court found that the
excessive prices charged by General Motors could be objectively justified.
In the second, the Court took the view that the discriminatory prices
charged by United Brands were abusive, but it first explored whether the
differences in prices could be objectively justified. Likewise, the BP case235
illustrates that the shortage of oil due to the 1973 world crisis could justify
the fact that a dominant company reduced its supplies to casual customers
proportionately to a greater extent than in relation to long-standing
customers. What might otherwise be seen as a refusal to supply, or a dis-
criminatory application of trading conditions, was found to be compatible
with Article 82 EC.
Other examples of this approach include the decision of the Court in
Gøttrup-Klim.236 In that case, an agricultural purchasing association in-
cluded in its statutes a provision prohibiting its members from purchasing
certain fertilisers through competing associations. The Court concluded
that such a clause was not abusive because it was limited to ensure the
proper functioning of the association and the maintenance of its con-
tractual power in relation to producers.237
Finally, it also seems clear that even if a practice is objectively justified, it
still needs to fulfil the further requirement of being proportionate. For
example, in BRT v. SABAM,238 a case discussed above, the Court was ready
to accept that a national copyright association could ask for the

233
This is rather similar to the case law on free movement of goods and the notions of direct
and indirect discrimination. Article 28 EC prohibits quantitative restrictions and
measures having equivalent effect. Quantitative restrictions and measures having
equivalent effect, which are directly discriminatory, are caught by Article 28. It is then up
to the Member States to invoke one of the express derogations in Article 30 EC to take the
measure outside the prohibition in Article 28 EC. However, when measures having
equivalent effect are indirectly discriminatory, and under the Cassis de Dijon principle,
Article 28 will not apply if the Member State is able to invoke a mandatory requirement that
justifies the measure and provided the latter is proportionate. The case law on free
movement of persons, establishment and services also illustrates this approach.
234
See supra section 3.2.2.
235
Case 77/77, see supra n. 174.
236
Case C-250/92 [1994] ECR I-5641, [1996] 4 CMLR 191.
237
Ibid., at paragraphs 49–52 of the judgment.
238
Case 127/73, supra n. 103.
112 EC Competition Law and Policy

assignment of copyrights in its favour if it was to protect them effectively.

It could not, however, impose obligations on its members that were not
necessary to achieve that objective and that would encroach unfairly on a
member’s freedom to exercise its copyright.239
The notion of objective justification therefore tempers the rigour of
Article 82 EC and allows for a fairer and more balanced approach to
behaviour that, although seemingly abusive, can be explained rationally. It
is, furthermore, a welcome development that not only shows a coherent
approach of the case law to other areas of EC law, but also shows that the
Commission and the Court consider the interests of dominant companies
when applying Article 82 EC.

239
See supra section 3.2.2.
 The enforcement of EC competition law 113

4
The enforcement of
EC competition law

4.1 Introduction

EC competition law is enforced at two levels: at Community level by the

Commission, and at national level by the national competition authorities
and the national courts. For almost forty years, the weight of enforcement
policy has fallen on the Commission. In the present system, while national
courts and national authorities can apply Articles 81(1) and (2) EC and
Article 82 EC, only the Commission can also apply Article 81(3) EC. Mario
Monti, the Competition Commissioner, has recently described this
division of competences as ‘telling someone to play chess while giving
him only half the pieces’.1 Although the Treaty did not make it clear that
only the Commission could grant exemptions, the main enforcement
regulation, Regulation 17/62,2 explicitly reserved to the Commission the
sole power to grant exemptions from the prohibition in Article 81(1) EC.3
There are two types of exemption, individual exemption and block

1
See the speech by Mario Monti, ‘The application of Community Competition law by the
national courts’, Conference held at the Europäische Rechtsakademie, ‘Towards the
Application of Article 81(3) EC by the National Courts’, Trier, 27 November 2000.
2
OJ Sp. Ed. [1962] 87. Regulation 17/62 was adopted on the basis of Article 83 (ex Article
87) EC.
3
See Article 9(1) of Regulation 17/62. See also Case 31/80 L’Oréal v. De Nieuwe ([1980] ECR
3775, [1981] 2 CMLR 235), where the Court held: ‘… under Article 9(1) of Regulation 17
… the Commission has the sole power, subject to review by the Court, to declare the
provisions of Article 85(1) [now 81(1)] of the Treaty inapplicable pursuant to Article 85(3)
[now 81(3)] of the Treaty. The jurisdiction of the national courts is restricted to
determining whether the agreement, decision or concerted practice which is the subject of
the action before them is in accordance with Article 85(1) [now 81(1)] and, if appropriate,
to declaring the agreement, decision or practice in question void under Article 85(2) [now
81(2)]’ (paragraph 13 of the judgment).
114 EC Competition Law and Policy

exemption, discussed above.4 To benefit from an individual exemption,

the parties must, in the present system, notify the agreement in question to
the Commission. If, however, an agreement falls within the scope of a
block exemption, there is no need to notify it to the Commission.
In 1999, the Commission published its White Paper on the moderni-
sation of the rules implementing Articles 81 and 82 EC, and it suggested a
bold programme for the reform of the enforcement of competition law. The
thrust of the White Paper is to propose the substitution of the system of
notification and individual exemption for a system of directly applicable
exception. This would mean that national courts and national authorities
could apply Article 81 EC as a whole. The effect would be twofold: to
decentralise the enforcement of competition law and remove the
administrative burden placed on the Commission by the authorisation
system. As a result, the Commission would be able to concentrate on
issuing block exemption regulations and on investigating the most serious
infringements of the competition rules. The White Paper, therefore, has the
potential to change very significantly the current landscape of
enforcement of competition law in the EC. Following a period of public
consultation on the White Paper, the Commission has recently published a
proposal for a draft Council regulation implementing Articles 81 and 82
EC that would replace Regulation 17/62.5
The pages that follow examine both the present system of enforcement
at Community and national level and the reforms proposed in the Com-
mission’s White Paper, together with the implications of these reforms.

4.2 The present system – enforcement at community level:

Regulation 17/62

Regulation 17/626 sets out in detail the current process of enforcement of

Articles 81 and 82 EC by the Commission.7 The following phases may be
distinguished in the procedure: initiation, fact finding, statement of
objections, hearing of the parties and final decisions.8 An outline of the
Commission’s procedure is provided in Figure 4.1.9

4
See Chapter 2, section 2.4.2.
5
[2000] 5 CMLR 1148.
6
See supra n. 2.
7
Alongside this general system of enforcement, there are special regimes for certain areas,
such as transport (see Regulation 141 (OJ Sp. Ed. [1959–62] 291); Regulation 1017/68 (OJ
Sp. Ed) [1968] 302; Regulation 4056/86 ([1986] OJ L 378/4) and mergers (Regulation
4064/89, last amended by Regulation 1310/97, OJ [1997] L 180/1)).
8
See, for specialised works in this area, C. Kerse, EC Antitrust Procedure, 4th edn (London,
1998); L. Ortiz Blanco, EC Competition Procedure (Oxford, 1996) and M. Smith, Competition
Law, Enforcement and Procedure (London, 2001).
9
See infra p. 115.
 The enforcement of EC competition law 115

Starting the Fact-finding

procedure: powers:
Commission
(a) notifications (a) requests for produces the
(b) applications information statement of
(c) complaints (b) investigations objections
(d) own initiative

The Commission may take decisions in the course of the

procedure (i.e. order interim relief)

Right to be heard Commission takes final decision:

of undertakings
concerned (a) formal decisions:
– negative clearance
– finding an infringement fines
I

+
– granting an exemption
Oral hearing (in (b) informal decisions:
some cases) – ‘comfort’ letters
– modification of agreements
– informal settlements

Figure 4.1 Outline of the Commission’s procedure

116 EC Competition Law and Policy

4.2.1 The Commission’s investigation

Phase one: Initiation of the proceedings
The Commission may initiate an enforcement procedure through four
different channels: following an application, after a notification or a
complaint, and on its own initiative. These will be examined in turn.
An application by one or more undertakings seeks to obtain a
declaration that their activities do not constitute a breach of either Article
81(1) EC or Article 82 EC.10
A notification, by one or more undertakings, seeks to obtain a
declaration that an agreement or concerted practice that, in principle,
comes under Article 81(1) EC, qualifies for exemption under Article
81(3) EC.11 This method of initiation of the procedure therefore only
applies to cases under Article 81 EC, given that exemption from the
prohibition in Article 82 EC is not possible. The general rule is that
notification is necessary if the parties seek an individual exemption for
an agreement or concerted practice.12 However, special dispensation from
the need for prior notification is given to some agreements, which are
allowed to benefit from an exemption, without it.13 The Regulation also
provides that agreements that existed when Regulation 17/62 came
into force need to be notified to the Commission14 unless they would have
been exempted from notification.15
10
See Article 2 of Regulation 17/62.
11
See Article 4 of Regulation 17/62.
12
See Article 4(1) and 9(1) of Regulation 17/62.
13
See Article 4(2) of the Regulation and the amendments set out in Regulation 1216/99 (OJ
[1999] L 148/5 to Article 4(2)(2) of the Regulation (see Chapter 2, section 2.4.6). The
differences between agreements subject to the obligation of notification (Article 4(1)) and
those exempted from it (Article 4(2)) were clearly set out by the Court in Stichting
Sigaretten-industrie v. Commission (Cases 240–242/82, etc. [1985] ECR 3831, [1987] 3 CMLR
661): ‘… On the one hand, in the case of agreements covered by Article 4(2) the
Commission must examine whether the conditions laid down in Article 85(3) are met
even where it becomes aware of the agreements as a result of its own investigation;
exemption can only be granted in respect of agreements covered by Article 4(1) if they
have been notified. On the other hand, in the case of agreements covered by Article 4(2)
the Commission may, under Article 6(2), give an unlimited retroactive effect to its
decision granting exemption; according to Article 6(1), decisions exempting agreements
governed by Article 4(1) cannot take effect from a date prior to the date of notification’ (at
paragraph 75 of the judgment).
14
See Article 5(1) of Regulation 17/62. In relation to these agreements, the Court developed
the so-called doctrine of ‘provisional validity’ to protect the general principle of
contractual certainty. Under this doctrine, agreements in force when the Regulation was
enacted (old agreements), and which have been notified under Article 5(1) of the
Regulation, can only be declared automatically void by a national court after the
Commission has taken a decision either granting or refusing an exemption. By contrast, in
the case of agreements notified after the Regulation entered into force, there is an
assumption that the parties implement the agreement at their own risk until the
Commission takes any such decision (see Case 48/72 Brasserie de Haecht v. Wilkin-Janssen
[1973] ECR 77, [1973] CMLR 287).
 The enforcement of EC competition law 117

The second benefit of notification apart from the possibility of obtaining

an exemption is that the parties obtain temporary immunity from fines –
i.e. from the date of notification until the Commission adopts a decision on
the application of Article 81(3) EC.16 The Commission may, however,
withdraw this temporary immunity if it becomes evident that the
agreement or practice will not be eligible for an exemption.17
The Commission may also initiate proceedings following a complaint
from an aggrieved party. The Regulation recognises two kinds of
complainants: Member States, which have an automatic right to
complain, and private parties, who need to show a legitimate interest.18
Neither the Commission nor the Community judicature have defined the
notion of legitimate interest, but they have both been generous in
recognising such legitimate interest whenever the interests of a natural or
legal person have been affected as a result of the activities of one or more
undertakings. The obvious examples are the victims of an abuse of
dominant position,19 the competitors of companies that have concluded
an anti-competitive agreement20 or associations of undertakings21 or con-
sumers22 whose members have been adversely affected.

15
That is those falling within the scope of Article 4(2) of the Regulation.
16
See Article 15(5) of Regulation 17/62. This immunity from fines will only apply to
agreements that have been notified (i.e. those falling under Article 4(1)) but not to
agreements that were exempted from notification (see the literal tenor of Article 15(5) of
Regulation 17/62 and the judgment of the Court in Stichting Sigaretten-industrie v.
Commission (see supra n. 13), at paragraphs 75–6 of the judgment.
17
See Article 15(6) of Regulation 17/62.
18
See Article 3(2) Regulation 17/62.
19
See, for example, the Commission’s decision in AKZO (Decision 85/609, OJ [1985] L 374/
1, [1986] 3 CMLR 273). The Commission’s investigation was triggered by the complaint
submitted by ECS, the victim of AKZO’s alleged predatory pricing (see paragraph 1 of the
Decision).
20
See, for example, the decision of the Court in BAT and Reynolds v. Commission (Cases 142/
84 and 156/84 [1987] ECR 4487, [1988] 4 CMLR 24), where it appears that BAT had
complained to the Commission that the agreements concluded between Philip Morris
and Rembrandt were anti-competitive. The Commission initiated an investigation as a
result of the complaint and, after suggesting some amendments which were adopted by
the companies, it wrote to the complainants informing them that it had closed the file.
BAT then challenged the Commission’s letters before the Court (see paragraph 1 of the
judgment).
21
For example, in BENIM v. Commission (Case T-5/93 [1995] ECR II-197, [1996] 4 CMLR
305), an association of discotheque operators had complained to the Commission that the
activities of the French copyright management society were contrary to both Articles 81
and 82 EC. The Court took the view that ‘an association of undertakings may claim a
legitimate interest in lodging a complaint even if it is not directly concerned, as an
undertaking operating in the relevant market, by the conduct complained of, provided,
however, that, first, it is entitled to represent the interests of its members, and secondly,
the conduct complained of is liable adversely to affect the interests of its members’ (at
paragraph 28 of the judgment).
22
See Case T-37/92 Bureau Europeen des Unions de Consommateurs v. Commission [1994] ECR
II-285, [1995] 4 CMLR 167.
118 EC Competition Law and Policy

Following the receipt of a complaint, the Commission is under an

obligation to examine carefully the legal and factual aspects of the
complaint.23 However, this does not mean that the Commission must
investigate all possible infringements of EC competition law. In particular,
the Court of First Instance explained in Automec (II)24 that the
Commission, as an institution that acts in the public interest, is entitled to
define its priorities when investigating infringements of the rules on
competition. This means that the Commission may decline to pursue an
investigation on grounds of lack of Community interest25 in order to
concentrate on more serious infringements of the competition rules. The
Commission may not, of course, merely assert the lack of Community
interest in the abstract when rejecting a complaint, but must state in some
detail the reasons26 why there is no sufficient Community interest. This
would allow the complainant to seek judicial review of the Commission’s
decision to reject the complaint.27
The Commission may, when faced with a complaint, initiate an
investigation, reject the complaint or remain silent. The last two
possibilities require some consideration.
If the Commission intends to reject a complaint, it needs to inform the
complainant of its reasons and set a date by which the complainant must
submit its observations. This obligation is laid down in Article 6 of
Regulation 2842/98 on hearings.28 In Guerin,29 the Court made it clear that
the Commission’s notification under Article 6 is a provisional measure and

23
See BAT and Reynolds v. Commission (Cases 142/84 and 156/84, supra n. 20, at paragraph
20 of the judgment) and Case T-24/90 Automec v. Commission (Automec II) [1992] 5 CMLR
431, at paragraph 79 of the judgment.
24
Case T-24/90, supra n. 23. See also the Opinion of Advocate General Jacobs in Tremblay v.
Commission (Case C-91/95P [1996] ECR I-5547, [1997] 4 CMLR 211, at paragraphs 22–3 of
the Opinion) and the Notice on co-operation between the national courts and the Commission
(OJ [1993] C 39/6, [1993] 5 CMLR 95, at sections III and IV).
25
See Case T-24/90, supra n. 23, at paragraphs 77–85 of the judgment.
26
Any Community act needs to state the reasons on which it is based (see Article 253 EC).
For a recent example where a Commission’s decision rejecting a complaint has been
annulled due to lack of reasoning, see the decision of the Court of First Instance in Case T-
206/99 Métropole v. Commission, judgment of 21 March 2001, not yet reported.
27
See Case C-19/93 Rendo v. Commission [1995] ECR I-3319, [1997] 4 CMLR 392, where the
Court held that ‘where an investigation is terminated without any action being taken, the
Commission is required to state reasons for its decision in order to enable the Court of
First Instance to verify whether the Commission committed any errors of fact or law or is
guilty of a misuse of powers’ (at paragraph 27 of the judgment). Given the wide discretion
of the Commission, the review of the European Court will be limited to cases where there
is an infringement of an essential procedural requirement, a manifest error in law or
misuse of powers (see Cases 142/84 and 156/84, supra n. 20, at paragraph 62 of the
judgment).
28
OJ [1998] L 354/18. Regulation 2842/98 replaced the earlier regulation on hearings
(Regulation 99/63 (OJ Sp. Ed. [1963] 47).
29
Case C-282/95P [1997] ECR I-503, [1997] 5 CMLR 447.
 The enforcement of EC competition law 119

therefore non-reviewable under Article 230 EC.30 In other words, this

measure is non-reviewable because it does not irrevocably define the
position of the Commission, but is only a preliminary step towards that
final definition of position.31
Regulation 2842/98 does not cover what happens following the
submission of observations by the complainant, but the Court’s decision
in Guerin32 explained that the Commission is bound either (a) to take up
the complaint and initiate the investigation or (b) to adopt a decision finally
rejecting the complaint. That final decision is, of course, reviewable by the
Community judicature by means of annulment proceedings.33 Further-
more, the Court set out two helpful and clear guidelines that filled the gap
left by Regulation 2842/98. First, it explained that the Commission must
make a final decision within reasonable time following the submission of
observations by the complainant.34 Secondly, it emphasised that the failure
of the Commission either to open the investigation or to adopt a final decision can
be challenged by the complainant under Article 232 EC.35
If, following the submission of a complaint, the Commission remains
silent, the complainant can call upon the Commission to respond, i.e. either
to initiate proceedings or to issue a notification under Article 6 of
regulation 2842/98. If the Commission fails to do either, then the
complainant can bring an action for a failure to act under Article 232 EC.36
Finally, the Commission may initiate proceedings on its own initiative.
For example, in Bayer,37 the Commission initiated proceedings ex officio
against Bayer, as it took the view that a provision in the company’s
General Conditions of Sale and Delivery was contrary to Article 81 EC.
Traditionally, most investigations have been initiated as a result of
applications, notifications and complaints, but in its XXXth Report on
Competition Policy,38 the Commission has indicated a drop in the number
of complaints and notifications, together with an increase in the number of
cases opened ex officio. The Commission has sought to explain this
development as a result of the recent changes in competition policy and, in
particular, the adoption of the new block exemption regulation on vertical
restraints and the White Paper proposals. Both these reforms have, as one
of their main themes, the pursuit of efficiency in the treatment of anti-

30
Ibid., at paragraph 34 of the judgment.
31
See infra nn. 152–154.
32
Case C-282/95P, supra n. 29.
33
Ibid., at paragraph 36 of the judgment.
34
Ibid., at paragraph 37 of the judgment.
35
Ibid., at paragraph 38 of the judgment. For an examination of the action for a failure to act
(Article 232 EC proceedings), see infra nn. 181–190.
36
See Case 125/78 GEMA v. Commission [1979] ECR 3173, [1980] 2 CMLR 177.
37
Commission Decision 90/645/EEC, OJ [1990] L 351/46, [1992] 4 CMLR 61.
38
Published on 16 May 2001 on the Commission’s website.
120 EC Competition Law and Policy

competitive agreements and concerted practices and the reduction of the

administrative burden that falls on the Commission, so that the latter can
focus on prosecuting the most serious infringements of competition law.39

Phase two: Fact-finding

Following the initiation of the proceedings, the Commission begins to
gather evidence on the existence of an alleged infringement of Articles 81
or 82 EC.40 Two main activities are carried out by the Commission in this
phase: the requests for information and the conduct of investigations,
which are covered respectively by Articles 11 and 14 of Regulation 17/62.
Both these provisions have been the subject of abundant case law.
The Commission may, under Article 11 of Regulation 17/62, obtain
information relevant to its investigation from Member States,
undertakings and associations of undertakings. When the Commission
requests information from undertakings or associations of undertakings,
this process takes the form of a two-step procedure. First, the Commission
writes informally to the undertakings with a request for information.41
Secondly, and only if the undertakings do not supply the information
requested or do not do so within the time limit, the Commission may issue
a formal decision requiring the submission of information.42 This second
decision is reviewable by the Court of First Instance.43
Under Article 14 of Regulation 17/62, the Commission has draconian
powers of investigation. It can examine company books and business
records, take copies of or extracts from these books and business records,
ask for oral explanations on the spot or enter any premises, land and even
means of transport of undertakings.44 Article 14 indicates the existence of
two types of investigation. Paragraph 2 of that provision refers to what can
be termed ordinary or voluntary investigations,45 while paragraph 3 refers
to investigations ‘ordered by decision’ of the Commission. In the first case,

39
Ibid., at paragraphs 10 to 12 of the Report.
40
As the Court held in Orkem v. Commission (Case 374/87 [1989] ECR 3283, [1991] 4 CMLR
502), ‘The sole purpose of the preliminary investigation procedure is to enable the
Commission to obtain the information and documentation necessary to check the actual
existence and scope of a specific factual and legal situation’ (at paragraph 21 of the
judgment).
41
See Article 11(2), (3) and (4) of Regulation 17/62.
42
See Article 11(5) of Regulation 17/62. See also the Decision of the Court in Case 136/79
National Panasonic [1980] ECR 2033, [1980] 3 CMLR 169, which made it clear that the
procedure laid down in Article 11 is a two-stage procedure (ibid., at paragraph 10 of the
judgment).
43
Ibid.
44
See Article 14(1) of Regulation 17/62.
45
In this respect, see the Decision of the Commission in Fédération Nationale de l’Industrie de
la Chaussure de France (Decision 82/756, OJ [1982] L 319/12, [1983] 1 CMLR 575) at
paragraphs 7 and 8 of the Decision.
 The enforcement of EC competition law 121

undertakings may refuse to submit,46 whereas in the second, they have an

obligation to submit to the investigation. Unlike the procedure provided
for in Article 11, this is not a two-step procedure and the Commission may
choose to order an investigation directly, by means of a mandatory
decision.47
In the interpretation of both Articles 11 and 14, the Community
judicature has striven to find a balance between the aim of ensuring an
effective investigation and the protection of the firms under investigation.
Regulation 17/62 itself provides for some safeguards. For example, Article
20(1), states that ‘information acquired as a result of the application of
Articles 11, 12, 13 and 14 shall be used only for the purpose of the relevant
request or investigation’.48 In particular, the case law has set important
limits on the broad powers of the Commission in this field. In Orkem v.
Commission49 , the Court held that undertakings under investigation have a
duty to cooperate actively with the Commission and to supply the
information requested or required under Article 11 Regulation 17/62.50
This duty, however, does not extend to an admission on the part of the
undertaking that an infringement of Articles 81 or 82 EC has taken place.51
In Hoescht v. Commission52 the Court clarified some important issues
concerning Article 14. The Commission suspected the existence of price
fixing practices between producers and suppliers of PVC and
polyethylene and decided to investigate several Community
undertakings. Upon arrival at the premises of Hoescht, representatives of
the company refused entry to the Commission’s inspectors on the grounds
that the investigation was an unlawful search. Two months later, and
armed with a search warrant obtained by the Bundeskartellamt, the
Commission inspectors gained access to the premises of the company and
carried out the investigation.

46
But if the undertakings agree to submit to the investigation and then refuse to show the
documents requested or show them in an incomplete form, the Commission may impose
fines. The companies may not, therefore, argue that they could have refused to submit to
the investigation altogether and would not have been fined for it. (See Fédération Nationale
de l’Industrie de la Chaussure de France, supra n. 45, at paragraph 7 of the decision).
47
See Case 136/79, supra n. 42, at paragraph 11 of the judgment. The Court reached this
conclusion by comparing the wording of Articles 11 and 14 of Regulation 17/62.
48
The Court interpreted this provision in DGDC v. Asociación Española de Banca Privada
(Case C-67/91 [1992] ECR I-4875) as meaning that authorities lawfully in possession of
information should be unable to use it for a reason other than that for which it was
obtained (at paragraph 42 of the judgment).
49
Case 374/87, supra n. 40.
50
This duty of cooperation applies in the context of both informal and mandatory requests
for information (see Case T-46/92 The Scottish Football Association v. Commission [1994]
ECR II-1039).
51
Ibid., at paragraphs 27–35 of the judgment.
52
Cases 46/87 and 227/88 [1989] ECR 2859, [1991] 4 CMLR 410.
122 EC Competition Law and Policy

The Court, drawing on its case law, stressed that Community

institutions are bound in their activities to respect fundamental human
rights. In the framework of the Commission’s investigations under Article
14, it therefore seemed particularly important to safeguard the rights of the
defence.53 First, the Court acknowledged that the right to inviolability of
the domicile existed with reference to private dwellings but not to
business premises.54 Secondly, the Court emphasised that the Commission
is under an obligation to specify the subject-matter and purpose of an
investigation. This obligation serves the dual purpose of justifying the
investigation and of protecting the rights of the undertaking under
investigation.55 Thirdly, the Court made it clear that the Commission’s
inspectors do not have the power of forcible entry onto company
premises. Should the representatives of the company refuse entry to the
inspectors, then the national authorities have an obligation to assist the
Commission in carrying out the investigation56 and the Commission has
an obligation to respect national procedural guarantees.57
The ruling of the Court in Hoescht reflects a judicious balance between
the protection of the firms under investigation and the need to guarantee
the effectiveness of the Commission’s investigation. Other decisions of the
Court have further illustrated this balancing exercise, as in AM & S v.
Commission,58 where the Court recognised the privileged nature of the
correspondence between independent lawyers and undertakings.59

Phase three: The statement of objections

Following the fact-finding phase of the proceedings, the Commission may
produce a statement of objections. Article 3 of Regulation 2842/98 on
hearings60 provides that the Commission is under an obligation to inform
the parties of objections raised against them and to set a date by which the
latter may submit observations.61 The statement of objections, therefore,

53
Ibid., at paragraphs 13–15 of the judgment.
54
Ibid., at paragraphs 17–18 of the judgment.
55
Ibid., at paragraph 29 of the judgment.
56
The Court also hinted in the judgment that the cooperation of the national authorities
may be requested ex ante by the Commission’s team, if it is feared that the undertaking
will oppose the investigation (see paragraph 32 of the judgment).
57
Ibid., at paragraphs 31–4 of the judgment.
58
Case 155/79 [1982] ECR 1575, [1982] 2 CMLR 264.
59
Ibid., at paragraphs 20–4 of the judgment. The Court explained that legal professional
privilege only applied to communications with independent lawyers: first, because they
act in ‘full independence and in the overriding interests of the administration of justice’,
and second, because they are subject to rules of professional ethics and discipline (see
paragraph 24 of the judgment). See also the Opinion of A.G. Slynn, who surveyed the
protection of legal confidence in the national legal systems.
60
See supra n. 28.
61
See Article 3(1) and (4) of Regulation 2842/98, supra n. 28.
 The enforcement of EC competition law 123

lays down the prima facie case of the Commission against the
undertakings concerned. The formal requirements and purpose of the
statement of objections have been set out in the case law. Thus it must set
out clearly all the essential facts upon which the Commission relies and its
evaluation of these facts,62 and its aim is to safeguard the rights of the
defence.63 As the Court explained in Woodpulp (II),64 the function of the
statement of objections is to give the undertakings ‘all the information
necessary to enable them properly to defend themselves before the
Commission adopts a final decision’.65
One of the most controversial issues in this area is the extent to which
undertakings concerned have the right of access to the Commission’s file.
The position of undertakings under investigation and that of third parties
will be considered in turn.
Access to the file seems essential to enable the addressees of the
statement of objections to examine the Commission’s evidence and hence
to prepare their defence effectively.66 In Consten and Grundig,67 the Court
acknowledged that, while the parties concerned must be informed of the
facts upon which the Commission’s complaints are based, it is not
necessary that the entire file should be communicated to them.68 Which
documents can the Commission refuse to disclose? In Hercules v.
Commission,69 the Court of First Instance stated70 that the Commission
should make available to the undertakings all documents except internal
Commission documents, those containing business secrets and those
containing confidential information.71 These criteria were developed
further in the 1997 Commission Notice on access to the File72 which,

62
Case C-62/86 AKZO v. Commission [1991] ECR I-3359, [1993] 5 CMLR 215, at paragraph
29 of the judgment; Cases 100–103/80 Musique Diffusion Française v. Commission [1983]
ECR 1825, [1983] 3 CMLR 221, at paragraph 14. As the Court of First Instance emphasised
in BPB Eendracht v. Commission (Case T-311/94 [1998] ECR II-1129), the statement of
objections must be framed in terms that are sufficiently clear to enable the applicant
properly to identify the objections of the Commission (see paragraph 56 of the judgment).
63
Case 60/81 IBM v. Commission [1981] ECR 2639, [1981] 3 CMLR 635, at paragraphs 14 and
15 of the judgment.
64
Joined Cases C-89/85, etc. [1993] ECR I-1307, [1993] 4 CMLR 407.
65
Ibid., at paragraph 42 of the judgment. See also Case T-311/94 BPB de Eendracht v.
Commission, supra n. 62.
66
See Cases T-10–12/92 and T-15/92 Cimenteries v. Commission [1992] ECR II-2667, [1992] 4
CMLR 259.
67
Cases 56, 58/64 [1966] ECR 299, [1966] CMLR 418.
68
Ibid., at p. 338.
69
Case T-7/89 [1991] ECR II-1711, [1992] 4 CMLR 84.
70
The judgment followed the criteria set out in the XXIInd Report on Competition Policy
(1992) at points 34 to 35 of the Report.
71
Ibid., at paragraph 54 of the judgment. See also Article 13(1) of Regulation 2842/98 on
hearings (see supra n. 28).
72
OJ [1997] C 25/3.
124 EC Competition Law and Policy

drawing on the case law, explained the rationale behind the non-
communication of these documents. For example, internal Commission
documents are not disclosed in order to protect the secrecy of the
Commission’s deliberations and to allow Commission departments to
express themselves freely.73 In the case of business secrets and documents
for which confidentiality has been requested, the aim is both to prevent the
parties from obtaining strategic information on the operation of the
business of their competitors74 and to protect the legitimate interests of
natural and legal persons.75
The Notice also reflected the landmark judgments of the Court of First
Instance in the Soda Ash cases,76 where the Court laid down the principle of
‘equality of arms’, according to which the undertakings concerned must
have the same knowledge of the file as the Commission.77 This is
particularly relevant in the case of documents that could either exonerate
the undertakings or prove the existence of the infringement. The Court
made it clear that it is not for the Commission alone to decide which
documents will be useful for the undertakings’ defence and that the
Commission must allow the undertakings to examine relevant documents
so that their probative value for the defence can be assessed. This has two
important implications. First, the Commission will not be able to claim
that the documents are confidential as a basis for its refusal to disclose
them.78 Second, the Court may annul the Commission’s final decision if it
finds that the non-disclosed document would have been useful in the
defence of the interested parties.79

73
See the Notice at I.A.3.
74
Ibid., at I.A.1.
75
Ibid., at I.A.2. See also the Adams case (Case 145/83, [1985] ECR 3539, [1986] 2 CMLR 506).
Mr Adams, a fomer employee of Hoffmann-La Roche, wrote to the Commission
informing it of a number of anti-competitive practices carried out by the company. He
asked the Commission to keep his identity confidential. The legal advisers to Roche were
able to glean from certain Commission documents that Mr Adams was the informant and
the latter suffered terrible consequences as a result (see infra section 4.2.3).
76
Case T-30/91, Solvay v. Commission [1995] ECR II-1775, [1996] 5 CMLR 57, and Case T-36/
91 ICI v. Commission [1995] ECR II-1847.
77
Ibid., at paragraphs 81–3 of the judgment.
78
See Notice at I.A.2.
79
In the Soda Ash judgments, the Court annulled the Commission decisions on the ground
that the Commission refused to disclose documents that might have been of use in the
defence of the concerned parties. See also the recent judgment of the Court of First
instance in Cimenteries (Joined Cases T-25/95 [2000] 5 CMLR 204, at paragraph 247 of the
judgment), where the Court has set out a low-threshold test for the annulment of a
Commission decision on grounds of non-disclosure of a document. The Court held that if
the document would have had ‘even a very small chance of altering the outcome of the
administrative procedure if the applicant had been able to rely on it during the procedure
[emphasis added]’, then the Commission’s final decision could be annulled on the
grounds that the rights of the defence were infringed.
 The enforcement of EC competition law 125

What is the position in relation to third parties, such as complainants?

The judgment in AKZO80 and the Notice on access to file81 make it clear
that the Commission has an obligation to respect the confidentiality of
certain documents, such as those containing business secrets of the firms
under investigation. As a result, a third party cannot have unrestricted
access to the Commission’s file, as otherwise firms could complain just to
gain access to their competitors’ business secrets.82 In the AKZO case, the
Commission disclosed to ECS, one of AKZO’s competitors and the
complainant in the case, several documents that AKZO had asked to be
kept confidential. The Court took the view that the Commission is under
an obligation to state in a decision whether or not it intends to disclose
such documents to third parties. The undertakings concerned should
then, and before the decision is implemented, have the opportunity to seek
judicial review of the decision before the Court of First Instance.83 In
AKZO, the Commission had simultaneously notified AKZO of its
intention to disclose the documents and shown these to ECS without
giving AKZO the opportunity to challenge the notification. The Court
declared the notification to be null and void.84

Phase four: The reply and the oral hearing

Article 19 of Regulation 17/62 identifies the parties who have a right to be
heard before the Commission takes a final decision on the case. That
provision draws a distinction between parties that must be heard and
parties that may be heard. The undertakings concerned have an automatic
right to be heard.85 In ANCIDES v. Commission86 the Court made it clear
that the expression ‘undertakings concerned’ referred to those ‘whose
agreements or conduct are the subject of an enquiry’87 – in other words, the
addressees of the statement of objections. Moreover, third parties that
show a ‘sufficient interest’ and apply to be heard88 must also be heard.89
Other natural or legal persons may be heard if the Commission or the
competent authorities of the Member States consider it necessary. The
right to be heard is developed in Regulation 2842/98 on hearings.90 The
80
Case 53/85 [1986] ECR 1965.
81
See the Notice at II.D.1
82
Ibid., at paragraph 28 of the judgment.
83
Ibid., at paragraph 29 of the judgment.
84
Ibid., at paragraphs 30-1 of the judgment.
85
See Article 19(1) of Regulation 17/62.
86
Case 43/85 [1987] ECR 3131, [1988] 4 CMLR 821.
87
Ibid., at paragraph 7 of the judgment.
88
It follows from ANCIDES v. Commission (Case 43/85, supra n. 86) that, if such legal
persons do not apply to be heard, then the Commission does not have an obligation to
grant them the right to be heard (ibid., at paragraph 8 of the judgment).
89
See Article 19(2) of Regulation 17/62.
90
See supra n. 28. Thus Chapters II, III and IV of Regulation 2842/98 deal respectively with
126 EC Competition Law and Policy

Regulation makes it clear that observations are to be principally submitted

in writing but that an oral hearing may also take place.91 If the
undertakings concerned request an oral hearing, the Commission is under
an obligation to provide one.92 If third parties, whether showing a
sufficient interest or not, request an oral hearing, the Commission may,
where appropriate, afford them one.93 The hearings are conducted by a
Hearing Officer.94
This right to be heard reflects a general principle of law found in all the
national legal systems: audi alteram parte.95 This provides that ‘a person
whose interests are perceptibly affected by a decision taken by a public
authority must be given the opportunity to make his point of view
known’.96 In Transocean Marine Paint v. Commission,97 the Court annulled a
provision in a Commission decision that attached a condition to the
renewal of an exemption enjoyed by the members of the Transocean
Marine Paint Association, in respect of which they did not have an
opportunity to make their views known. The Court recognised that the
Commission has a wide discretion in deciding the conditions under which
an Article 81(3) EC exemption can be enjoyed, but the Commission had to
respect the right of the undertakings concerned to submit observations
before it reached a final decision. Failure to observe this condition would
result in the annulment of the relevant part of the Commission’s decision
due to breach of an essential procedural requirement.98

Phase five: Decisions of the Commission

There are two main types of decision the Commission may adopt:
procedural decisions and final decisions. The first are taken in the course
of the investigation and the second are taken at the end of it and may be
further subdivided into two main groups, informal and formal. They will
be considered in turn.

Procedural decisions
The most important kinds of procedural decision are: (a) those taken
under Article 15(6) of Regulation 17/62 to remove temporary immunity
the right to be heard of undertakings concerned, applicants and complainants and other
third parties.
91
See Articles 4, 5, 8 and 9 of Regulation 2842/98.
92
See Article 5 of Regulation 2842/98.
93
See Articles 8 and 9(3) of Regulation 2842/98.
94
For regulation of the conduct of oral hearings, see Articles 10–14 of Regulation 2842/98.
95
This is also recognised the 11th Recital to the Preamble to Regulation 17/62.
96
See Transocean Marine Paint v. Commission (Case 17/74 [1974] ECR 1063, [1974] 2 CMLR
459).
97
Ibid.
98
Ibid., at paragraphs 16–22 of the judgment.
 The enforcement of EC competition law 127

from fines;99 (b) those under Article 11(5) or Article 14(3) of Regulation
17/62 requiring information to be supplied or ordering an investigation;100
and (c) interim measures.
The power of the Commission to grant interim relief was not expressly
provided for in Regulation 17/62, but was recognised by the European
Court in its landmark decision in Camera Care v. Commission.101 In that case,
Camera Care, a company that repaired, hired and sold professional
equipment, argued that Hasselblad, one of its suppliers, was in breach of
Articles 81 and 82 EC, and asked the Commission to open an investigation
against the latter. Furthermore, it asked the Commission to grant interim
relief. The Commission agreed to open the investigation but refused to
grant interim relief on the grounds that Regulation 17/62 did not confer
upon it the power to do so. The Court, however, took the view that, subject
to certain conditions, the Commission should be able to grant interim
relief. The Court set out its legal reasoning as follows. First, it emphasised
how appropriate and necessary it was for the Commission to be able to
grant interim relief. It explained that the interests of private parties, of the
Member States and of the Community’s competition policy had to be
protected from serious and irreparable damage while the Commission’s
investigation was taking place.102 It then turned to Regulation 17/62 and
found that, since Article 3 enabled the Commission to compel under-
takings to bring an infringement of Articles 81 or 82 EC to an end, the
Commission should also have the power to take protective measures
beforehand. Otherwise the power to make decisions under Article 3 could
become ‘ineffectual or even illusory because of the action of certain
undertakings’.103 Finally, it attached certain conditions to the grant of
interim relief:

… [I]t is essential that interim measures be taken only in cases proved to be

urgent in order to avoid a situation likely to cause serious and irreparable
damage to the party seeking their adoption, or which is intolerable to the public
interest. A further requirement is that these measures be of a temporary and
conservatory nature and restricted to what is required in the given situation [emphasis
added].104

99
See supra n. 16.
100
See supra n. 42 and supra n. 45–47 and accompanying text.
101
Case 792/79R [1980] ECR 119, [1980] 1 CMLR 334.
102
Ibid., at paragraph 14 of the judgment.
103
Ibid., at paragraph 18 of the judgment. Later in the judgment, the Court also alluded to the
Order of the President of the Court in National Carbonising Company (Case 109/75R [1975]
ECR 1193), a case under the ECSC Treaty, where it was recognised that Community
institutions that receive complaints or take decisions with regard to infringements should
be able to adopt any necessary interim measures.
104
Ibid., at paragraph 19 of the judgment.
128 EC Competition Law and Policy

The Court explained in subsequent decisions the further condition is

that there should be a prima facie case of infringement of the competition
rules.105 This does not mean, however, that the Commission should be
persuaded that there is a clear and flagrant infringement, but that it should
conduct a preliminary assessment and conclude that, in principle, it is likely
that Articles 81 and 82 EC might have been breached.106
The Commission has acted cautiously in this field and there have been
few cases where it has granted interim relief, but the judgment in Camera
Care is a welcome example of teleological reasoning that filled the gap left
by Regulation 17/62. The 2000 Draft Regulation implementing Articles 81
and 82 EC now lays down the Camera Care principles in legislative form.107

Final decisions: informal

The commonest example of informal decisions are the so-called ‘comfort
letters’. As defined by the Court in the Perfume cases,108 these are
administrative letters informing the undertakings concerned of the
Commission’s opinion that there is no breach of Articles 81 or 82 EC and of
its intention of closing the file. Comfort letters are widely used by the
Commission, whereas few formal decisions are issued each year. But what
is the legal status of comfort letters? Do they bind the national courts?
These issues were considered by the Court in the Perfume cases, where the
Commission had issued comfort letters with reference to certain selective
distribution agreements that subsequently came before the national
courts. A reference was made to the Court, which held that ‘comfort
letters’ were mere administrative decisions and did not prevent the
national courts from reaching a different conclusion about whether or not
an agreement was in breach of Article 81 EC. The Court, however, stated
that although comfort letters did not bind the national courts, they should
be taken into account by the national courts when deciding whether or not
there has been a breach of Article 81 EC.109 It is also clear from the case law
that, by sending a ‘comfort letter’, the Commission is not prevented from
reopening the file following a complaint by from a third party.110

105
Case T-44/90 La Cinq v. Commission [1994] ECR II-1, [1992] 4 CMLR 449, at paragraph 28
of the judgment.
106
Ibid., at paragraph 61 of the judgment.
107
See Article 8 of the Draft Regulation on enforcement (see supra n. 5) and infra section 4.4.3.
108
Case 37/79 Anne Marty v. Estée Lauder [1980] ECR 2481, [1981] 2 CMLR 143; Case 99/79
Lancôme v. Etos [1980] ECR 2511, [1981] 2 CMLR 164; and Case 31/80 L’Oréal v. De Nieuwe
[1980] ECR 3775, [1981] 2 CMLR 235.
109
See Case 31/80 L’Oréal v. De Nieuwe, supra n. 108, at paragraphs 9–11 of the judgment. See,
more recently, the Court’s decision in Koelman v. Commission (Case C-59/96P [1997] ECR
I-4812).
110
See the Court of First Instance judgments in the Ice-cream cases (Cases T-7/93 and T-9/93
[1995] ECR II-1533, [1995] 5 CMLR 602, at paragraphs 38 and 41 of the judgment (T-7/93)
and 112 and 115 (T-9/93).
 The enforcement of EC competition law 129

The Commission may end the procedure informally by asking the

undertakings concerned to modify their agreements, as in BAT and Reynolds
v. Commission.111 In that case, the Commission issued a statement of
objections with reference to a sale agreement between Philip Morris and
Rembrandt, but suggested certain amendments to remove its anti-
competitive features. Following the adoption of these amendments by the
companies, the Commission closed the file.
The procedure may also end by means of an informal settlement. For
example, in 1980 the Commission initiated an investigation against the
activities of IBM, the world’s largest computer manufacturer at the time,
and produced a statement of objections finding the company to be in
breach of Article 82 EC. In 1984, however, the Commission accepted an
undertaking from IBM to modify its business practices and suspended the
investigation before a final decision was taken.112

Final decisions: formal

There are three types of formal decision that can be adopted by the
Commission at the end of its investigation: (a) decisions finding an
infringement of the competition rules; (b) negative clearance; or (c)
decisions granting individual exemption. Since there is no possibility of
exemption from the prohibition in Article 82 EC, the last type of formal
decision is only pertinent in the context of Article 81 EC proceedings.

Decisions finding an infringement. Article 3 of Regulation 17/62 expressly

provides that where the Commission finds that there has been a breach of
Articles 81 or 82 EC, it ‘may by decision require the undertakings or
associations of undertakings concerned to bring such infringement to an
end’. It is therefore clear that the Commission can issue ‘cease and desist
orders’, and plenty of examples can be found in the case law, in the context
both of Article 81 and Article 82 EC.113 Two issues, however, need to be
considered. First, can the Commission prevent undertakings from
entering into similar arrangements in the future? The decisions of the
Commission and the approach of the Court seem to differ on this point. In
the Dutch building cartel decision,114 the Commission took the view that
Article 3 of Regulation 17 enabled it, even if the undertakings had already
111
Cases 142/84 and 156/84, supra n. 20.
112
See XIVth Report on Competition Policy (1984), at paragraphs 94 and 95. IBM’s
undertaking was closely monitored by the Commission in subsequent years (see XXIst
Report on Competition Policy (1991) at paragraph 106).
113
See, for example, the Commission Decision in GEMA (Decision 71/224/EC, OJ [1971] L
134/15, [1971] CMLR D35), in which the Commission ordered the German music
performing rights society to put an end to their abusive practices. In the context of Article
81 EC, see the decision of the Court in Automec (II) (Case T-24/90, supra n. 23, at
paragraph 52 of the judgment).
114
Decision 92/204, OJ [1992] L 92/1, [1993] 5 CMLR 135, at paragraph 133 of the decision.
130 EC Competition Law and Policy

put an end to an infringement, to order the cartel to refrain from any

similar practices in the future. For the Commission, this reading of Article
3 was justified, not only for the purpose of imposing fines on under-
takings, but also for the protection of public interest. In the Ice-cream
cases,115 however, the Court of First Instance took a different view. In these
cases, the Commission ordered the parties to refrain from concluding
exclusive purchasing agreements in the future. The parties argued that
Article 3 of Regulation 17/62 only empowered the Commission to prohibit
existing agreements, but not those that might be concluded in the future.
In particular, they argued that it would infringe the principle of non-
discrimination, as their competitors could continue to conclude exclusive
agreements which might either not be covered by Article 81(1) or might
fall within the scope of the relevant block exemption regulation.116 The
Court of First Instance upheld these arguments and annulled the relevant
provision in the Commission’s Decision.117
The second contentious issue is whether the Commission may order the
parties to take some specific course of action to bring the infringement to
an end. Here, it seems that a different philosophy applies to cases under
Article 81 EC and those under Article 82 EC.
In Commercial Solvents v. Commission118 the Commission had found
Commercial Solvents in breach of Article 82 EC and had ordered the
company to supply Zoja with certain quantities of aminobutanol, the
substance that it had previously refused to supply. The Court took the
view that Article 3 of Regulation 17/62 gave the Commission the power to
order the undertakings ‘to do certain acts or provide certain advantages
which have been wrongfully withheld as well as prohibiting the
continuation of certain practices or situations which are contrary to the
Treaty’.119 It therefore upheld the Commission’s decision ordering
Commercial Solvents to supply Zoja with aminobutanol. Similarly, in RTE
v. Commission,120 another case concerning a refusal to supply, the Court
upheld the Commission’s decision ordering the television companies to
supply the relevant information to Magill, as this was, in the words of the
Court, ‘the only way of bringing the infringement to an end’.121

115
See cases T-7/93 and T-9/93, supra n. 110.
116
See case T-7/93, at paragraphs 198–200 of the judgment, and Case T-9/93, at paragraphs
158–64 of the judgment.
117
The European Court confirmed, on appeal, the decisions of the Court of First Instance (see
Case C-279/95P [1998] ECR I-5609, [1998] 5 CMLR 933).
118
Cases 6–7/73 [1974] ECR 223, [1974] CMLR 309. For a description of the facts, see supra
Chapter 3, section 3.2.2
119
Ibid., at paragraph 45 of the judgment.
120
See Joined Cases C 241–242/91P (the Magill cases) [1995] ECR I-797, [1995] 4 CMLR 718
(for a description of the facts, see supra Chapter 3, section 3.2.2).
121
Ibid., at paragraph 91 of the judgment.
 The enforcement of EC competition law 131

In Automec (II),122 a case under Article 81 EC, the Court adopted what
might seem, at first sight, an inconsistent approach. Automec complained
to the Commission that it had been excluded from BMW’s distribution
system. It argued that BMW’s action was contrary to Article 81(1) EC and
applied for an injunction compelling BMW to resume supplies. The Court
held that, although the Commission had the power to bring the
infringement to an end, the Commission was not empowered to adopt the
specific injunction requested. The Court based its reasoning on a literal
reading of Article 81 EC. It explained that Article 81(2) EC only provides
for one express consequence of the breach of the prohibition in Article 81(1)
EC, namely the nullity of the agreement or concerted practice. It therefore
concluded that any other consequence, such as the obligation to make
good damage caused to a third party or to fulfil an obligation to contract,
must be determined by national law.123 It then alluded to the principle of
freedom to contract and explained that, when there are several possible
ways to end an infringement, it is not for the Commission ‘to impose on
the parties its own choice among the different potential courses of action
which all conform to the Treaty’. 124
What is the rationale behind the different treatment of Article 81 and 82
EC cases? In Automec (II), the Commission had argued that it stems from
the different logic underlining these two provisions. On the one hand,
Article 82 EC refers to any unilateral anti-competitive behaviour and can
encompass a wide range of deliberate acts or omissions by a dominant
company. The powers of the Commission under Article 3 can therefore
extend to issuing orders either to perform certain acts that were
unlawfully not done or to refrain from practices contrary to Article 82 EC.
On the other hand, Article 81(1) specifically prohibits anti-competitive
agreements and the only step that the Commission may take is to
discontinue the validity of the agreement or provision in question.125 The
Court, in its judgment, did not compare its approach in both types of case
but reached a similar conclusion using a literal interpretation of Article 81
EC, discussed above. It would appear that the wider approach adopted by
the Court in Article 82 EC cases is a direct consequence of the less
restrictive terms in which Article 82 EC is framed. Thus Article 82 EC
prohibits any abuse of dominant position and does not outline any specific
consequences that flow from the infringement of that prohibition. Article
81 EC, however, prohibits anti-competitive agreements and concerted
practices and lays down one specific sanction: the nullity of the agreement
122
Case T-24/90, supra n. 23.
123
Ibid., at paragraph 50 of the judgment. See also the possible implications of the recent
decision of the Court in Courage v. Crehan (Case C-453/99, Judgement of 20 September
2001, not yet reported). See infra section 4.3.1.
124
Ibid., at paragraph 52 of the judgment.
125
Ibid., at paragraphs 40–2 of the judgment, where the arguments put forward by the
Commission during the proceedings are set out.
132 EC Competition Law and Policy

or practice. This would seem to prevent the Commission from ordering

action other than the termination of the agreement.
Articles 15 and 16 in Regulation 17/62 empower the Commission to
impose fines or periodic penalty payments on undertakings. Fines may
be imposed on undertakings that have committed either substantive in-
fringements, i.e. breach of Articles 81 and 82 EC, or procedural
infringements, i.e. breach of the provisions in Regulation 17/62.126
Periodic penalty payments may be imposed on undertakings that
continue to act in breach of the substantive or procedural competition
provisions despite having been alerted that their behaviour is unlawful.127
Both these provisions outline clearly the circumstances in which a fine
or periodic penalty payment may be imposed. However, in the case of
the most severe fines, i.e. those imposed on account of substantive
infringements, Article 15(2) does not specify clearly the criteria that
the Commission should follow in its calculation, other than that the
gravity of the infringement and its duration should be taken into
account.128 The 1998 Guidelines on the method of setting fines imposed
pursuant to Article 15(2)129 have substantially, but not completely,
clarified the principles that should inform the fining policy of the
Commission.130
Fines can be imposed both with reference to intentional and negligent
infringements of EC competition law. This is set out in Article 15(1) of
Regulation 17/62, but it has also been made clear by the Commission
and the case law. In an early decision, Re Deutsche Philips,131 the company
under investigation argued that it had erroneously maintained an export
ban in its wholesale agreements. To prove its point, Deutsche Philips
submitted to the Commission evidence, consisting of letters indicating
that it had informed its wholesalers that exports to other Member
States were not forbidden. The Commission, while accepting that the
infringement was not deliberate, fined the undertaking because it had
not exhibited the necessary degree of care by modifying its agree-
ment.132 However, and despite the fact that export bans constitute a very

126
See Article 15 of Regulation 17/62.
127
See Article 16 of Regulation 17/62.
128
The case law has added other relevant factors, such as the size of the undertakings
concerned, their long-term engagement in international and national trade, their
involvement in antit-trust infringement suits brought against them in other jurisdictions,
etc. (Case 27/76 United Brands v. Commission [1978] ECR 207, [1978] 1 CMLR 429, at
paragraphs 298–301 of the judgment).
129
OJ [1998] C 9/3.
130
See W. P. J. Wills, ‘The Commission’s new method for calculating fines in antitrust cases’
[1998] 23 ELRev 252.
131
Decision 73/332, OJ [1973] L 293/40, [1973] CMLR D241.
132
Ibid., at paragraphs 14–18 of the decision.
 The enforcement of EC competition law 133

grave infringement of Article 81(1) EC, the Commission imposed a less

severe fine than it would have done had the infringement been
intentional.133

Negative clearances. Article 2 of Regulation 17/62 provides that the

Commission may adopt a decision stating that there has been no breach of
Article 81 or 82 EC and that there are, therefore, no grounds for action on
its part.

Decisions granting an exemption. This possibility is provided in Article 8 of

Regulation 17/62. Under this provision, a decision granting an exemption
is granted ‘for a specified period of time and conditions and obligations
may be attached thereto’.134 Furthermore, an exemption may be renewed,
provided the conditions in Article 81(3) EC continue to be satisfied.135 The
Commission may also revoke or amend its decision granting an
exemption in four cases listed in Article 8(3) of Regulation 17/62: (a) where
there has been a change in any of the basic facts that led to the decision; (b)
where the parties breach a condition or obligation attached to the
exemption; (c) where the decision is based on incorrect information; and
(d) where the parties abuse the exemption. As the Court of Justice has
emphasised, the effect of a decision granting an exemption is to give the
addressees the right to rely on it against third parties that claim the
agreement is null and void.136

Formal requirements. Formal decisions need to satisfy certain requirements

and failure to do so could result in the annulment of those decisions on
grounds of infringement of an essential procedural requirement.137

133
Ibid., at paragraph 19 of the decision.
134
See Article 8(1) of Regulation 17/62.
135
See Article 8(2) of Regulation 17/62. In Eurotunnel (Decision 94/894, OJ [1994] L 354/66,
[1995] 4 CMLR 801), the Commission renewed in 1994 an exemption granted in 1988 to a
contract governing the use of the Channel tunnel concluded between British Railways
and SNCF. In 1988, the exemption was gained by acquiescence under Article 12(3) of
Regulation 1017/68 (OJ Sp. Ed. [1968] 302), applying rules of competition to transport by
rail, road and inland waterway. Under Article 12(3) of that Regulation, if following the
publication of a summary of the application for exemption in the Official Journal inviting
interested parties to submit comments, the Commission does not notify the interested
parties within 90 days that there are serious doubts about the granting of an exemption,
the agreement will be deemed to be exempted for a maximum period of three years. In
1994, however, the Commission issued a decision renewing the exemption for a period of
30 years, provided that certain conditions were fulfilled (see Articles 1 and 2 of Decision
94/894).
136
See Case 31/80, supra n. 108, at paragraph 23 of the judgment.
137
Infringement of an essential procedural requirement is one of the four grounds for
annulment set out in Article 230(1) EC.
134 EC Competition Law and Policy

First, decisions, like any other binding Community act, need to state the
reasons on which they are based.138 This means that the Commission has
to set out the factual and legal considerations governing its decision. The
Commission is not under an obligation, however, to discuss all the points
raised during the administrative proceedings.139 For example, in VBVB &
VBBB v. Commission,140 an association of Dutch and Belgian book pub-
lishers challenged a decision of the Commission finding their agreement
on resale price maintenance to be in breach of Article 81(1) EC and
ineligible for exemption. The association had argued, inter alia, that a
prohibition of the agreement would infringe their freedom of expression
and Article 10b is of the Paris Convention on Industrial Property Rights.
The association argued before the Court that the Commission did not
consider these arguments and that, consequently, its decision should be
annulled. The Court dismissed these claims and held that the Commission
had sufficiently stated, in the operative part of its decision, all the legal and
factual considerations that led to the prohibition of the agreement.141
Second, a formal decision of the Commission can only deal with points
in respect of which the parties have been afforded the opportunity of
making their views known, in other words can only deal with the points
raised by the Commission in the statement of objections.142 In Woodpulp
(II),143 the Court annulled a provision in the Commission’s decision
because it referred to concertation between the parties on transaction
prices whereas the statement of objections only referred to concertation on
announced prices. The Commission had claimed that several references to
concertation on transaction princes had been made in its statement of
objections, but the Court took the view that the complaint about these
prices had not been set out clearly. As a result, the undertakings concerned
had not had an opportunity to defend themselves effectively and the
relevant part of the Commission’s decision was annulled.144
Third, decisions must be effectively notified to the addressees and will
only take effect upon notification.145 Notification has to be clear and
unequivocal. The Court has held that a registered letter with postal
acknowledgement of receipt is a suitable method of notification.146

138
See Article 253 EC.
139
See VBVB & VBBB v. Commission (Cases 43/82 and 63/82 [1984] ECR 19, [1985] 1 CMLR
27), at paragraph 23 of the judgment.
140
Cases 43/82 and 63/82, supra n. 139.
141
Ibid., at paragraphs 22–3 of the judgment.
142
See Article 2(1) of Regulation 2842/98, supra n. 28.
143
Cases C-89/85, etc., supra n. 64. For a summary of the facts, see Chapter 2, section 2.2.1.
144
Ibid., at paragraphs 40–54 of the judgment.
145
See Article 254(3) EC.
146
See Bayer v. Commission (Case C-195/91P [1994] ECR I-5619, [1996] 4 CMLR 31), at
paragraph 21 of the judgment.
 The enforcement of EC competition law 135

4.2.2 Judicial review

The Commission’s enforcement of competition policy is subject to the
control of the Community judicature. In particular, there are two kinds of
direct action in the EC Treaty that are used to review different aspects of
the Commission’s conduct in this field: the action for annulment and the
action for a failure to act.
These actions are closely related and, in fact, represent two dimensions
of the same remedy. While the action for annulment is used to review the
legality of Community acts, the action for a failure to act is used to control
illegal omissions of Community institutions, i.e. cases where they had an
obligation to act and failed to do so. These two actions guarantee that both
illegal acts and omissions are subject to judicial control. They are set out in
Articles 230 and 232 EC, respectively.
In addition to these two actions, the action to review penalties set out in
Article 229 EC provides that Council regulations may confer on the
European Court unlimited jurisdiction with regard to penalties provided
therein. Article 17 of Regulation 17/62 bestows this jurisdiction on the
Community judicature, which accordingly may cancel, reduce or increase
a fine or penalty payment imposed by a Commission decision. Further-
more, Articles 242 and 243 EC enable the Community judicature to grant
interim relief in connection with any of the direct actions mentioned
above.147
In respect of the division of jurisdiction between the European Court
and the Court of First Instance, all these actions, when brought by private
parties, come before the Court of First Instance. An appeal on points of law
against decisions of the Court of First Instance can be brought before the
European Court. Actions brought by other parties come before the
European Court.148
The action for annulment and the action for a failure to act will now be
considered in detail.

The action for annulment

This action occupies a central position in the system of judicial review
provided in the Treaty. Four aspects of Article 230 EC proceedings need to
be considered: (a) what acts can be challenged; (b) who can bring an action;

147
See the Order of the President of the Court of First Instance in Bayer v. Commission (Case
T-41/96R [1996] ECR II-381, [1996] 5 CMLR 290), which granted negative interim relief,
i.e. suspension of a Commission decision. The Order illustrates clearly the issues that are
examined by the Court before an interim stay could be granted (prima facie case, urgency,
threat of irreparable damage and conservatory nature of the measures adopted).
148
See Article 225 EC and Article 3 of Decision 88/591, OJ [1988] L 319/1 and Decision 93/
350, OJ [1993] L 144/21. See also the reforms proposed by the Treaty of Nice (signed on 26
February 2001) to the judicial architecture of the European Union.
136 EC Competition Law and Policy

(c) the suitable grounds for review; and (d) the time limit within which
proceedings can be brought. These will be considered in turn.

Acts that can be challenged

Article 230(1) EC makes it clear that only legally binding acts are
reviewable. In principle, this would cover regulations, directives and
decisions enacted by Community institutions, because these are the three
kinds of legally binding act provided in Article 249 EC. In competition
proceedings, and given the pivotal enforcement role played by the
Commission, most actions for annulment are brought against
Commission decisions.
The Commission, however, may also act in this area by means of acts
that are not specifically termed decisions. Are these to be reviewable? This
is an important question and competition cases have provided the
guidelines that apply to other areas of EC law. In its landmark decision in
Cimenteries v. Commission,149 the Court held that a letter in which the
Commission informed a group of cement-makers of the withdrawal of
their temporary immunity from fines150 was a decision in substance, given
that it produced legal effects on the addressees.151 It was therefore
reviewable, even if the word ‘decision’ was not mentioned in the letter.
Later case law has confirmed this non-formalistic approach and has
emphasised that an act will be reviewable if it produces legal effects,
regardless of the form and title given to it. The decision of the Court in IBM
v. Commission152 illustrates this approach. In that case, IBM tried to
challenge before the Court the Commission’s statement of objections. The
Court confirmed that any measure that brought about a distinct change in
the legal position of the applicants might be subject to an Article 230 EC
action. The form in which a measure was cast was immaterial.153 The
Court held that the statement of objections did not produce such legal
effects because it was only a procedural measure that did not lay down
definitely the position of the Commission, but paved the way for the one
that did so.154 This, however, must not be understood as meaning that only

149
Joined Cases 8-11/66 [1967] ECR 75, [1967] CMLR 77.
150
See Articles 15(5) and 15(6) of Regulation 17/62.
151
In Prodifarma v. Commission (Case T-3/90 [1991] ECR II-1), the Court of First Instance
emphasised that a decision to withdraw immunity produces two main legal effects for the
parties to the agreement: it lays them open to fines if they continue to implement the
agreement and it excludes the undertakings’ good faith in respect of the compatibility of
their agreement with Article 81 EC. In other words, if the parties continue to implement
their agreement, they do so at their own risk.
152
Case 60/81 [1981] ECR 2639, [1981] 3 CMLR 635.
153
Ibid., at paragraph 9 of the judgment.
154
Ibid., at paragraphs 13–21 of the judgment. As seen above, supra section 4.2.1 (Phase
three), the statement of objections only sets out the prima facie case of the Commission
and it has the function of allowing the undertakings concerned to prepare their defence
 The enforcement of EC competition law 137

the final decision is reviewable. Measures adopted under Article 15(6) of

Regulation 17/62 are reviewable,155 and so are measures whereby the
Commission notifies the applicants of its intention to disclose confidential
information,156 and decisions requiring information157 or ordering an
investigation158 and those definitively rejecting a complaint.159 Further-
more, final decisions, such as negative clearances, are only reviewable by
third parties and not by the addressees of the decision, as the Court of First
Instance held in the Dutch banks case.160 The reasoning behind this
approach is that negative clearances give satisfaction to the addressees
and do not alter their legal position.161
One interesting issue is whether comfort letters are reviewable.
Undoubtedly, these may produce legal effects; therefore they should be
reviewable. The case law, however, has not settled this point. In the
Perfume cases,162 the Court took the view that these were merely
administrative decisions, and therefore not binding on the national courts,
but it emphasised, at the same time, that they produced legal effects. In Air
France v. Commission,163 the Court of First Instance made a passing
reference to the Perfume cases and explained that comfort letters cannot
‘form the subject matter of an action for annulment’, which would indicate
that they are not reviewable. The question of whether comfort letters are
reviewable, therefore, remains open.

Who can bring annulment proceedings?

Under Article 230 EC, there are three categories of applicant that may
bring annulment proceedings: privileged, semi-privileged and non-
privileged. Privileged applicants have automatic standing to bring an
action for annulment. These are the Council, the Commission and
the Member States.164 Semi-privileged applicants are the European
Parliament, the Court of Auditors and the European Central Bank, who
can only bring annulment proceedings when their prerogatives are at

effectively. Only the final decision of the Commission has the effect of definitely finding
an infringement, exempting an agreement or granting negative clearance.
155
See Cimenteries (Joined Cases 8–11/66, supra n. 149).
156
See AKZO v. Commission (Case 53/85, supra n. 80, and supra section 4.2.1, Phase three).
157
See Article 11(5) of Regulation 17/62.
158
See Article 14(3) of Regulation 17/62.
159
See Guerin (Case C-282/95P, supra n. 29, and supra section 4.2.1, Phase two). According to
the principles governing the IBM case, a notification by the Commission under Article 6 of
Regulation 2842/98 would be a provisional measure and therefore non-reviewable (see
also Guerin).
160
See Case T-138/89 [1992] ECR II-2195, [1993] 5 CMLR 435.
161
Ibid., at paragraph 32 of the judgment.
162
Cases 37/79, Case 99/79 and Case 31/80, supra n. 108.
163
Case T-3/93 [1994] ECR II-121.
164
Article 230(1) EC.
138 EC Competition Law and Policy

stake.165 Finally, non-privileged applicants are natural and legal persons,

who have to fulfil very stringent locus standi requirements, laid down in
Article 230(4) EC.
The position of non-privileged applicants needs to be considered in
detail, as the overwhelming majority of competition cases concern
applications submitted by natural or legal persons for the annulment of
Commission decisions. Under Article 230(4) EC, a natural or legal person
may challenge a Commission decision either if he/she is the addressee of
the decision or, if the decision is addressed to a third party, he/she can
show to be directly and individually concerned by it. The EC Treaty did
not define when a private applicant would be individually and directly
concerned, and it therefore fell to the European Court to interpret these
two notions. In most areas of EC law, the standard test adopted to
determine whether a private party is individually concerned is whether it
belongs to a closed class: namely, a group of people that was fixed and
ascertainable when the contested measures entered into force.166 Non-
addressees have been found to be directly concerned when the addressee
of the measure has no discretion about how to implement it, or even if it
has any discretion, it is clear from the circumstances how this discretion
can be exercised.167 This double test is extremely difficult to satisfy. As a
result, few actions for annulment have been declared admissible.
Competition law is, however, one of the areas where the Community
judicature has adopted a more flexible interpretation of the standing
requirements in Article 230(4). Thus, in Metro (I),168 the Court held that
complainants who triggered the Commission’s investigation would have
standing to challenge the decision adopted by the Commission at the end
of the procedure. The Court did not apply consecutively the standard tests
of direct and individual concern, but took an overall approach169 based on
the applicant showing a legitimate interest. In the same vein, the Court held
in Metro (II)170 that an applicant who participated in the administrative
proceedings, even though not in a complainant capacity, was also directly
and individually concerned. This would be the case, for example, in
165
Article 230(3) EC. The Treaty of Nice (2001) has given the European Parliament the status
of privileged applicant.
166
Case 25/62 Plaumann v. Commission [1963] ECR 95, [1964] CMLR 29; Cases 106–107/63
Toepfer v. Commision [1965] ECR 405, [1966] CMLR 111.
167
Case 11/82 Piraiki-Patraiki [1985] ECR 207, [1985] 2 CMLR 4.
168
Case 26/76 [1977] ECR 1875, [1978] 2 CMLR 1.
169
In competition cases, the Court rarely considers separately the tests of direct and
individual concern, but prefers to take an overall approach, focusing mainly on the test of
individual concern. This seems to be a logical consequence of the fact that direct concern
refers to the absence of discretion bestowed on the addressee of the Commission’s
decision. In competition cases, the addressee is always a private party and therefore it is
difficult to imagine a situation where it would have discretion about how to implement a
Commissions decision.
170
Case 75/84 [1986] ECR 3021, [1987] 1 CMLR 118.
 The enforcement of EC competition law 139

respect of an interested party who submitted observations under Article

19 of Regulation 17/62.
Would an interested private party be individually concerned only if it
had actually participated in the Commission’s procedure? In merger cases,
the Court of First Instance began to relax the locus standi rules even more.
This was achieved in two different ways. First, in Air France v.
Commission,171 the Court indicated that an undertaking likely to suffer
damage as a result of a Commission decision finding a merger between its
competitors not to have a Community dimension would be individually
concerned, regardless of its actual participation in the Commission’s
proceedings. Second, in the Mineral water cases,172 the Court held that
natural or legal persons who enjoy procedural rights under the EC Merger
Regulation, i.e. the right to submit observations,173 would be individually
concerned by that decision even if these rights have not been exercised in
practice.
A few months later, a similar approach was taken in Métropole v.
Commission,174 an Article 81 EC case. The Court of First Instance held that a
direct competitor of the addressee of an individual exemption was
individually concerned because the decision could have a clearly
damaging effect on its interests and because the applicant enjoyed
procedural rights, i.e. the right to be heard under Article 19(3) of
Regulation 17/62. Standing was granted irrespective of the fact that the
applicant did not take part in the Commission’s procedure.175
The decision in Métropole, however, was distinguished in Kruidvat v.
Commission.176 In this case, a parallel importer of luxury perfumes was
sued before the national courts by one of Givenchy’s selective distributors
in Belgium, on the basis that the sale of Givenchy products by a non-
authorised retailer was in breach of Belgian laws on unfair competition.
Kruidvat argued that the selective distribution system operated by
Givenchy was in breach of Article 81 EC. The selective distribution system
had been notified to the Commission, which granted an exemption to the
system under Article 81(3) EC. Kruidvat challenged the Commission’s
decision. The European Court upheld the decision of the Court of First
Instance and found that Kruidvat lacked standing. In particular, it
emphasised that whereas in Métropole the applicant was a direct
171
Case T-3/93, [1994] ECR II-121.
172
See Case T-96/92 Comité Central d’entreprise de la Société Générale des Grandes Sources and
others v. Commission [1995] ECR II-1213 and Case T-12/93 Comité Central d’entreprise de la
Société Anonyme Vittel and others v. Commission [1995] ECR II-1247.
173
See Article 18 of Regulation 4064/89 (OJ [1990] L 257/13).
174
Joined Cases T-528/93, T-542/93, T-543/93 and T-546/93 [1996] ECR II-649, [1996] 5
CMLR 386.
175
Ibid., at paragraphs 59–65.
176
See Case C-70/97P [1998] ECR I-7183, [1999] 5 CMLR 68 and the decision of the Court of
First Instance in that case (Case T-87/92 [1996] ECR II-1931, [1997] 4 CMLR 1046).
140 EC Competition Law and Policy

competitor, Kruidvat had never applied for admission to the Givenchy

distribution network and ‘its situation could not be distinguished from
that of numerous other economic operators in the parallel market’.177
It follows from the case law discussed above that natural or legal
persons who are not the addressees of a Commission decision will have
standing to bring an Article 230 EC action in two cases. The first case is if
they have participated in the Commission’s procedure leading to the
adoption of the contested decision. This is the most frequent scenario in
competition cases, where interested parties do, as a rule, become involved
in the Commission’s procedure. The second case arises even if they have
not participated, provided that they (a) enjoy procedural rights i.e. they
are interested parties, and (b) the decision has effects on them that are
clearly distinguished from those it has on other parties generally affected
by the decision. So far, the case law has only shown that a direct
competitor would be in such a position.178

Grounds for review

Article 230(1) EC lays down four possible grounds for the annulment of
Community acts: lack of competence, infringement of an essential
procedural requirement, infringement of the Treaty or of any rule relating
to its application, and misuse of powers.

Time limit
Article 230(5) EC provides that there is a two-month time limit within
which an action for annulment may be brought. The time limit runs from
the date a decision has been published or notified to the addressee or, in
the absence thereof, from the date on which the decision came to the
applicant’s knowledge.

The interplay between Article 230 EC and 234 EC proceedings

In addition to the action for annulment, which is the direct avenue for the
challenge of Community acts, Article 234 EC provides an indirect avenue
for judicial review. The latter provision allows or obliges, as the case may
be, the national court to make a reference to the European Court con-
cerning the legality of a Community act which is at issue on national
proceedings. In competition cases, the European Court has frequently
suggested this avenue to parties who have been unable to show standing
under Article 230(4) EC.179 The rule set out in TWD,180 however, applies: if
an applicant clearly had standing to bring an Article 230 EC action (i.e. in
competition cases, if it has participated in the Commission’s investigation)
177
Ibid., at paragraph 46 of the judgment.
178
See Case C-70/97P, supra n. 176.
179
See Case C-70/97P, supra n.176, at paragraph 49 of the judgment.
180
Case C-188/92 [1994] ECR I-833.
 The enforcement of EC competition law 141

and failed to do so within the two-month time limit, it cannot then bring
national proceedings and expect the national court to make a reference to
the Court concerning the validity of the Commission’s decision.

The action for a failure to act

The action for a failure to act is available in cases where a Community
institution has failed to act, in infringement of the Treaty. Its purpose is,
therefore; to force an institution to act.181 There are three aspects of Article
232 EC proceedings that will be examined in turn: (a) the procedural
requirements attached to the action for a failure to act; (b) who can bring an
action; and (c) which omissions are reviewable.

Procedural requirements
Article 232(2) makes it clear that the Community institution in question –
in competition cases, the Commission – needs to have been called upon to
act before an action for a failure to act can be brought before the Com-
munity judicature. This is an essential procedural requirement, and failure
to comply with it will determine the inadmissibility of the action. Only if
the Commission has failed to define its position within two months of
being called upon to act would an applicant be entitled to bring an action
for a failure to act.
Moreover, if, following such a call, the institution defines its position,
then an action for a failure to act is no longer appropriate, even if it has
already been brought before the Court. For example, in Asia Motor France
v. Commission,182 the applicant, an importer of Japanese cars, complained
to the Commission that an agreement concluded between five other
importers of Japanese cars was contrary to Article 81 EC. As nothing was
heard from the Commission, the applicant brought an action for a failure
to act. A few months later, the Commission wrote to the applicant
pursuant to Article 6 of Regulation 99/63183 to let it know that it intended
to reject its complaint and invited it to submit observations. The Court
held that the action for a failure to act had become devoid of purpose
because the Commission had defined its position. In other words, once an
act has been adopted, the action for a failure to act ceases to be relevant and
annulment proceedings become the appropriate avenue of review. In this
case, and although the Commission had enacted a decision finally

181
See the Opinion of the (then) Advocate General Edwards in Asia Motor France v.
Commission (Case T-28/90 [1992] ECR II-2285, [1992] 5 CMLR 431).
182
Case T-28/90, supra n. 181. See also GEMA v. Commission (Case 125/78 [1979] ECR 3173,
[1980] 2 CMLR 177).
183
Regulation 99/63 had now been replaced by Regulation 2842/98 on hearings. The
corresponding provision of old Article 6 of Regulation 99/63, is Article 6 in the new
Regulation (see supra section 4.2.1 (Phase one)).
142 EC Competition Law and Policy

rejecting a complaint, the applicant brought an action for annulment

against the decision provisionally rejecting the complaint. This meant that
the action for annulment was also declared inadmissible because, accord-
ing to the case law, such acts are not reviewable.184

Who can bring an action for a failure to act?

The action for a failure to act is closely related to the action for annulment.
Accordingly, this is reflected in the similar categorisation of potential
applicants set out in Article 232 EC. Thus there are three kinds of
applicants. First, the Member States and all three political institutions –
the Council, the Commission and the Parliament – constitute the
privileged applicants, i.e. those enjoying automatic standing. Second, the
European Central Bank is the only semi-privileged applicant, in that it can
only bring proceedings in areas ‘falling within its field of competence’.
Thirdly, natural and legal persons constitute the category of non-
privileged applicants and have to satisfy very stringent locus standi
conditions, as is the case under the action for annulment.
Again, the question of standing of private parties is of crucial im-
portance because most competition cases are brought from the private
sector. The wording of Article 232(3) EC suggests that the standing
requirements laid down by this provision are even more stringent than the
corresponding ones in Article 230(4) EC. Thus, a private party can only
bring an action if the Community institution in question has failed ‘to
address to that person an act’. It would seem therefore that it does not cover
a private party wishing to challenge the failure of an institution to adopt
an act that, although would have been addressed to a third party, would
have concerned it directly and individually. In the framework of competition
law, the Court of First Instance certainly interpreted the provision in this
light in Prodifarma v. Commission.185 It denied standing to a private party on
the grounds that the decision the private party was asking the Com-
mission to adopt would not have been addressed to it.186 The issue was not
settled until the decisions of the Court in ENU v. Commission187 and
T. Port,188 the first falling within the framework of the EURATOM Treaty,

184
A Commission decision provisionally rejecting a complaint is non-reviewable because it is
an act that does not irrevocably define the position of the Commission, but is merely a
preparatory step for the decision that does so (see supra section 4.2.1 (Phase one)).
185
Case T-3/90, supra n. 156.
186
Ibid., at paragraphs 35–7 of the judgment. Although the Court regarded the literal
wording of Article 232 EC as a sufficient basis to dismiss the application as inadmissible,
it went on to consider ad abundantiam whether the applicant would have been directly and
individually concerned (see paragraphs 39–45 of the judgment). This could well indicate
the first move towards harmonising the standing requirements in Articles 230 and 232 EC.
187
Case C-107/91 [1993] ECR I-599.
188
Case C-68/95 [1996] ECR I-6065, [1997] 1 CMLR 1.
 The enforcement of EC competition law 143

and the second, within the complex litigation concerning the common
organisation of the market for bananas. In these cases, the Court finally
made it clear that the requirements of standing should be identical in both
actions. This is the logical consequence of the fact that both actions
constitute aspects of the same remedy.

Reviewable omissions
The Commission cannot be subject to Article 232 EC proceedings, unless it
has an obligation to act under the Treaty which it disregarded. The case
law has made it clear that this action cannot be used to force the
Commission to find the existence of an infringement. In GEMA v.
Commission,189 the applicants submitted a complaint with the aim of
obtaining a formal decision from the Commission, finding two companies
in breach of the Treaty provisions on competition. The Commission wrote
to the applicants announcing its provisional intention to reject the
complaint and inviting them to submit observations. The applicants
argued that the letter of the Commission was not a definition of position
and brought an Article 232 EC action against the Commission which was
declared to be inadmissible by the Court. The Court took the view that the
Commission’s letter was a definition of position. Furthermore, it held that
a complainant is not automatically entitled to obtain a final decision from
the Commission on the existence or non-existence of an infringement. A
different conclusion would be at variance with the letter of Article 3 of
Regulation 17/62, which allows the Commission the opportunity of not
adopting a final decision finding that an infringement has taken
place.190

4.2.3 Damages against the Commission

Articles 235 and 288(2) EC set out the general principle that Community
institutions may be liable for damages that arise from their conduct. There
have been few competition cases where natural or legal persons have
brought actions for damages against the Commission. Moreover, these
have rarely been successful, mainly on account of the rigorous conditions
attached to these actions by the Community judicature. Thus, in Automec
(I), the Court held:

189
Case 125/78, supra n. 182.
190
Ibid., at paragraph 18 of the judgment. See also the letter of Article 3 of Regulation 17/62,
which provides: ‘Where the Commission, upon application or upon its own initiative,
finds that there is infringements of Article 85 [now 81] or Article 86 [now 82] of the Treaty,
it may by decision require the undertakings or associations of undertakings concerned to
bring such an infringement to an end [emphasis added]’.
144 EC Competition Law and Policy

… an application seeking compensation for damage caused by a Community

institution must state the evidence from which the conduct alleged against the
institution can be identified, the reasons for which the applicant considers that
there is a causal link between the conduct, the damage it claims to have
suffered, and the nature and extent of that damage. 191

One of the rare cases where this action has been successful was the Adams
case,192 discussed above.193 In that case, the Commission showed to
Hoffmann-La Roche, the former employer of Mr Adams, documents
which identified him as the Commission’s informant with reference to
certain anti-competitive practices carried out by that company. A string of
tragic events followed, including the arrest of Mr Adams by Swiss police.
The Commission was found to be liable for damages for failing to make all
reasonable efforts to keep the applicant’s identity confidential. Mr Adams,
however, was only awarded half the damages he had claimed, as the
Court took the view that he had contributed to the damage through his
own negligent conduct.
Consistent with other principles of Community law, if damages arise
from a legally binding act, the applicant has to show that the act is illegal in
addition to showing the existence of damage and a causal link between the
illegal act and the damage suffered.194 Recent case law on damages has
harmonised the conditions that apply to state liability for damages and
those that apply to the non-contractual liability of the Community
institutions.195 Thus in areas where a Community institution has consider-
able discretion, as would seem to be the case of the Commission in some
aspects of competition investigation, mere illegality would not suffice: it
would have to be shown that the breach of law is sufficiently serious.196
The decisive test is whether the institution concerned has gravely and
manifestly disregarded the limits on its discretion,197 a standard which is,
of course, very difficult to satisfy. If, however, the institution has reduced
discretion or no discretion, a mere breach of EC law is automatically a
sufficiently serious breach.198

191
Case T-64/89 [1990] ECR II-367, [1991] 4 CMLR 177, at paragraph 73 of the judgment.
192
Case 145/83 [1985] ECR 3539, [1986] CMLR 506.
193
See supra n. 75.
194
See Case C-87/89 Sonito v. Commission [1990] ECR I-1981, at paragraph 16 of the
judgment.
195
See Case C-352/98P Bergaderm v. Commission, [2000] ECR I-5291, and T. Tridimas,
‘Liability for breach of Community law: growing up or mellowing down?’, [2001] 38
CMLRev 301.
196
Ibid., at paragraph 41 of the judgment.
197
Ibid., at paragraphs 42 and 43 of the judgment.
198
Ibid., at paragraph 44 of the judgment.
 The enforcement of EC competition law 145

4.3 Enforcement at national level: national courts

and national authorities – the present system

Articles 81 and 82 EC are also enforceable at national level by national

courts and national authorities. The power of the national courts to apply
these provisions is based on the direct effect of Articles 81(1), 81(2) and 82
EC. In BRT v. SABAM,199 the Court held that the prohibitions in Articles 81
and 82 EC produce direct effects and therefore create direct rights for
individuals which the national courts must safeguard.200 The national
courts continue to have jurisdiction to apply the provisions of Articles
81(1) and 82 EC even after the Commission has initiated an investigation.201
The national competition authorities derive their power from Article 84 EC
and Article 9(3) of Regulation 17/62, which read in conjunction provide
that the national authorities can apply Articles 81(1), 81(2) and 82 EC as
long as the Commission has not initiated its investigation.
Although national courts and national authorities can enforce Articles
81(1), 81(2) and 82 EC, they cannot, in the present system, apply Article
81(3) EC, given that Regulation 17/62 reserves to the Commission the
exclusive competence to grant exemptions.202 This partly decentralised
system of enforcement has given rise to a complex relationship between
the two levels of enforcement in Article 81 EC cases, which will be
examined next. The enforcement of Article 82 EC at national level,
however, has been largely uncontroversial.

4.3.1 Enforcement by national courts

Quite frequently, the legality of agreements is contested before the
national courts on the ground that they breach Article 81 EC. In
Delimitis,203 the Court set out to examine the division of competence
between the national courts and the Commission, with the principal aim
of providing guidelines that would diminish the risk of conflicting
decisions. That case has already been discussed above204 and concerned an
agreement between a German publican and a brewery. Under the terms of
the agreement, the publican had to obtain his requirements exclusively
from the German brewery. The publican decided to terminate the contract,
and the brewery, claiming that he still owed a certain amount of money,
deducted that amount from the deposit provided by the publican. The
199
Case 127/73 [1974] ECR 51, [1974] CMLR 238.
200
Ibid., at paragraph 16 of the judgment.
201
See Case C-344/98 Masterfoods v. HB Ice Cream [2001] 4 CMLR 449, at paragraph 47 of the
judgment.
202
See Article 9(1) of Regulation 17/62.
203
Case C-234/89 [1991] ECR I- 935, [1992] 5 CMLR 210.
204
See supra Chapter 2, section 2.2.3.
146 EC Competition Law and Policy

publican issued proceedings before the national courts and argued that
the agreement was contrary to Article 81(1) EC and, therefore, null and
void.
The judgment of the Court gives some helpful insight into the options
open to a national court when considering the legality of an agreement
before it, and highlights the difficulties that arise from the lack of direct
effect of Article 81(3) EC in the present system. The Court distinguished
the following possible scenarios. First, when the agreement is clearly
either outside or within the scope of Article 81(1) EC and there is ‘scarcely
any risk of the Commission taking a different decision’,205 the national
court may continue proceedings and declare the agreement either valid or
null and void.206 Second, when the national court takes the view that the
agreement is caught by Article 81(1) EC but may be the subject of an
exemption, then the action of the national court will vary depending on
whether a block exemption or an individual exemption might be
applicable. If the agreement falls within the scope of a block exemption, the
national court may apply the provisions of the block exemption to it. If the
agreement could benefit from an individual exemption, the national court
should stay proceedings and, if appropriate, grant interim relief, pending
the decision of the Commission.207 The Court also emphasised that both
the Commission and the Community judicature have a duty of sincere co-
operation with the national courts. This is enforced through the national
courts’ right to seek information on the state of the procedure from the
Commission, or to contact this institution in particularly difficult cases.
The duty of cooperation with the Community courts is enforced by the
system of preliminary references set out in Article 234 EC.208
The Delimitis guidelines are, to a great extent, reflected in the 1993 Notice
on co-operation between the Commission and the national courts.209 The main
purpose of the Notice, as stated by the Commission in the opening para-
graphs, is to achieve effective cooperation between the national courts and
the Commission in the application of Articles 81 and 82 EC to individual
cases.210 The Notice emphasises the different philosophy that underlines
these two levels of enforcement. Whereas the Commission is an
administrative authority and hence acts in the public interest, the national
courts have the task of safeguarding the subjective rights of private

205
Case C-234/89, supra n. 203, at paragraph 50 of the judgment.
206
Ibid.
207
Ibid., at paragraphs 51–2 of the judgment. This is the case provided, of course, that the
agreement has been notified to the Commission or is exempted from notification. In the
present system, only these agreements may benefit from an individual exemption (see
supra section 4.2.1 (Phase One)).
208
Ibid., at paragraphs 53 and 54 of the judgment.
209
OJ [1993] C 39/6, [1993] 5 CMLR 95.
210
Ibid., at paragraph 3 of the Notice.
 The enforcement of EC competition law 147

individuals.211 It also outlines the difficulties that arise from the lack of
direct effect of Article 81(3) EC.212 On the whole, however, it strongly
conveys the message that it is possible for both systems not only to coexist,
but also to be consistent and to contribute to the creation of a uniform body
of law.
A recent case has shed further light in this difficult area. In Masterfoods v.
HB213 parallel proceedings took place before the Commission and the
national courts, in reference to an agreement including an ‘exclusivity
clause’. The Commission enacted a decision finding this clause to be in
breach of Article 81(1) EC, which was challenged by the applicant directly
before the Community judicature under Article 230 EC proceedings. The
national court made a reference to the European Court, asking whether it
should stay proceedings pending the outcome of the action for annulment.
The Court held that the outcome of the dispute before the national court
depended on the validity of the Commission’s decision. Therefore the
duty of cooperation between the Commission and Community courts, on
the one hand, and the national courts, on the other, meant that the latter
should stay proceedings pending the decision on the Article 230 EC
proceedings. This obligation to stay proceedings would apply unless the
national court decided itself to question the validity of the Commission’s
decision via an Article 234 EC reference.214 The reason for this approach
was again to avoid conflicting decisions.215
Thus, the direct effect of the competition provisions allows private
parties to claim before the national courts that certain agreements or
practices are unlawful. Private parties are also likely to seek a remedy, for
example compensation for loss suffered as a result of such an agreement or
practice. There is hardly any Community regulation of the remedies that
apply to claims based on EC law brought before national courts. As a
general principle, such matters are regulated by national law (the principle
of national procedural autonomy), subject to the conditions that the

211
Ibid., at paragraph 4 of the Notice. The Notice also highlights other important differences,
such as the fact that whereas the Commission acts in accordance with the procedural
regime set out in Regulation 17/62, national courts exercise their powers within the
framework of national procedural rules (at paragraph 9 of the Notice).
212
Ibid., at paragraphs 24–32 of the Notice.
213
Case C-344/98, supra n. 201.
214
In this respect, see the Opinion of AG Cosmas who took the bold view that to allow a
national court to make an Article 234 EC reference when annulment proceedings are
already pending, although not expressly prohibited in the Treaty, would be contrary to
the principle of sound and rational administration and could lead to abuses of procedure
(see paragraphs 34–59 of his Opinion). The approach taken by the Court, however, is
consistent with its case law, which has always recognised the parallel application of
Articles 230 EC and 234 EC, subject to the TWD rule (see supra nn. 179–180).
215
Ibid., at paragraphs 54–7 of the judgment.
148 EC Competition Law and Policy

national remedy should be effective and non-discriminatory.216 A remedy

is effective when it does not render the exercise of an EC right impossible
or excessively difficult.217 It is non-discriminatory when it lays down
requirements identical to those that would apply to a similar domestic
claim.218
Under English law, it seems that damages would be available to third
parties in cases of breach of Articles 81 and 82 EC. The House of Lords held
in Garden Cottage Foods219 that since Article 82 EC is directly effective, it
should also give individuals who have suffered loss or damage as a result
of a breach of that provision a private cause of action under English law.
The same approach should also apply to Article 81 EC cases.220 The appro-
priate cause of action would be breach of statutory duty,221 despite earlier
suggestions by Lord Denning in Application des Gaz v. Falks Veritas222 that a
new tort should be created to accommodate competition claims. There is,
however, still uncertainty about how such action for damages ought to be
construed in domestic law.223
In 1991, in its seminal judgment in Francovich and Bonifaci,224 the Court
recognised that Member States could, subject to certain conditions being
fulfilled, be liable for damages in cases where they acted in infringement of
EC law. The Court therefore introduced a new and uniform remedy of a
Community nature. The Francovich decision concerned the failure of a
Member State to implement a directive, but three 1996 cases extended the
principle to other breaches of EC law, such as those attributable to the
national legislature225 or to administrative authorities.226 It was unclear in
Francovich whether the principle of state liability only applied when the
breach was of a non-directly effective provision of EC law, but Brasserie du
Pêcheur227 made it clear that the principle also extended to breaches of
216
See Case 37/76 Rewe-Zentral Finanz v. Landwirtschaftskammer für das Saarland [1976] ECR
1989, [1977] 1 CMLR 533. For a clear statement of these principles in a competition case,
see GT-Link v. De Danske Statsbanes (Case C-242/95 [1997] ECR I-4449, [1997] 5 CMLR 601)
at paragraphs 24–6 of the judgment.
217
See Case 37/76, supra n. 216, and Case 199/82 San Giorgio [1983] ECR 3595.
218
See Case 37/76, supra n. 216.
219
Garden Cottage Foods v. Milk Marketing Board [1984] AC 130.
220
See Cutsforth v. Mansfield Inns [1986] 1 CMLR 1.
221
The statute is the 1972 European Communities Act which incorporated Article 82 EC into
UK law (see per Lord Diplock, at p. 141 and section 2 of the 1972 European Communities
Act).
222
[1974] Ch. 381, 386.
223
See R. Whish, ‘The enforcement of EC competition law in the domestic courts of Member
States’, [1994] ECLR 60.
224
Joined Cases C-6/90 and 9/90 [1991] ECR I-5357, [1993] 2 CMLR 66.
225
See Joined Cases C-46 and C-48/93 Brasserie du Pêcheur and Factortame [1996] ECR I-1029,
[1996] 1 CMLR 889, and Case C-392/93 R. v. HM Treasury, ex parte BT [1996] ECR I-1631,
[1996] 2 CMLR 217.
226
See Case C-5/94 R. v. MAFF, ex parte Hedley Lomas [1996] ECR I-2533.
227
Cases C-46 and 48/93, supra n. 225.
 The enforcement of EC competition law 149

directly effective provisions of EC law. Following these cases concerning

the non-contractual liability of Member States, there has been considerable
debate among academics as to whether this principle could also apply to
actions between private parties.228 Competition law would obviously be a
fertile ground for claims for damages against private parties, because
Articles 81 and 82 EC are addressed to the activities of undertakings. In
fact, in his Opinion in Banks v. British Coal Corporation,229 a competition
case, Advocate General Van Gerven made a strong case in favour of the
extension of the principle of non-contractual liability to cases where a
private party infringes a provision of EC law. In its recent decision in
Courage v. Crehan,230 the court had a clear opportunity to extend the
Francovich principle to actions between private parties, but instead of
doing so, it confirmed that the configuration of a right to compensation in
these cases was a matter for national law. The case raised two issues. First,
whether a party to an agreement prohibited under Article 81(1) EC could
seek compensation for loss against its co-contractor. Secondly, whether the
English rule which prevents a party to an illegal agreement from seeking
damages from the other party, was compatible with EC law. The Court
first held that Article 81 EC conferred rights – and this would include the
right to compensation for loss suffered as a result of that agreement – on
any individual, even where he is a party to an anti-competitive
agreement.231 Secondly, the Court confirmed that the configuration of such
a right to compensation was a matter for national law, provided that the
principles of effectiveness and non-discrimination were complied with.232
The Court went on to strike down the English bar, but only in so far as it
was an absolute one and prevented a private party from seeking
compensation solely on the ground that it was a party to it.233 EC law,
however, did not preclude such a rule, where the claimant is found to ‘bear
significant responsibility for the distortion of competition’.234 The ruling in
Courage, therefore strongly conveys the message that the Court is not
ready to create a centralised action for damages against private parties and
that it prefers to guarantee a minimum level of effectiveness for
Community rights while preserving the application of national rules.

228
See A. Ward, Judicial Review and the Rights of Private Parties in EC Law (Oxford, 2000), at
pp. 127–8. In a competition context, see C.A. Jones, Private Enforcement of Antitrust Law in
the EU, UK and USA (Oxford, 1999), at pp. 75–8.
229
Case C-128/92 [1994] ECR I-1209, [1994] 5 CMLR 30, at paragraphs 43–5 of his Opinion.
230
Case C-453/99, Judgement of 20 September 2001, not yet reported.
231
Ibid. at paragraphs 23–27 of the judgement.
232
Ibid. at paragraphs 28–29 of the judgement.
233
Ibid. See also the Opinion of Advocate General Mischo in that case at paragraphs 33–60 of
his Opinion.
234
Ibid. at paragraph 31 of the judgement.
150 EC Competition Law and Policy

As for the question of interim relief in English law, it is clear from

Garden Cottage Foods235 and from Cutsforth v. Mansfield Inns,236 that in
principle, interim relief is available to restrain breaches of Article 82 and 81
EC respectively. The claimant would, of course, have to satisfy the general
conditions in American Cyanamid v. Ethicon,237 which means that it would
have to show, inter alia, that damages would not be an adequate remedy. In
practice, this complicates the availability of interim relief in competition
cases.238

4.3.2 Enforcement by national authorities

As seen above, Articles 81(1) and (2) EC and Article 82 EC can also be
enforced at national level by national authorities, an expression which
appears both in Article 84 EC and in Article 9(3) of Regulation 17/62. The
European Court interpreted this expression early in its case law and held
in BRT v. SABAM239 that it referred to national competition authorities
such as the Office of Fair Trading in the United Kingdom or the
Bundeskartellamt in Germany.
Unlike the national courts, the power of national competition
authorities to enforce Articles 81 and 82 EC is limited in that they can only
do so as long as the Commission has not initiated an investigation.240 The
legal issues surrounding the concurrent application of EC and national
competition law have already been discussed in this work. 241
The Commission has repeatedly emphasised the importance of the
involvement of national authorities in the application of EC competition
law.242 In 1997, it issued a Notice on co-operation between the national
authorities and the Commission,243 with the aim both of raising the profile of
this aspect of the enforcement of competition at national level and also of
guaranteeing an effective system of cooperation between the Commission
and these authorities. As in the case of national courts, the raison d’être of
the Notice is the maintenance of a coherent system of law, not only to
preserve the uniformity of EC law but also to guarantee legal certainty for
undertakings.

235
See supra n. 219.
236
See supra n. 220.
237
[1975] AC 396.
238
See Chelmkarm v. Esso [1979] 1 CMLR 73.
239
Case 127/73, supra n. 199.
240
See Article 9(3) of Regulation 17/62.
241
See supra Chapter 1, section 1.6.
242
See the XXIIIrd Report on Competition Policy (1993) at paragraphs 189–91.
243
OJ [1997] C 313/3, [1997] 5 CMLR 884.
 The enforcement of EC competition law 151

4.4 The new system of enforcement of competition law:

the White Paper and the Draft Regulation

In April 1999, the Commission published its White Paper on modernisation of

the rules implementing Articles 85 [now 81] and 86 [now 82] of the EC Treaty,244
where it launched a radical programme for the reform of the system of
enforcement of competition law which had been in place for nearly forty
years. The Commission opened a five-month period of public consultation
and, after the receipt of observations from the sectors concerned,245 a Draft
Regulation was enacted in September 2000.246 The White Paper, the
Observations submitted and the Draft Regulation will be considered in
turn.

4.4.1 The White Paper on enforcement247

The White Paper outlined the manifest problems inherent in the present
system and discussed several options for reform. It was divided into three
main chapters that followed an Executive summary and an Introduction.
In the first chapter, the Commission explained the principal reason for
the centralised and ex ante control system248 provided in Regulation 17/62:
the need to maintain a uniform and coherent application of Article 81(3)
EC and to guarantee legal certainty for undertakings. It also emphasised
that the system of notifications and applications had soon imposed a
crushing administrative burden on the Commission, which it sought to
address in three different ways. First, it tried to limit the number of
notifications and applications by introducing the de minimis notices and by
adopting block exemption regulations. Secondly, it began to use comfort
letters to speed up the processing of notifications and applications. Finally,
it emphasised, by adopting general notices, the important role of the
enforcement of competition at national level. These measures, however
effective they might once have been, were no longer sufficient or
appropriate, and more radical reforms were needed.
In the second chapter, the Commission argued that it was timely to
encourage a full decentralisation of the enforcement of EC competition
policy because the latter had now reached a sufficient degree of maturity,
clarity and consistency. This went hand in hand with the urgent need to

244
OJ [1999] C 132/1, [1999] 5 CMLR 208.
245
A summary of the observations submitted was published on the Commission’s website
on 29 February 2000.
246
[2001] 5 CMLR 1148.
247
See supra n. 244.
248
The ‘ex ante control system’ indicates that prohibited practices are void until the relevant
authority has authorised them.
152 EC Competition Law and Policy

simplify the administrative task of the Commission, which was to be

achieved by the removal of the ex ante control system.
The Commission went on to explore two kinds of options for reform:
(a) one based on the improvement of the present authorisation system,
and (b) a totally different approach based on a switch to a directly
applicable exception system. In the first group, the Commission examined
four possibilities, all guaranteeing the maintenance of a system of ex ante
control. These were: adopting a ‘rule of reason’ approach, enabling the
national competition authorities to grant exemptions, broadening the
scope of application of Article 4(2) of Regulation 17/62, and simplifying
the procedures laid down in Regulation 17/62. The Commission, how-
ever, took the view that none of these options would satisfactorily address
the existing problems and strongly supported the adoption of a directly
applicable exception system allowing for ex post supervision of restrictive
practices. This meant that Article 81(3) EC would become directly
applicable and therefore enforceable by the national courts and national
authorities. It did not mean that national courts and authorities would
grant exemptions, but simply that they could apply the conditions in
Article 81(3) EC, just as they had always applied those in Article 81(1) EC
and Article 82 EC. Article 81 EC would, therefore, be applied as a whole.
An agreement or concerted practice that fell under Article 81(1) EC but
satisfied the conditions in 81(3) EC would be valid, whereas one that did
not fulfil them would be void. A national court would no longer have to
stay proceedings, following the Delimitis guidelines,249 until the Com-
mission issued a decision granting an exemption. Instead, undertakings
would be able to obtain an immediate decision on their agreements if these
satisfied the conditions in Article 81(3) EC.
In the third chapter, the Commission explained in full the changes
encapsulated in the adoption of a directly applicable exception system. In
particular, three aspects seemed important: (a) the ending of the system of
notification and authorisation; (b) the decentralised application of the
competition rules; and (c) an intensified ex post control.
In its commentary on the implications of decentralisation, the
Commission already identified what was to become one of the main
preoccupations in the debate that followed the publication of the White
Paper: how to ensure the uniformity and coherence of EC competition
law.250 To address this issue, the Commission suggested two sets of com-
plementary solutions. On the one hand, the Commission would continue
to play a pivotal role in the direction competition law would take. Thus, it

249
See supra section 4.3.1.
250
See also J. D. Cooke, ‘Changing responsibilities and relationships for Community and
national courts: the implications of the White Paper’, in The Modernisation of European
Competition Law: The Next Ten Years, Occasional Paper No. 4 (University of Cambridge,
Centre for European Legal Studies, 2000).
 The enforcement of EC competition law 153

would carry on issuing block exemptions, notices and guidelines and

would deal with the most serious infringements of competition law by
means of formal prohibition decisions. The latter would carry important
weight as precedents. On the other hand, some mechanisms of co-
operation and information dissemination would be put in place between
the national courts and authorities and the Commission. For example,
national courts and authorities would have to inform the Commission of
cases where they applied Articles 81 and 82 EC. Furthermore, national
authorities would have a specific duty to notify the Commission of cases
where they intended to withdraw the benefit of a block exemption. Also,
the Commission would be allowed to intervene in proceedings before the
national courts as an amicus curiae.
Finally, the Commission argued the need for an intensified ex post
control, suggesting three main ways to achieve it: first, by strengthening
the Commission’s powers of enquiry, which would be manifested in the
amendment of Articles 11 and 14 of Regulation 17/62; secondly, by
increasing the importance of complaints; thirdly, by harmonising the fines
and periodic penalty payments provided in Regulation 17/62 with those
provided in the EC Merger Regulation.

4.4.2 The reactions to the White Paper251

The White Paper was welcomed by a wide range of the sectors concerned:
the European Parliament, the Economic and Social Committee, the
Member States and EEA States, industry and lawyers. While the response
was positive overall, some anxieties were expressed on particular aspects
of the reforms suggested by the Commission. These will now be examined
briefly.
First, and although there is nothing in the Treaty that expressly excludes
the system of directly applicable exception, one Member State expressed
doubts that such a system could be compatible with the Treaty. It would
appear, however, that this view is not so much based on the issue of
compatibility as on concern about whether Article 81(3) EC can be directly
effective.252
Secondly, the abandonment of the system of notifications met with a
favourable reaction from the European Parliament, the ECOSOC and most
Member States. Two Member States, however, opposed this proposal on
251
See the Summary of Observations, supra n. 245 and the Resolution of the European
Parliament of 18 January 2000 ([2000] 5 CMLR 1212). See also the IVth Report of the
House of Lords Select Committee on European Union (15 February 2000).
252
See the Summary at point 3.2. This point has been very competently addressed by C.-D.
Ehlermann in ‘The modernisation of EC antitrust policy: a legal and cultural revolution’,
[2000] 37 CMLRev 537, at pp. 553–60, and where the author concludes that the arguments
against the direct effect of Article 81(3) are not decisive.
154 EC Competition Law and Policy

the basis that the present system has a preventive effect and that the
abolition of notifications would lead to a de facto control of abuse
system, and diminish legal certainty for undertakings. Although lawyers
generally supported the new system, some felt they were not sufficiently
prepared to give guidance to their clients on the conditions laid down in
Article 81(3) EC.253
Thirdly, on the proposed decentralisation to national courts, the main
fear shared by all the interested parties was whether national courts would
apply Article 81(3) in a coherent and consistent manner.254 A particular
cause for concern was whether they would be able to undertake the
complex economic assessment that is part of the application of Article
81(3) EC.255 Some solutions were suggested, ranging from the creation of
specialised courts or provision of training for national judges to the
appointment of a national Advocate General to assist national courts.
Fourthly, the proposed system of cooperation and exchange of
information was generally well received. The Commission’s potential role
as amicus curiae, however, produced an unenthusiastic response from the
majority of Member States, either because this role of the Commission
might meddle with the independence of national courts or because it
might be too cumbersome for the Commission to implement256
Finally, on the decentralisation to national authorities, all the sectors
concerned supported a move towards enhancing the role of national
authorities in the application of competition law. Some voices in the
industry and among the legal profession expressed disquiet about the
ability of national competition authorities to apply EC law and about
practical matters such as the lack of resources or translation logistics that
were likely to ensue.257

4.4.3 The Draft Regulation implementing Articles 81 and 82 EC258

On 27 September 2000, the Commission published a proposal for a new
Council Regulation whose aim is to reform the present system of
enforcement set out in Regulation 17/62 and the corresponding transport
regulations.259 The proposed new Regulation is based on the White Paper
and takes due account of the concerns raised by interested parties during
the consultation process. The Regulation has at its core the setting out of

253
See the Summary at point 4.1.
254
See the Summary at point 5.2.
255
In this respect, see also Whish, ‘National courts and the White Paper: a commentary’, in
The Modernisation of European Competition Law: The Next Ten Years, supra n. 247, at p. 74.
256
See the Summary at section 5.3.
257
See the Summary at section 6.
258
See supra n. 246.
259
See supra n. 7.
 The enforcement of EC competition law 155

the new principle of directly applicable exception and of the guidelines

that will govern the decentralised application of EC competition law. It is
divided into an Explanatory Memorandum and 42 articles that represent
the operative part of the Regulation.
In the introductory section of the Explanatory Memorandum, the
Commission dispels any doubts on the compatibility of a new system of
directly applicable exception with the Treaty and on the capacity of Article
81(3) EC to produce direct effects. On the first point, it explains that the
Treaty not only does not exclude this possibility, but that it could also be
read as encouraging it, given that Article 83(2)(b) EC lists ‘to simplify
administration’ as one of the objectives of implementing regulations. The
application of Article 81(3) EC by national courts could clearly achieve
this. On the second point, the Commission acknowledges that, although
Article 81(3) EC leaves ‘a certain margin of appreciation in its inter-
pretation’, this does not render that provision unsuitable for direct
application. This is confirmed by the successful and long-standing
application of Articles 81(1) and 82 EC by the national courts.260
Chapter One lays down the general principles that govern the new
regulation. First, the principle of directly applicable exception is set out in
Article 1 in legislative form. The Explanatory Memorandum describes the
functioning of this principle as follows:

… agreements, decisions or practices that fall under Article 81(1) and do not
satisfy the conditions of Article 81(3) are prohibited and void ab initio in
accordance with Article 81(1) and 81(2). On the other hand, agreements,
decisions and practices that fall under Article 81(1) but do satisfy the conditions
in Article 81(3) EC are valid ab initio, no prior administrative decision to that
effect being required.261

Secondly, Article 2 provides that the burden of proof that the conditions in
Article 81(3) EC have been met falls on the party invoking the benefit of
Article 81(3).
Thirdly, Article 3 addresses an important gap in Regulation 17/62 and
regulates the relationship between EC competition law and national
competition law. The rule is that whenever an anti-competitive practice
may have an effect on intra-EC trade, only EC competition law should
apply.262
Chapter Three deals with the different types of Commission decision.
Thus, Article 7 maintains the power of the Commission to adopt a decision
finding an infringement of either Article 81 or 82 EC. Article 8 codifies the
260
See the Explanatory Memorandum at point 2.B.
261
See the Explanatory Memorandum at point 4 (Article 1). The powers of the Commission,
of national courts and national authorities within the framework of this new division of
responsibilities are considered in detail in Chapter 2.
262
See supra Chapter 1, section 1.6.
156 EC Competition Law and Policy

findings in Camera Care263 and lays down the power of the Commission to
adopt interim relief, as well as the necessary conditions that need to be
fulfilled for interim relief to be granted. Furthermore, Article 9 introduces
a new provision, by empowering the Commission to adopt decisions
accepting commitments offered by undertakings in the course of the
proceedings where it intends to find an infringement of Articles 81 or 82
EC. Finally, Article 10 provides that the Commission may also adopt
decisions finding that Article 81 EC is inapplicable, either because the
conditions in Article 81(1) EC have not been fulfilled or because the
conditions in Article 81(3) EC have been satisfied. These declaratory
decisions will be used solely on the Commission’s own initiative and for
reasons of Community public interest. They will be used therefore as a
policy instrument to guarantee the consistent application of EC com-
petition law.
Chapter Four is devoted to one of the crucial aspects of the White Paper:
the need to ensure uniformity in the application of competition law. This
general principle is expressly set out in Article 16, whereas Articles 11
and 15 lay down specific rules governing the cooperation between,
respectively, the Commission and the national authorities, and the Com-
mission and the national courts. The mechanisms suggested in the White
Paper, i.e. the exchange of information between the Commission and
national courts and authorities, and even the more contentious role of the
Commission as an amicus curiae, are retained.
Chapter Five deals with the powers of investigation bestowed on the
Commission. It reflects the intensified ex post control suggested by the
White Paper. Articles 18 and 20 constitute the core of this Chapter and
introduce amendments to the current Articles 11 and 14 in Regulation
17/62.264 The main change proposed concerning requests for information
is that duly authorised lawyers should be able to answer requests for
information on behalf of undertakings or associations of undertakings,
although the latter would bear responsibility for the correctness of the
information.265 The Regulation modifies the current powers of investi-
gation of the Commission under Article 14 of Regulation 17/62 on three
counts:266

• it extends the powers of search to private homes if it is suspected that

company documents are kept there;
• it allows the Commission’s inspectors to seal cupboards and offices at
the beginning of an inspection to make sure that no documents dis-
appear in the course of the investigation; and
263
Case 792/79R, supra n. 101.
264
See supra section 4.2.1 (Phase two).
265
See proposed Article 18 of the Draft Regulation.
266
See proposed Article 20 of the Draft Regulation.
 The enforcement of EC competition law 157

• unlike Regulation 17, which only allows inspectors to ask for oral
explanations relating to documents, it allows them to ask any questions
related to the subject matter of the investigation.

Finally, Article 19 creates a legal basis for a new power of the Commission:
to interview natural or legal persons, whether or not they are themselves
the subject of the proceedings, and to record their statements.
The remainder of the Draft Regulation addresses some of the less con-
troversial aspects of the White Paper. Thus Articles 22 and 23 update the
fines and periodic penalty payments that can be imposed by the Com-
mission in order to ensure their deterrent effect. Article 26 lays down the
principle of access to the Commission file, and Article 28 appears as the
legal basis for the adoption of new block exemption regulations by the
Commission. There is also a set of transitional and final provisions.267

4.5 Concluding remarks

This chapter has surveyed both the current system of enforcement of EC

competition law and the radical reforms proposed by the Commission in
its White Paper. It is likely that these reforms will be implemented soon,
but it is also important not to lose sight of the system that has been in place
for more than three decades and of the case law that has interpreted the
provisions of Regulation 17/62 and filled some of its obvious gaps. The
decentralisation proposals included in the White Paper were partly a
response to the pressing need to reduce the administrative load that has
overburdened the Commission for years. More importantly, however,
they have also sent a strong message that the Commission is ready to
regard national courts and authorities as equal partners in the enforce-
ment process and it acknowledges their ability to apply fully Article 81 EC
without undermining the consistent application of the law. The key to the
success of the new system will be to ensure the close and effective
cooperation between the Commission and national courts and authorities
while preserving the Commission’s role in steering and shaping
competition policy. Some teething problems are to be expected, but – in the
words of Ehlermann268 – ‘the legal and cultural revolution’ brought about
by the Commission’s proposals seems to be a necessary one, even if some
debate still surrounds practical ways of implementing it.269

267
See Articles 35–42 of the Draft Regulation.
268
See op. cit., supra n. 252.
269
For a comprehensive discussion of potential problems raised by the White Paper, see The
Modernisation of European Competition Law: The Next Ten Years, op. cit., supra n. 247.
158 EC Competition Law and Policy
 Index
Index
XXIVth Report on Competition Policy, 86
XXIXth Report on Competition Policy, 6
abuses of dominant position, 2, 5
concept, 88–9
examples in Article 82 EC, 89–97
other forms, 97–105
actions for annulment, 119, 135–6
applicants, 137–40
grounds for review, 140
reviewable acts, 136–7
time limit, 140
actions for a failure to act
applicants, 142–3
procedural requirements, 141–2
reviewable omissions, 143
actions to review penalties, 135
activities of governments, rules concerning,
3 scope of application, 4
acts, reviewable, 136–7
agreements, 18–22
anti-competitive object or effect, 34–40
effect on trade between Member States,
28–34
modification of, 129
see also exclusive sales agreements;
franchise agreements; gentlemen’s
agreements; joint discount agree-
ments; market sharing agreements;
research and development agreements
annulment proceedings see actions for
annulment
anti-competitive abuse, 89
159
anti-competitive object or effect, 34–9
within the Common Market, 39–40
apparent unilateral behaviour, 27–8
applicants
actions for annulment, 137–40
actions for a failure to act, 142–3
applications, 116
appreciability, requirement of, 107
Article 81 EC, 2, 16–17
availability of damages in cases of
breach, 148
basic prohibition, 18–45
exemptions, 46–67
issues in common with Article 82 EC,
10–15
rule of reason approach, 68–73
sanction of nullity, 46
Article 82 EC, 2, 74–112
availability of damages in cases of
breach, 148
issues in common with Article 81 EC,
10–15
scope of application, 4f, 5
associations, anti-competitive practices, 22
audi alteram parte, 126
authorisation system, improvement of,
152
authorised dealers, prohibition of cross-
supplies, 36
barriers to entry, 86–7
160 EC Competition Law and Policy
basic prohibition, Article 81(1) EC, 18–45
basic test, 29–30
black lists, 53
black-clauses, 61–3
block exemption regulations, 51–4
block exemptions, 47
conditions for granting, 48
drawbacks, 55–6
options for reform, 56–8
withdrawal, 64
breach of statutory duty, 148
casual customers, refusal to supply, 100
cease and desist orders, 129
collective dominance see joint dominance
comfort letters, 51, 128
reviewable, 137
commercial policies, by Member States, 83
Commission
co-operation with national courts, 146–7
damages against, 143–4
enforcement at community level, 5, 114–
43
jurisdiction to apply Articles 81 and 82
EC, 12–15
commission schemes, 95–6
Commission’s Communication on the
application of EC competition rules to
vertical restraints: A follow-up to the
Green Paper on Vertical Restraints (1998),
57
Commission’s Green Paper on Vertical
Restraints (1997), 55–6
Commission’s Notice on agreements of
minor importance (1997), 31–2, 33f, 34
Common Market, anti-competitive object
or effect, 39–40
common rebate or discount policies,
adoption of, 41
common sales conditions, 42
common sales policy, 41–2
Community competition law, and national
law, 8–10
community level, enforcement at, 114–44
compensation, right to, 149
Competition Act (1988), 8
competition law, foundations, 1–15
competition policy, aims, 6–7
complainants, types, 117
complaints
investigation, 118
rejection, 118–19
remaining silent, 119
complex cartels, 23
concerted practices, 22–7
anti-competitive object or effect, 34–40
effect on trade between Member states,
28–34
see also tacit cooperation
consumer preference, 80
for local sources, 83
contractual clauses in vertical agreements,
36
cooperation, forms of, 18–28
cost of establishment, 87
Council Regulation 1215/99, 57
Council Regulation 1216/99, 57, 58
crisis cartels, 42–3
cross-elasticity of demand, 80–81
cross-elasticity of supply, 81
cross-supplies, prohibition between
authorised dealers, 36
damages
against the Commission, 143–4
cases of breach of Articles 81 and 82 EC,
148–50
de minimis rule, 31–4, 107
decisions, Commission, 126–34
decisions by associations of undertakings,
22
anti-competitive object or effect, 34–40
effect of trade between Member states,
28–34
demand elasticity, 79
demand substitutability, 79–81
direct concern, test of, 138
direct effect, principle of, 5–6fn, 8
directly applicable exception
principle of, 155
system of, 51, 72, 152
discounts, 93–6
adoption of common policies, 41
discriminatory practices, 7, 44–5, 91–6
disguised cooperation, 27–8
distribution channels, nature of, 81
distribution franchise agreements, 71
distributors, imposition of export bans,
36
doctrine of effects, 13–15
doctrine of essential facilities, 102–3
dominant companies, refusal to supply,
99–103
dominant position
definition, 84–8
determination of existence, 75–84
within the Common Market, 88
see also joint dominance
Draft block exemption regulation on
vertical restraints (1999), 58
Draft Guidelines on vertical restraints
(1999), 58
 Index
Draft Notice on agreements of minor
importance (2001), 32–4
Draft Regulation implementing Articles 81
and 82 EC (2000), 10, 154–7
EC competition law see Community
competition law
EC Treaty
lack of definition, 11
provisions on competition, 2–3
ECJ see European Court of Justice
economic analysis, to establish anti-
competitive behaviour, 30, 36–9
economic links, 108–10
economic unity approach, 13
effect, anti-competitive, 36–9
effects, doctrine of, 13–15
enforcement
at community level, 5, 114–44
at national level, 5–6, 145–50
new system, 151–7
equality of arms, principle of, 124
essential facilities, 102–3
establishment, initial cost, 87
European Court of Justice (ECJ), 2, 5
ex officio proceedings, initiation, 119–20
exchanges of information, 26–7
on prices, 41
exclusive distribution agreements, 29, 31
exclusive purchasing agreements, parallel
networks, 36–9
exclusive sales agreements, 69–70
exemptions, 46–7
comparison with objective justification,
110–11
conditions for granting, 48–50
decisions granting, 133
power to grant, 47
types, 47
see also block exemptions; individual
exemptions
exploitative abuse, 89
export bans, imposition on distributors, 36
fact-finding, on alleged infringements, 120–
22
fidelity rebates, 93–4, 95–6
files, access to Commissions, 123–5
final decisions, 119, 128–34
reviewable, 137
financial risk, 87
fines
imposition, 132–3
temporary immunity, 117
fixed rebates, 94
fixing, of prices, 36, 40–41
161
formal final decisions, 129–33
formal requirements, 133–4
reviewable, 137
forms of cooperation, 18–28
anti-competitive object or effect, 34–40
effect on trade between Member states,
28–34
foundations, competition law, 1–15
franchise agreements, 71
freedom to contract, principle of, 131
gentlemen’s agreements, 19
governments activities, rules concerning,
3
grounds for review, actions for annulment,
140
Guidelines on vertical restraints (2000),
58–9
hearings, 125–6
horizontal agreements, 20–21, 36
price fixing, 40–41
reform of, 54, 65, 67
immunity from fines, temporary, 117
implementation test, 14–15
indirect avenue, for judicial review, 140–41
indirect price fixing, 41
individual concern, test of, 138–9
individual exemptions, 47
conditions for granting, 48–50
requirement for notification of agree-
ments, 50–51
informal final decisions, 128–9
reviewable, 137
informal settlements, 129
information
exchanges of, 26–7
requests, 120
infringements
decisions finding, 129–33
fact-finding on alleged, 120–22
investigation of, 118
initiation of enforcement procedures,
116–20
intellectual property rights, 86
exploitation of, 100–102
interchangeability, 77–82
interim relief, 150
granting, 127–8
intra-Community trade
effect of abusive practices, 105–7
effect of agreements, 28–34
investigations
conduct of, 120–21
protection of firms under, 121–2
162 EC Competition Law and Policy
investment, agreements to limit or control,
42
joint discount agreements, 44–5
joint dominance, 107–10
judicial review, 135–43
legitimate interest, 117, 138
levels of enforcement, 5–6
license, refusal to, 101
loyalty rebates, 93–4, 95–6
market behaviour, regulation of, 1
market power, indicators, 84–6
market share, 84–5, 88
market share caps, 56, 57
market sharing agreements, 7, 36, 43–4
markets
abuses in related, 103–5
oligopolistic, 25–6
unjustified limitation, 91
member undertakings, anti-competitive
practices, 22
Merger Regulation (1989), 3, 108fn
mergers
between undertakings, 2–3
definition of joint dominance, 108
procedural rules, 3
minimum prices, fixing, 41
modification of agreements, by undertak-
ings, 129
monopolies
state, 83
statutory, 87
Monti, Mario, 113
national authorities, enforcement by, 5–6,
150
national courts, enforcement by, 5–6, 145–
50
national law, and Community competition
law, 8–10
national level, enforcement, 145–50
national markets, 88
national procedural autonomy, principle of,
147–8
nationality, discrimination on grounds, 92
negative clearances, 133
reviewable, 137
negative conditions, for granting of
exemptions, 49–50
negligent infringements, imposition of
fines, 132–3
non-colluding oligopolists, 110
non-contractual liability, principle of, 149
non-discrimination, principle of, 7, 91–2,
130
non-privileged applicants
actions for annulments, 138–40
actions for a failure to act, 142–3
Notice on co-operation between the Commission
and the national courts (1993), 51, 146–7
Notice on co-operation between national
competition authorities and the Commission
(1997), 9, 150
notifications, to qualify for individual
exemption, 50–51, 116–7, 134
nullity, sanction of, 46
object, anti-competitive, 34–6
objective justification, Article 82 EC,
110–12
observations, submission by complainants,
118–9
oligopolies, 25–6, 110
opposition procedures, 53
oral agreements, 19–20
oral hearings, 126
ordinary investigations, 120–21
parallel behaviour, 24–7
parallel importers, 35
parallel networks of exclusive purchasing
agreements, 36–9
perfectly competitive markets, 1
periodic penalty payments, 132
positive conditions, for granting of
exemptions, 48–9
predatory pricing, 97–9, 106
price fixing, 36, 40–41
pricing, 80
discriminatory, 45, 92–3
see also purchase prices; resale prices
prior notification, dispensation from need,
116
private parties, standing of, 138–40, 142–3
privileged applicants
actions for annulment, 137
actions for a failure to act, 142
procedural decisions, 126–8
procedural infringements, 132
procedural requirements, actions for a
failure to act, 141–2
procedural rules, 3
proceedings, initiation, 116–20
production
agreements to limit or control, 42–3
unjustified limitation of, 91
products, discriminatory allocation during
supply shortages, 93
 Index 163

prohibition of cross-supplies between statutory monopolies, 87

authorised dealers, 36 structural links, 108–9
proportionality, principle of, 49–50 structure
protection of firms under investigation, Article 81 EC, 4
121–2 Article 82 EC, 4f, 5
public undertakings, rules, 2 substantial part of Common Market,
purchase prices, imposition of unfair, 89–90 definition, 88
substantive infringements, 132
quantity discounts, 94 substitutability, 77–82
supply
rebates, 93–6 allocation of products during shortages,
adoption of common policies, 41 93
recommendations, 22 refusal to, 99–103, 106
refusal to license, 101 sharing sources, 36, 43
regional markets, 88 supply substitution, 81
Regulation 17/62, 3, 47, 114–44 supremacy of EC Law, principle of, 8–9
Regulation 2790/99, 41, 44, 46, 54, 58–65,
66–7f tacit collusion, 23
regulatory barriers, 87 tacit cooperation, 20
related markets, abuses in, 103–5 target discounts, 94–6
relevant geographic market, 82–4 target prices, fixing, 41
relevant product market, 77–82 technical development
resale price maintenance (RPM), 41, 46 agreements to limit or control, 42
resale prices, fixing, 36 unjustified limitation, 91
research and development agreements, 7, technological lead, of undertakings, 86
42 temporary immunity from fines, 117
reviewable acts, 136–7 territorial protection, 36, 44
reviewable omissions, actions for a failure third parties, access to files, 125
to act, 143 tie-in clauses, 45
right to be heard, 125–6 time limit, actions for annulment, 140
rule of reason, 68–73 trade between Member States
rules effect of abusive practices, 105–7
activities of governments, 3 effect of agreements, 15, 28–34
activities of undertakings, 2–3 trading conditions
discriminatory, 44–5
sanction of nullity, 46 fixing, 41–2
scope imposition of unfair, 90–91
Article 81 EC, 4 transport
Article 82 EC, 4f, 5 costs of, 83
selective distribution agreements, 27–8, 70 special regulations, 3
selling prices, imposition of unfair, 89–90 tying, 96–7
semi-privileged applicants
actions for annulment, 137–8 umbrella block exemption regulation 2790/
actions for a failure to act, 142 99, 41, 44, 46, 54, 58–65, 66–7f
service networks, quality, 86 undertakings
settlements, informal, 129 access to Commission’s files, 123–4
severability, 46 collusion between, 4
similar behaviour, 24–7 definition of, 11–12
single market, achievement, 6–7, 10, 22, 29, forms of cooperation, 18–28
36, 43, 91, 106 modification of agreements, 129
standing, private parties, 138–40, 142–3 prohibition of abuses of dominant
state aids, 3 position, 5
state liability, principle of, 148–9 rules concerning activities of, 2–3
state monopolies, markets subject to, 83 size, 85–6
statement of objections, 122–5, 134 undertakings granted special rights, rules, 2
statutory duty, breach of, 148 unfair purchase price, imposition, 89–90
164 EC Competition Law and Policy
unfair trading conditions, imposition, 90–
91
unilateral behaviour, apparent, 27–8
vertical agreements, 7, 20, 21–2, 59
contractual clauses in, 36
territorial protection, 44
vertical integration, degree of, 86
vertical restraints, process of reform, 54–65
voluntary investigations, 120–21
white lists, 53
White Paper on modernisation of the rules
implementing Articles 85[now 81]
And 86 [now 82] of the EC Treaty (1999),
47, 51, 68, 72–3, 114, 151–3
reactions to, 153–4
written contracts, 18