COMPETITION POLICY ANS EU FINAL HASBA

Kevin runs a successful chain of amusement arcades in the United Kingdom. He

decides to expand into ‘Europe’. His initial research shows that entrance fees
charged in such centres as already exist in the Baltic states (Estonia, Latvia,
Lithuania) are uniformly high. He contacts some of the centres, explaining that his
centres will be aimed at a somewhat different market from their existing ones,
which mainly cater for the young ‘mass’ market, whereas Kevin is aiming at
wealthier and more mature players. Kevin does not wish to annoy the other centres,
and thinks that a good relationship with them is important and might be mutually
beneficial. Consequently, he wishes to discuss setting his prices at the ‘right’
level. Consider possible breaches of EU competition law which might arise.
Art 101 (agreement or concerted practice) and 102 (abuse of domant position)

We can deduce coming from the evidence that K made the decision to broaden his
network of amusement arcades throughout the countries of the Baltic Region because
he observed the fact that there are a number of amusement arcade service
providers that consistently charge high prices from the public. It is also
important to observe that both sides have had a few discussions, and relying upon
that, K made the decision to keep his prices closer to the rates of his competitors
in order to prevent offending them while continue maintaing their mutual beneficial
connection. We have to decide whether K and the other proprietors of arcades have
violated EU competition law, specifically, Article 101 of the Treaty on the
Functioning of the EU, that forbids any contract which restricts competition within
the shared market while putting the EU commission with the duty to carry out the
policy.

Infringement of Article 101 TFEU:

It is required to establish the presence of "agreement between undertakings or
association of undertakings" for the purpose to establish a breach of Art. 101
TFEU. Firstly, it is necessary to show that K along with other proprietors of theme
parks satisfy the criteria for an undertaking as outlined in Hofner, which applies
to any corporation performing economic activity. Since it is evident that everybody
involved collaborate in economic activity, i.e., business with a profit motive,
they are all going to be categorised as undertakings. The second condition is to
show the existence of a contract (as broadly defined in Constan, that encompasses
horizontal and vertical agreements, both written and verbal, as well as gentlemen's
promises (Chemiefarma)) or concerted activity (as defined in the ICI case showing
collaboration and corporation among opponents in the absence of proof in support of
an agreement). The costs for arcades made have been evenly excessive in all each of
the three nations, which is certainly not by chance. Following arguments, K ought
to have planned the best way to enter into the market for arcade games and compete
in opposition to others, however he has additionally worked together by setting the
cost "at the right level." We observe a lack of a contract within the two groups,
but the circumstances of the market concisely indicate that there has been
collaboration and cooperation. Evidently, it constitutes as a determined approach.
The defence of oligopoly (Ahlstrom case) could potentially be used by K and the
other businesses to argue that their cooperation does not occur as the result of a
planned practise but rather due to the oligopolistic nature of the market. This
defence, however, will ultimately fall short due to the fact that is no proof that
the marketplace is oligopolistic. Thus, the first component will be proved.

Another concern is demonstrating the EU Commission's authority to file a complaint

over the undertaking in compliance with EU competition legislation. This
jurisdiction will only be applicable when the coordinated conduct has a chance to
affect competitiveness in a number of EU member state. If otherwise, it is a
national issue and the Commission lacks jurisdiction. Since there are three nations
involved in our instance, the Baltic States, the competitiveness is going to be
influenced in all three, and the EUI panel has the authority to pursue legal
proceedings.

The last step is to demonstrate that the coordinated practice's goal or outcome is
to decrease, alter, or limit competition in the internal market. In our situation,
there exists a problem with pricing, which is obviously anti-competitive with
regard to of its goal, or object, and even if it were not, the market would
ultimately have been affected because they all involve selling at high prices,
which the customers have to settle to ensure that they are doing so. We'll also
take into consideration that factor.

Conclusion
A violation of Article 101 of the TFEU is going to be established in accordance
with all of the ongoing information.

Once violation turned out to be determined, the EU applies the two-step test
(Metropole TV case), wherein the initial step is to prove that there was a
violation, an aspect that we have discussed already, whereas the next step is to
figure out whether or not an exception is possible. For a deal to qualify for an
exception as per Article 101(1) TFEU, there are four requirements that must be
completed; if they are not established, the contract shall be considered invalid
and the undertakings may be subject to penalties according to Article 101(2). In
our situation, consistent price fixing fails to promote growth in the economy and
even does not assist consumers, but instead hinders the competitiveness. As a
result, none of them are going to be considered eligible for an exemption, and K as
well as the other individuals involved in the concerted practise will all be
subject to the fines.

The most beneficial advise to K would be to attempt to use the Commission's

leniency policy for his own benefit, in that instance he ought to notify the
Commission of the concerted practise and request to them to grant him leniency
considering that there is a chance that a penalty might be given to him.