Art 101 TFEU

Article 101 TFEU - Anti-Competitive agreements

• 2 or more undertakings
• agreement, decision or concerted practice
  • written or oral agreement → although not necessarily a contract
  • gentlemen’s agreement included
  • general practice included
  • decision by a Trade Association
    • Association does not have money, going after member companies therefore
  • concerted practices
    • parallel behavior hard to distinguish from cooperation
    • burden of proof lies with enforcers (authorities)
    • 3 criteria
      • concerting with each other
      • subsequent conduct on the market
      • cause & effect
    • example: gas station prices
  • horizontal vs vertical agreement
    • horizontal … refinery cooperating with other refineries
    • vertical … refinery cooperating with gas stations
      • if in a conglomerate it is okay from anti-competitive
      • but dominant position laws within 102 come into effect
• appreciable effect on trade between member states
  • EU Laws should only be applied to EU relevant cases
  • para 52: thresholds (NAAT Rule)
    • market share not above 5%
    • aggregate (horizontal) or suppliers (vertical) annual turnover not above 40 Million EUR
  • para 53: rebuttable positive presumption
    • imports/exports or covers several member states
    • • turnover threshold exceeded
  • also applies to hardcore restraints
• appreciable effect on competition
  • effect must be “noticeable” to be illegal
  • agreement does not have to be on EU scale, even if effect is
  • De Minis Notice
    • para 2: not applicable if agreement has the object of restricting competition
    • threshold
      • 10% aggregate for competitors (horizontal)
      • 15% each for non-competitors (vertical)
      • 5% in case of network effect
  • consequence: justification under Article 101(3) TFEU highly unlikely
• object or effect of preventing, restricting or distorting competition
  • “restriction of competition”
  • Article 101(1) TFEU → long non-exhaustive list of behaviors

Exceptions to Article 101 TFEU

• 4 cumulative conditions
  • 2 positive conditions
    • Improvement → Innovation
    • passing on to consumer → Principle of Consumer Wealth
  • 2 negative conditions
    • no indispensable restrictions → everything is necessary
    • no enabling to eliminate competition → competition is still functioning

Block Exemptions

• the VABER 2022/720
• Distribution Agreements → vertical agreements
• does not apply to huge companies
• first thing when setting up distribution agreements is to be VABER compliant
  • ensures safety from anti-competition claims

Consequences of Infringement

• those parts of the agreement are void (not the whole agreement)
• fines of up to 10% of previous years turnover (public enforcement)
  • highest fine was 4.3 Billion EUR
  • Austria only: Authority may keep parts of the fine → incentive
• damages actions by other companies or consumers are possible
• loss of reputation, bad publicity, loss of share value

Information sharing agreements

• paras 366 ff
• Information exchange = common feature in business; efficiencies v competition concerns
• Covers direct and indirect sharing of information, data sharing
• Type of information exchanged: paras 384 ff
• Ways of exchange: paras 395 ff
• Market characteristics: para 412
• Restrictions by object: paras 213 ff
• Restrictions by effect: paras 420 ff

Sustainability Standards

• paras 529 ff
• Transparent procedure for developing the sustainability standard, all participate
• No obligations for companies not wishing to participate
• Participants must remain free to apply higher sustainability standards
• No exchange of commercially sensitive information that is not necessary
• Effective and non-discriminatory access to the outcome of the standard-setting process
• (a) The standard must not lead to a significant increase in the price or a significant reduction in the quality of the products concerned; OR (b) The combined market share of the participating undertakings must not exceed 20 % on any relevant market affected by the standard.

Cases

Pierre Fabre (2011)

• market: cosmetics companies
• agreement: selective distribution (banning )
• selective distribution agreement prohibited internet sales (absolute ban)
• banning only sales is not acceptable → CJEU Ruling

Electronics Producers (2018)

• involved: Asus, Denon & Marantz, Philips, Pioneer
• agreement: resell price maintenance; refusal to supply; pricing algorithms
• fine: EUR 111 million
• online retails were restricted in setting prices
  • monitoring network to ensure compliance
• non-complying retails were threatened or sanctioned
• pricing algorithms to adapt to competitor pricing
• limiting cross-border sales

Nike (2019)

• fine: EUR 12.6 million
• restriction of out-of-territory sales
  • prohibiting resellers to sell outside of assigned territory
  • deeply nested licencing structure