Competition Law Quiz: BIDS and EC Treaty

Anti-Competitive Agreements

• EU competition law aims to protect consumers and prevent monopolies.
• Key EU legislation for competition includes Article 101 TFEU (covering anti-competitive agreements) and Article 102 TFEU (covering abuse of a dominant position).
• Students should understand the background to EU competition law, abuse of a dominant position, and anti-competitive agreements.

Learning Objectives

• Students should gain a better understanding of EU competition law, abuse of a dominant position, and anti-competitive agreements.
• Students should understand that establishing a dominant position is not necessary for the application of Article 101.

Why Protect Competition?

• Adam Smith argued self-interest drives market competition and leads to better goods and services.
• Effective competition benefits consumers through lower prices and better quality.
• Policy behind competition law aims to protect consumers by preventing monopolies and promoting market fairness.

Benefits of Competition in the Market

• Competition law seeks to break up monopolies
• It prevents anti-competitive agreements which harm consumers.
• Competition pushes businesses to provide better goods and services and decreases prices.

EU Background to Competition Law

• Article 101 TFEU prohibits agreements that obstruct trade between EU member states.
• Article 102 TFEU prohibits the abuse of dominant positions in the EU market.

Article 101(1) TFEU

• Prohibits anti-competitive agreements that affect trade between EU member states, which are aimed at obstructing or distorting competition.
• Examples include fixing prices, limiting production, sharing markets, and imposing discriminatory conditions to favor one party.

Article 101(1) TFEU (continued)

• Further restrictions include sharing markets or sources of supply.
• Applying different conditions to equivalent deals making one party more competitive than another.
• Making a contract's completion dependent on unrelated supplementary terms imposed on the customer.

What is an 'Agreement?'

• Agreements, as defined by the Court (Bayer v. Commission), involve mutually agreed intentions between at least two parties
• The form of the agreement is not important; the essential element is the parties’ joint intention.

Vertical and Horizontal Agreements

• Vertical agreements are between suppliers and producers. Example: a manufacturer and a retailer.
• Horizontal agreements are between producers. Example: several manufacturers of similar products.

What is a 'Concerted Practice?'

• A concerted practice exists when undertakings without forming a formal agreement, coordinate their actions to restrain competition.
• This often involves actions that are similar in purpose, creating an implication of coordination amongst competitors.

Case 48/69 ICI v. Commission

• The Court defined a concerted practice as cooperation amongst undertakings that knowingly substitutes cooperation for competitive risks.

Case C-49/92 Polypropylene

• This case illustrates a concerted practice where producers met to discuss pricing and supply strategies.
• The court held that such meetings constituted a cartel. Joint action to coordinate on pricing implies causation.

Article 101(1) TFEU (Question)

• This section focuses on agreements that restrict competition outright
• Examples are often related to fixing prices, preventing markets, sharing, or technical development

Examples of Anti-Competitive 'Objects'

• Horizontal agreements: examples include price fixing, market sharing, and non-compete clauses (entre competitors)
• Vertical agreements: examples include minimum price-fixing, excessive geographical restrictions and (deals between manufacturers and sellers).

Case 58/64 Consten and Grundig

• This case involved an exclusive distribution agreement, which the court declared anti-competitive.
• The court held that private agreements couldn't divide the EU market to prevent competition.

Case C-209/07 BIDS

• This case dealt with a proposal to compensate companies for leaving the beef market.
• The court ruled that the agreement had the objective of preventing competition.

Case C-209/07 BIDS (Court Held)

• Such a scheme was incompatible with the EC Treaty as it involved coordination between participants which replaced competitive considerations with cooperative actions.

Exemptions from Article 101 TFEU

• Article 101(3) establishes exemption guidelines.
• Agreements which enhance efficiency and benefit consumers, without impeding competition are exempt.

Summary of Exemption Criteria

• Agreements can be exempt from Article 101 if they improve production/distribution, promote technical/economic progress, provide fair share to consumers, and don't restrict competition.

Block Exemptions

• Block exemptions streamline certain agreement types (e.g., R&D, technology transfer and franchising).

VBER 2022

• This regulates vertical agreements, specifying limits of protection and defining hardcore and excluded restrictions.
• A safe harbor provision exists, exempting agreements if market shares do not exceed 30%

VBER 2022-Article 4 (restrictions)

• Hardcore restrictions like price-fixing or exclusive distribution agreements need a full analysis to evaluate potential legality under competition provisions.

VBER 2022 - Article 5 (Exclusions)

• Non-compete clauses exceeding 5 years or obligations to sell particular brands frequently fall outside VBER parameters, requiring individual consideration.

Case T-374/94 European Night Services

• National railway services were not deemed to compete with each other.
• The absence of actual or meaningful competition meant that the agreement wasn't deemed anti-competitive.