Competition Law: TFEU Articles 101 and 102 (Andrew)

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary objective of competition law?

To enhance monopolistic practices

To eliminate all forms of market competition

To regulate pricing strategies of firms

To maintain the integration of the internal market (correct)

Who enforces competition law within the EU?

Member state judicial systems exclusively

Private corporations

European Court of Justice

The European Commission (correct)

Under Article 101, what must be demonstrated to establish a potential distortion of competition?

An intention to harm competitors

A definitive proof of economic loss

A possibility of distortion, not necessarily actual evidence (correct)

An agreement with regulatory authorities

What is an 'undertaking' as defined by the European Court of Justice?

Any entity engaged in an economic activity, no matter the financing Signup and view all the answers

Which of the following actions would likely constitute a violation of Article 101?

Producers agreeing to raise prices to increase profit margins Signup and view all the answers

What is the 'single economic entity doctrine' in relation to competition law?

It distinguishes between separate undertakings and those that act as a single entity Signup and view all the answers

Which practice is often associated with cartel formation under Article 101?

Copying each other's pricing to prevent competition Signup and view all the answers

What type of practices does Article 102 specifically address?

Abuse of a dominant position by a single undertaking Signup and view all the answers

What implication does owning 100% of shares have on a parent company and its undertaking?

They are seen as a single entity. Signup and view all the answers

What requirements must be met for an arrangement to be categorized under Article 101?

It must consist of agreements between multiple entities. Signup and view all the answers

What criteria define 'concerted practices' within competition law?

Independent undertakings coordinating market strategies. Signup and view all the answers

What justification did the ECJ provide for excluding Albany's pension fund requirement from breaches of competition law?

It served a higher social purpose. Signup and view all the answers

Which statement best exemplifies a vertical agreement?

An agreement between a car producer and a delivery service. Signup and view all the answers

What can be inferred about the penalties for companies involved in cartel behavior?

Companies can face substantial financial penalties. Signup and view all the answers

What differentiates horizontal agreements from vertical agreements?

Horizontal agreements involve the same stage of production. Signup and view all the answers

What example illustrates 'decisions by groups' in a way that constitutes a breach of competition law?

An organization issues recommendations for minimum prices. Signup and view all the answers

Which scenario would likely be considered an implicit agreement under competition law?

Firms adjust their pricing based on competitor actions. Signup and view all the answers

In competition law, what is typically required to prove collusion?

An explicit written agreement. Signup and view all the answers

How did the shipping companies avoid fines despite sharing information?

They claimed it was for mutual benefit without intent. Signup and view all the answers

What is a key feature of cartels according to competition law?

They engage in coordinated market manipulation. Signup and view all the answers

What role does case law play in the exclusions from competition law outlined in Article 101 and Article 102?

It contributes to defining exclusions through specific rulings. Signup and view all the answers

What must be shown for an agreement to avoid prosecution under competition law?

Four justifiable reasons as outlined in Art. 101.3 Signup and view all the answers

Under which condition does the 'de minimis' rule apply in competition law?

When combined market shares are below certain thresholds Signup and view all the answers

Which of the following behaviors is generally classified as anti-competitive?

Engaging in price fixing Signup and view all the answers

What is the primary factor considered to determine market dominance?

Market share and barriers to entry Signup and view all the answers

What characterizes a block exemption in competition law?

It provides a safe harbor for companies under specific conditions Signup and view all the answers

Which of the following is an example of conduct that would be considered a breach of Art. 102?

Banning competitors from accessing a market Signup and view all the answers

Which statement accurately describes the 'de minimis' concept?

Agreements must meet legal thresholds to avoid prosecution Signup and view all the answers

In what scenario is a company likely considered dominant?

Holding a market share of 50% or more Signup and view all the answers

What is one condition under Art. 101.3 for an exemption to be granted?

Providing a fair share of benefits to consumers Signup and view all the answers

Which of the following practices is NOT typically viewed as anti-competitive?

Setting competitive prices Signup and view all the answers

How does the concept of 'bundling' relate to anti-competitive practices?

It prevents consumers from exploring alternatives Signup and view all the answers

What is characterized as a hardcore restriction under block exemptions?

Market sharing agreements Signup and view all the answers

Which of the following factors does NOT contribute to determining market dominance?

Consumer satisfaction levels Signup and view all the answers

Which aspect is essential to establishing that a company has abused its dominant position?

Evidence of unfair pricing strategies Signup and view all the answers

Study Notes

Competition Law: TFEU 101 and 102

Objective: Maintain internal market integration. Monopolies hinder free movement of goods/services and reduce incentive for product improvement/cost reduction.

Enforcement

European Commission: Enforces competition law. Has significant investigatory and sanctioning powers; can be appealed to the European Court of Justice (ECJ).
Member State Authorities: Network of national competition authorities.
Private Enforcement: Civil litigation between corporations.

Article 101: Agreements, Decisions, Concerted Practices

Scope: Addresses activities distorting competition within EU trade.
Focus: Focus on potential distortion, not just proven distortion.
- Agreements: Producer groups agreeing to raise prices; potential to restrict output.
- Decisions of Organizations: Actions by organizations companies belong to.
- Concerted Practices: Coordinated actions mimicking a cartel to reduce competition, e.g., passive copying of strategies, avoiding price wars.

Undertakings

Definition: Any entity engaged in economic activity.
Scope of Article 101: Requires a plurality of separate undertakings. The state can be considered an undertaking.
Single Economic Entity Doctrine: Used to determine if a group of undertakings are one entity or separate. This depends on whether the smaller entities can make independent economic decisions. Control by a parent company usually indicates a single entity.
Requirements for EU Trade Impact: An undertaking's actions (direct or indirect, actual or potential)must influence or could potentially hurt the market integration.

Exclusions from Competition Law

Higher Purpose Justifications: Many exclusions stem from case law. Justification often involves a higher purpose(e.g., social welfare).
Example: Dutch textile company case (Albany) where the ECJ recognized a compulsory pension fund for workers as a valid social purpose, not a restriction of competition.

Article 101 Conditions

Prohibitions: Covers agreements, concerted practices, and decisions by organizations.
Plurality Requirement: Multiple entities required; a parent company controlling all elements treated as one entity.
Types of Agreements:
- Vertical: Between actors at different stages (e.g., car producer and seller).
- Horizontal: Between actors at the same stage (e.g., two car producers).
Passive Participation: Benefiting from an agreement without manifest opposition can constitute participation.
Example: Cartels Price fixing, output limitation, and market sharing are anti-competitive. These can take many documented forms, including:
- delay of new technology, and maintaining high prices
- allocating market shares.

Article 102: Abuse of Dominant Position

Purpose: Prohibits abuse of dominant position in the market.
Dominant Position Definition: Enables an undertaking to prevent effective competition. Dominant companies can act independently.
Determining Dominance: Factors include market share (often >50% raises a presumption) and barriers to entry (high capital investment, distribution access, intellectual property). Market share alone does not automatically equate to dominance, but combined with barriers, may be proof.

Examples of Anti-Competitive Conduct under Art. 102

United Brands: Company was dominant in the banana trade, and abused this position, charging different customers differently to punish competitors.
Google (Shopping, Android): Google was accused of using its market dominance to favor its own services (e.g., manipulating search results to promote Google Shopping) and to bundle products and apps to stop competitors from acting freely in the market, like restricting manufacturers from choosing alternative services.

Article 101 Analysis Categories

By Nature Anti-Competitive: No economic analysis needed. (e.g., price-fixing, market-sharing)
Requires Economic Analysis: Agreements falling short of inherently anti-competitive provisions requires analysis on if provisions are anti-competitive.
**De Minimis:**Small companies are outside the scope. This threshold varies depending on whether agreements are horizontal (e.g., less than 10% market share) or vertical (e.g., less than 15% market share).
- "De minimis" does not imply legality, it just means the case is insignificant.
Exceptions (Art. 101.3): Agreements may be exempt if they improve production, benefit consumers, and are not unduly restrictive or eliminate competition in a significant part of the market.
Block Exemptions: Specific, sector-based exemptions to allow agreements without prosecution, with market share thresholds.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Explore the fundamentals of competition law under Articles 101 and 102 of the TFEU. This quiz covers the role of the European Commission, national authorities, and private enforcement in maintaining market integrity. Test your knowledge of agreements, decisions, and concerted practices that may distort competition in the EU.