Competition Law Topics PDF

**Competition Law**     **TFEU 101 and 102**   **What is the objective of competition law?**   - To maintain the integration of the internal market   - You can stop the free movement of goods or services if you have a monopoly.   - If you have a monopoly you don´t need to compet...

**Competition Law**     **TFEU 101 and 102**   **What is the objective of competition law?**   - To maintain the integration of the internal market   - You can stop the free movement of goods or services if you have a monopoly.   - If you have a monopoly you don´t need to compete, and make your products better, cheaper etc.     **How is competition law enforeced?**   - Enforced by the european commission - Significant powers to investigate, evaluate and sanction. - They are the police and the judicial system - The European commission are not the European court of justice (ECJ) - Therefore, their decisions can be appealed to the ECJ.   - Network of competition law authorities in the member states   - Enforced privately through civil litigation (coorperations)           **Art. 101 generally**   - Talks about things that can distort competition   - Has to be groups   - **Emphasis on CAN**, you don´t have to prove that it distorts competition   - Disrtorting competition could be **the object or the effect** of the actions of the company.   - Limited to EU trade   - **Agreements** - Classic example: a group of producers get together and decide to all raise prices, so they all make more money. - You can make an agreement to underproduce a commodity, but the demand is consistent or rising. Less products on the markets, ergo, prices would go up. - **Decisions of organizations** - Companies all belong to an orginisation, that organisation decides something - **Concertive practices** - How could they form a cartel? - They can copy eachother, and the result will be the same, creating an unfair market? - It is safer to copy each other - Price war is unsafe - They agree to don´t have real competition, and copy eachother, to prevent a price war       **What is an undertaking?**   - ECJ definition: Encompasses every entity that is engaged in an economic activity, regardless of how it´s financed. - Basically a coorperation   - The state can also be an entity/undertaking. - Example, NAV   - In 101 can´t involve a single undertaking. 102 can   - Single economic entity doctrine   - To distinguish between if a group of undertakings are one undertaking pretending to be many undertakings, or if they can be viewed as separate. - It depends on if the smaller groups can make separate economic desicions. - If not, they are just following orders, and art. 101 cannot be enforced. - If the parent company own 100% of the shares in the undetaking, they are not a seperate undertaking - Can also be considered not separate if the undertaking are still taking orders from the parent company   - ECJ: in order to be capable to affect trade between member states: - Influence direct or indicrect, actual or potential - Could hurt the integration of the market - \+ one more idk     **What is excluded from competition law?**   - Article 101 and 102 does not explicitly include any exclusions   - Article 346.1 b is an example of an exclution - Weapons, war materials etc. you can keep that technology and information secret. - The weapon builders in the individual countries can have a monopoly. - Many exclusions come from case law - The justification is usually a higher purpose   - Example: 1996 Albany international BV   - Dutch textile company - Universal pension fund for workers in the industry, it is compulsory for the individual textile companies to pay into this fund. - Albany said it could hinder competition, because only dutch textile producers had to do it, not other european countries. - Belgian textile companies had an extra cost that other european textile companies does not - ECJ said it was not a breach of fair competition - Excluded from competition law - Because it was to prevent working conditions, it served a higher pupose, social welfare - By virtue and it´s nature and purpose     **Art. 101 vilkår:**   - **Prohibits: agreements, concerted practices, decisions by groups** - **Always requires plurality of groups, if the parent company has all the controll, it will be seen as a single entity, and cannot be punished under 101.**   **\"Agreements\"**   - Vertical and horisontal agreements - Vertical, between two entities at different stages of the process - Like an agreement between a car salesman and a car producer - Horisontal, between two entities at the same stage of process, - Like an agreement between two car producers - These agreements do not have to be legally binding - Does not have to be written down, can be recorded, just has to be documented. - You can be part of an agreement by just sitting there and being passive, if you knew about it and benefitted from it - You have to manifestly oppose to be excluded     - Example for agreements between companies, a cartel   - Car compainies - New legislation was setting higher and higher demands in regard to car productions - The were setting the price between them - Trying to delay new technology for cleaner emissions, so everyone were ready to release the technology at the same time. - Slowed down the development of new technology - They could maintain high prices and less features. - The EU commission imposed fines on 3,8 billion euros   - Example of cartel, vitamins, BASF   - Vitamin companies agreed to allocate market shares - You take germany i take italy - Making markets less competitive, because one was allowed by the others to basically have a monopoly - Fixing prices - Holding regular meetings to uphold the cartel agreements - Fined 855 million euros     - Example of cartel, LCD, Samsung   - Fixed prices - Exchanged information of production quantities and future biznizz plans - Fined     **\"concerted practices\"**   - Independent undertakings exchange information with other companies   - To remove strategic uncertainty   - Example, UK sugar and confectionary market - Companies were exchanging info on market strategies and production volumes - Caught exchanging information     - Example, 2011-2016 shipping companies - Shipping containers are cool and have revolutionized our lives - The companies were sharing info - The promised to be good boiz and didn´t get fined   - Definition of \"concerted practices\" : seeks to prevent undertakings to be able to avaide the rules of compettiton simply by coordinating the market between themselves.     **\"Decisions by groups/accosiations\"**     - The group of companies as a whole makes a decision and agree on a policy   - If you are present and do nothing you are guilty   - Example, Italy, 1996 - Organization for italian insurance salesmen gave out a \"reccommendation\" of minimum fixed prices, lead to artificially high prices. - Breach of art. 101   - Example, Spanish waste management association - Gave a direct order to the waste management company to standardize prices - Held meetings and enforced the directive - ECJ said no - Example, Belgian arcitect association   - Published a list of reccommended prices - ECJ said they were price fixing - Example, Bayer, adelatt, pharmacutial company - Medicine for blood pressure - Germany were exporting it to spain, france and the UK - Sold it for different amounts in the different countries - Parallell imports, Spain got the cheap medicine, they bought a lot and sold it to the UK. - The UK reduced their imports from Germany because they were buying it from Spain - Germany therefore reduced their exports to Spain, so Spain could not buy extra to sell to the UK - Collusion between producer and wholeseller in Spain? - Germany had been in contact with the wholesalers in Spain, and the wholesellers agreed to order less. - They couldn´t prove there was an explicit agreement, BUT it was an implicit agreement so it still counts - **They could not prove collusion** between the wholesalers, or between buyer and the wholesalers. - Was a not concerted practice, and they could not prove that Buyer had instructed them. - There was nothing to be done under art. 101, no evidence - If Buyer had a dominant market position, it would be different (under art. 102) **Competition Law**   **Continuing TFEU art. 101**   **There are 4 categories of analysis in competition law:** - If an agreement between undertakings is restrictive of competition by it´s nature and objective, no economic analysis is needed, no proof is needed - It can be prosecuted by competition law anyways - If the agreement does not contain any provisions which by their objective are anti competitive, but there is an agreement, the agreement has to be studies by \"economists\" to see if the terms of the agreement could have a **distorting effects** on competition - Examples in notes - If, as a result of that economic analysis it is found that compdtition can be affected, but the economic effect is below a certain level, because the effect is so small, it will be considiered to be outside the scope of competition law   - Called \"de minimis\" - Art. 101 will not apply - There is a \"de minimis\" notice with threshholds: - If the combined marked share of each party in a horizontal agreement is below 10 % it will not be prosecuted in competition law - In vertical agreements, the marked share of each party must not exceed 15 % in any relevant market - \"De minimis\" does only apply to effect, not by object - Just because its \"de minimis\" does not mean it´s legal, it´s just not worth persecuting - There are exceptions to \"de minimis\" rules, they are not legally binding - If an agreements by it´s very nature and objective affects competition: There are 2 main ways of excemption: - **Art. 101.3** give four justifiable reasons, **all of which must apply** for excemption to apply: 1. There is an imporvement (generally) of production, distribution or promotion of technical or economic progress. 1. Consumers have to recieve a \"fair share\" of the benefits 1. The agreement cannot impose unneccesary restirctions 1. The agrrement cannot completely eliminate competition in a substatial part of the market - Example: 2 computer companies collaborate on production, restricts competition between them. - Example, european night-train services - Agreement between train companies - The service could not have been provided without the agreement - Was a benefit to consumers - **Block excemptions**, basically the same thing as art. 101.3, but for different sectors - Legal certanity for companies that they want to enter agreements without prosecution, as long as they follow the rules - Criterea more or less the same as art. 101.3 - Blcok excemptions usually have market share thresholds - Block excemptions contain \"hardcore restrictions\" - A list of things that cannot form part of the agreement - Block excemptions empose obligations and conditions on the parties - Compliance with a block excemption makes you safe from prosecution - Blcok excemptions always have a time limit - Active vs. Passive sale - Active is direct and explicit targeting - Passive, someone approaches you to buy something - Example, vertical block excemption regulation, 2022   **What is by nature considered anti competitive?**   - Price fixing - Market sharing, either geographically or consumer based - Output limitation agreements - Companies agree to limit production - Bid rigging - Auction for contactiors - The firms taking part in the auction have already decided who will win. - Collective boykotts   - Not an exhaustive list     **TFEU art. 102**   - Punishes the abuse of a dominant position   **Definition of \"dominance\", Laroche case**   - Dominace enables the undertaking to prevent effective competiiton being maintained on the relevant market - You can behave independently of your competitors, you don´t need to compete with them because you are dominant. - You ultimatrely can behave independently of consumer needs   **How to determine if a company is dominant?**   **When deciding if a company is dominant, you look at market share, and obvious barriers to entry.**   - There is a legal presumption that if someone has more than 50% **market share**, dominance is persumed - It can be lower and you will still be considered dominant - Depends on the shares of the other competitors, if the other competitors are far lower than you   - Obvious **barriers of entry** - High capital investment to get into the market - Access to distribution channels - Intellectual property rights - Espechallty patents - Network effects - The more people who use a product, the more difficult it is to compete with - Ex, facebook, youtube, whatsapp - Bundeling, microsoft, bundle all their products that are all tied up - Brand loyality and trust - Switching costs   **Examples of anticompetitive conduct under art. 102**   - United brands had a dominant position in the banana trade - Charged different prices or banned different costumers who purchased from their competitor. - Court said they abused their dominant power - Particularly because they used their power to punish - Google, shopping - Abused dominant position, because the search engine favoured \"google shopping\" - Used to get rid of competitiors in the onlyine shopping market - Fined 2,4 billion euros - Google, android - Were saying newly manufactured phoned has pre installed google search, google crome, and that all apps had to be available on the play store.   - Google was preventing manufacturers from choosing the search engine and web browser of their choice