International Commercial Law PDF

International-commercial-law.pdf honwinnie Derecho del Comercio Internacional 4º Grado en Derecho Facultad de Derecho Universitat de València Reservados todos los derechos. No se permite la explotación económica n...

International-commercial-law.pdf honwinnie Derecho del Comercio Internacional 4º Grado en Derecho Facultad de Derecho Universitat de València Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 LESSON 1: INTERNATIONAL COMMERCIAL LAW I. INTRODUCTION. Concept: Comercial relationships that go beyond borders. Adam smith theory of the comparative advantage, he said that this commercial exchange between states, even the fact that some nations will improve the productivity of consumption of goods that will improve the situation of citizens because the kind of good available to the public will be of better quality. Recently, we have seen that this notion of the constant international relationships is not that good (can lead to nationalisms in a political perspective). Nevertheless, the idea of free trade is still considered a positive element. The problem is: if we are dealing with relationships beyond international borders, how do we regulate that? In principle, law is a national problem; law cannot govern anything outside its borders/sovereign state, so it is not easy to find mechanisms to regulate with eficacy this relationship if it transcends these borders. The traditional approach of this dilemma was the application of tariffs (the need to pay a certain amount of money in order to import good in a certain country, so the one exporting pays). In this case, the country receiving those goods will establish the amount of money according to its own necessities. → The problem is that the use of tariffs will inhibit international commercial relationships because in order to sell your products, you need to add to the production costs of your goods the additional cost that tariffs represent. That’s why after IIWW we have different international agreements trying to reduce or unify tariffs. TARIFFS + ADT. COST The first one (or more relevant), is the GATT (General Agreement on Tariffs and Trade – Acuerdo General sobre Aranceles Aduaneros y Comercio) in 1947. After that, we witness the creation of the WTO (World Trade Organisation) in 1994 that will set up an institutional scheme to apply the GATTs. The WTO, tries to enforce the provisions of the international agreement that the GATTs represent trying to ensure that tariffs will not exceed a certain amount of money or will respond to a unify rational. In certain regions of the world, certain free trade areas will pop up: e.g. NAFTA agreement Canada-Mexico-EEUU UE itself it is a custom union -> only external tariffs to 28 MS, there is no intra-eu tariffs Commonwealth (tariffs preferences) The bond is that “tariffs” are the traditional way that national states face the phenomena of commerce, but we also know that the application of tariffs also risks the possibility of inhibiting international trade, that is why we have these international agreements creating this free trade areas (regional or whole wold like WTO). However, sometimes the obstacles to international commerce does not only come with tariffs but also with non-tariffs barriers against international commerce. In principle, we are assuming that free exchange between nations is something positive but if we assume that we need to reduce tariffs, what happened with non-tariff barriers? They are non-economic sanctions but can difficult the economic relationships between countries → Quality standards of goods: E.g.: according to Spain, in order to produce cars, we need to use plastic; if the law establish those standards, that would mean that car produced in Germany cannot be exported to Spain, unless they meet those standards. Free trade is not the law for humanity, so it is possible that we want high standards quality products and if that means an obstacle for int.commerce we are sorry but we need it. Another example is: Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 → Law concerning nationalities, who can work in Spain? Maybe the law admitting someone from abroad to provide services in Spain is hard when admitting someone from abroad that it is almost impossible to come here to work → Safety in war places → Debate from a liberal principle whereby free flows of economic exchange and others saying we need some standards of quality of products, safety, etc. Not solved. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. II. INSTITUTIONS OF AN INTERNATIONAL CHARACTER. International World Trade Organisation - WTO: Most important institution governing international commercial flows, it is the result of the so- called Euro Rome I, which are international agreements reached by different governments concerning the way that the guides of the GATTs have to be applied. When the GATTs were born in 1947, it lacked any institutional apparel, there was not a council, general assembly devoted to the application of the GATTs. In order to fix this problem, Rome I said that we needed an institutional system, which is the WTO in 1995. It basically works according to multiple international treaties, that deal with multiple fields (e.g agriculture, telecoms, intellectual property rights, etc.) & there are also provisions inside the int. treaties concerning dispute settlement. → Not mixed! Notion WTO with other constitutional structures. It is not a State, sovereign entity, entity capable to pass laws, just and int. organization. Nothing to do btw WTO and EU. → EG DISPUTE SETTLEMENT: Increasement of tariffs in Trump’s administration, that is for the WTO. If a MS makes a decision that can be in breach in the provision of the int. treaties can make them liable bfre the WTO. The fact is that this organisation has its own dispute settlement procedures. Concerning public int. law, the legal nature of the framework that creates the WTO are int. treaties does not allow discrimination. Does this mean that an individual can appeal in court and demand the enforcement of the treaties constituting the WTO? (go to court and say german exporter has infringed the provision X invoking a treaty) → Monist approach (treaty becoming law): Yes, bc once the int. treaty is published in the boe is automatically recognised (e.g Spain) → Dualist approach (e.g UK): we need a transposition of the rule. Imagine we follow in general a monist system when approved it becomes law. Do that allow us to appeal? No bc the treaties are designed to stablish obligations btw states but not to invest individual rights on individuals. ECHR established in the Treaty on Functioning of the EU (like Constitution) that certain dispositions which are very clear can confirm individual rights on individual persons. Relevant: as a general rule, we cannot involve WTO treaties before a court of justice. Main principles established by the WTO legal system: Most favoured nation (art. I GATT): when one of the MS of the WTO establish a certain treatment (preferential relationship) w/ a 3rd party, the other members of the WTO shall have exactly the same treatment if that treatment improves their position. The treaty tries to make sure that non-discrimination is made within the MS of the wto. National treatment (art. III GATT): once a certain good is introduced in a national market, that good will have the same treatment as national goods (treat import products like domestic ones) Fair competition: you cannot export your products with a cost below the production cost. The idea is that you cannot act in this unfair way, and sell your product below this cost. Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net Derecho del Comercio Interna... Banco de apuntes de la a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 III. INTERNATIONAL COMMERCE AND THE CODIFICATION OF INTERNATIONAL COMMERCIAL LAW. Four features that show today international commerce that rises in international courts: Development of international investment: possibility of work connection makes very easy to invest our money in different jurisdictions. Delocalisation of industrial production: we can, due to the interconnected world, move our Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. productive structures to other jurisdictions to produce our goods there. o Implications: if we decide to produce in Cuba, what happens if Cuba decides to nationalize your infrastructure? Do we need to defend our property rights? Has our country of origin something to say? o In 90th century the solution was diplomacy, today we have investment arbitration tribunals & bilateral investment treaties whereby the country receiving the investments and the state of origin of the investor reach and int. agreement where they give up to their privileges as sovereigns so they withdraw their rights to immunity of jurisdiction & therefore they will be submitted to an int. arbitral tribunal o You cannot subject to your jurisdiction another sovereign State. o If after the decision made by the tribunal, the other one doesn’t pay once the award is emitted, they have immunity of enforcement where the assets of a sovereign state cannot be frozen or enforce in order to pay a debt. But you can come to your State and enforce the award and they will freeze their assets. Development of transnational companies: also means that the sovereignty of the traditional state is undermined bc when the State can only exert its powers within their own territory but you have certain companies which influence goes beyond, it is very difficult to establish good level of protection for individuals (e.g. human rights). o Paraguay decision very harmful to the environment, destroys the living environment of indigenous people. Responsible? The corporation acting in Paraguay would be responsible but the heads are in Berlin. Certain corporations can extent their influence beyond their sovereign state and unless the law is sufficiently flexible to tackle, certain decisions made by the corporation will remain untouchable, with no possible of challenging the decision (there are no international mechanisms) How International Commercial Law is codified? UNCITRAL (United Nations Commission on international trade law) created in 1966 by General Assembly of the UN. More 60 states members of UN belongs to this commission. According to the legal work that this commission has produced we have: -> POSITIVE LAW!!!! Responsible for the NY Convention in 1958 on the Recognition and enforcement of international arbitral awards. Very important treaty bc makes possible that once an international arbitral tribunal has issued an award, makes that award enforceable in every single MS of the NYC. 1985 Model Law on International Commercial Arbitration: called soft law (guidance of how interpret national legislation) Vienna Convention of 1980 on international sales of good: most relevant int. treaty concerning basic questions of civil or private law ratified by countries (70) as China, EEUU, Italy so it is very particular because there are countries very different (not UK) UNCITRAL Rotterdam rules on the law of international transport Model law on electronic covers Together with UNCITRAL, another important is the International Chamber of Commerce of Paris (ICC). Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 Private institution with a big influence, which has approved the rules of arbitration that nowadays the most relevant ones; almost every single international commercial arbitration with great importance will be processed with their rules. ICC is not itself an arbitral tribunal just a private organization that administrates the element surrounding the arbitration, they don’t make the award (decision) but provide you with support, material, appoint arbitrators etc. ICC also approved the “incoterms” (int. commercial terms), where in most of the cases, exchange of good will not be described full of contract, a formal document explaining in which way we deliver the goods, which jurisdiction will be competent, etc. The use of this incoterms (e.g. FOB – free on board) will give us the rules concerning when the seller passes the risk on the goods on the buyer, where the goods should be delivered and it is important because sometimes it determines the jurisdiction competent dealing with any dispute. In addition, International Institute for the Unification of Private Law (UNIDROIT). Created in 1929 as an auxiliary of the Society of Nations, after the UN. It is a scholar institution (profs of pil) and one of the most imp achievement is International Principles of contract law. It is an important body of soft law because certain jurisdictions (e.g. Spain), are assuming these soft law principles despite the fact it is not positive law. Supreme Court involved these principles in order to solve disputes and they will give us a perspective on how difficulties are solved in a comparative basis (e.g. the way a common law lawyer in comparison with continental lawyer) In conclusion, there is an urgency to establish a legal framework to recognise international commerce relationships, the role of the WTO, the existence of free trade areas around the world, the notion of “tariffs”, role of the EU keeping in mind that the ECJ has established that the provision of the Treaty on the Functioning of the EU is directly applicable even by individuals in courts. When it comes to the basic dispositions concerning the free trade (after IIWW, the creation of the EU helped to the creation of the “common market” because the ECJ established that certain dispositions of the Treaty on Functioning in the area of free trade are in such a value that they are directly applicable and evocable by individual awards. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 CHAPTER 3: COMPETITION LAW I. THE REGULATION OF INTERNATIONAL FREE COMPETITION. We have 3 freedoms: - Movement of goods - Movement of services Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. - Movement of employees - Movement of capital The main provision concerning this legal scheme is art. 34 TFEU – Lisbon Treaty since 2009 1. Analysis of Arts. 34-36 TFEU about prohibition of any limitation to the export and importation of good among MS of UE Art. 34 TFEU Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States. Art. 35 establishes the same rule, for EXPORTS. The rationale between these 2 rules, is that the Lisbon Treaty tried to suppress any sort of commercial barriers between MS. But, the problem here is that this sort of economic and legal philosophy behind the treaty can lead to controversy about the concrete policy that inspire EU Constitutional goal. If we establish this rule, every measure having the equality effect is forbidden, then we are taking the risk of excluding social protection in the market (labour law, tax, law, questions concerning quality standards could be considered as measures having the effect restrictions and therefore may be bound by virtue of EU constitutional law. The job of the court is to say, analyse the provisions of Italy e.g. concerning the standards of quality of bread in order to verify whether or not that provision inhibit the possibility of import or export intra- EU. The scheme establishes by the Court respond to the following principles: When we are dealing with marketing or selling arrangements, the legality or illegality of the national measures will be established under “KECK”. When we are dealing with production or packaging of products, according to “CASSIS DE DIJON”. Does not fall within the scopes of Keck and Cassis, according to” DASSONVILLE general formula & it will define which is the measure equivalent to a quantitative restriction. If we are not capable to define with sufficient precision what is the measure equivalent to quantative restriction we will fall E.g. sales controversy on Sundays ECJ has deal with cases in which traders have challenged the constitutional validity of national laws bc those laws allow the possibility of open on Sundays or prohibit & as a result, one could say that if we don’t apply with equal liberal these dispositions through this general formula, we will be establishing difficulties in the development of social policies that may be very important for consumers and for quality of goods. That’s why it is important, concerning the way in which we mark products, product goods, package goods and how do we import and export them between MS. The way in which the ECJ has faced this situation is controversial 3 basic precedents of case law: DASSONVILLE CASE 8/74 Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 Dassonville was a Belgian citizen who bought Scotch whisky in France in order to sell them in Belgium. At a time this gentlemen bought it in France it was not very famous and the France was low. However, the situation was different in Belgium as it was a well-considered whisky and the price was high (rational was to buy cheap and sell them expensive). The problem arose when Dassonville tried to resell the whisky because Belgian authorities Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. established rules in the case where products with the denomination of origin (Scotland in this case), you need a certificate of the state of origin in order to put that product in the Belgian market. Dassonvile believed that this national Belgian rule was a violation of Lisbon Treaty (art. 34) because he believed that measure concerning the denomination of origin, was equivalent to a quantitative restriction in terms of exportation and importation. Decision of the court: All trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade are to be considered as measures having an effect equivalent to quantitative restrictions (PARAG. 5) PARAG. 6: In the absence of a Community system guaranteeing for consumers the authenticity of a product's designation of origin, if a Member State takes measures to prevent unfair practices in this connexion, it is however subject to the condition that these measures should be reasonable and that the means of proof required should not act as a hindrance to trade between Member States and should, in consequence, be accessible to all Community nationals. In parag. 5 the court expanded the notion of a measure having equivalent effect to a quantitative restriction & in parag. 6 the court takes the decision of establishing certain clarifications: in the absence of a harmonizing EU instrument, is your MS to make decision concerning the authenticity of products but in order to do that the measures adopted by MS must be reasonable and the burden of proof should not excessively hinder EU commerce. So, the court for the first time is establishing a very clear application of the Dassonvile formula. Cases in which the Dassonville formula has resulted in the disapplication of national laws: Government campaigns encouraging consumers to produce domestic goods. Rules requiring electricity suppliers to produce a percentage of the electricity from domestic farms Public tenders requiring goods made according to national standards In all these cases, there is a recommendation to consumers to make national products and it is assumes to the court that this measures will hinder intra EU commerce and therefore it is not available. The form of the measures of quantitative restriction is irrelevant EGM Finnish company, which was selling lifting machines to Italy but Italian authorities understood that these machines were dangerous. But in a certain point, both reach an agreement but apparently even within the Finish authorities wasn’t an agreement and a sort of finnish inspector of safety appeared in tv and he said that despite the agreement these machines were very dangerous. EGM considered that that statement on the tv was “a measure having equivalent effect of quantitative restrictions”. The position of the court was (470/03) –paragraph 66 In the light of the above considerations, the answer to Question 1 must be that statements which, by reason of their form and circumstances, give the persons to whom they are addressed the impression that they are official positions taken by the State, not personal opinions of the official, are attributable to the State. The decisive factor for the statements of an official to be attributed to the State is whether the persons to whom those statements are addressed can reasonably suppose, in the given context, that they are positions taken by the Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 official with the authority of his office. To the extent that they are attributable to the State, statements by an official describing machinery certified as conforming to the Directive as contrary to the relevant harmonised standard and dangerous thus constitute a breach of Article 4(1) of the Directive. If this statement made by a physical person generated the impression that that was the position of the finnish state, tit is a measure equivalent to restriction and was liable of breaching art. 34 TFEU The application of these articles, does not deal with private actors but only with authorities although European freedoms establishes private law relations. Art. 34 TFEU only governs the content of law, regulations or acts attributable to MS. Only certain nuances are established to these rules: Apple and pears development council 222/82: body representing fruit growers who run a by English apple and pears campaign. Under English law this was a private organization, but the court found that fans that supported this organization came directly from the public budget of GB & this organization had the power to let growers to collect money to fund the organization. Even the private connection between the organization and the GB state, the conclusion was that art. 34 could also be applied against the organization and the campaign was illegal. CASSIS DE DIJON 120/78: Conflict between Belgian & German company. Under german regulations at that time, you could not put into the market drinks with less than 20% alcohol. The gentleman who was trying to import this Cassis de Dijon product, was prevented from that bc this alcohol beverage did not have enough alcohol in it in order to be according to german standards. The german government stated that the purpose of the fixing of minimum alcohol content by national legislation is to avoid the proliferation of alcohol beverages of alcoholic market, in particular, alcoholic beverages with a low alcoholic content since such product may more easily induce a tolerance towards alcohol than more alcoholic beverages. So, the approach of the german government was: we don’t like people tolerating alcohol, so in order to arise that we only admit drink with extreme labels of alcohol (VERY EXTRANGE) The court never admitted this explanation and they stated: PARAG. 8 In the absence of common rules relating to the production and marketing of alcohol, it is for the Member States to regulate all matters relating to the production and marketing of alcohol and alcoholic beverages on their own territory. Obstacles to movement within the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defence of the consumer. What they thought about the explanations was in PARAG. 11 Such considerations are not decisive since the consumer can obtain on the market an extremely wide range of weakly or moderately alcoholic products and furthermore a large proportion of alcoholic beverages with a high alcohol content freely sold on the German market is generally consumed in a diluted form. From this Cassis de Dijon, there are 2 novelties –principles: 1) Neutral recognition of national measures: the court is assuming that if a certain product is legitimately marketable in a certain MS, it must be so in the rest because we are all equal. 2) Mandatory requirement: parag. 6 concerning the reasons that may just justify national measures in the absence of EU instruments Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 This approach produces certain distortion with the tradition of some MS with the protection of consumers. E.g.: Germany where there is a very old german rule defining the ingredients permitted for the production of beer. According to this rule, beer is only what results from the application of the ingredients in this formula, any other product cannot be called beer. The problem was when Spanish company try to sell Spanish beer in Germany that cannot be called beer but something like “yellow drink” & the reason behind this was that they had some traditional approach that they wanted to respect and it is for the interest of german consumers to be aware Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. of what they are drinking. In Cassis de Dijon we have the requirement giving a sort of entitlement to national law makers to establish exceptions to the rules established in C.D.D. The production of consumers could authorise the existence of this commercial law in order to define what is or what is not beer? In the case of beer, the decision of the Court was against. But, we can say that it is true that it is a legitimate interest from Germany and consumers to have good information on what is beer. However, even if the court admits that position, it is not proportional and Spanish beers cannot be labelled differently like “yellow drinks”. If the national measure, providing there is no EU instrument, is proportional they will admit it but was not the case with german beers. KECK joint cases 267/91 & 268/91 Coming back to the opening on Sundays, Luxembourg suggested that in this case we are not dealing with physical representation of the products. Sundays trade has nothing to do to the way the goods are produced or packaged but with the way in which MS conceive commercial relationships. This is what the courts called “selling arrangements” decisions made by MS regardless of the physical specification of the products and with no impact in discrimination issues of other goods of other states. This falls outside the scope of art. 34 TFEU and therefore are legitimate under EU law. Keck case was a prohibition established by MS concerning resales at a los. MS prohibited the possibility of selling products to a price below the production cost. Stake holders believed that according to art. 34 and sales at a lost, that would be a measure having equivalent restriction illegal The rationale: if you don’t allow me to sell products at a lost, you are indeed inhibiting certain production goods and that is equivalent to a restriction. The court disagreed. In paragh. 12: National legislation imposing a general prohibition on resale at a loss is not designed to regulate trade in goods between Member States. Parag. 14: In view of the increasing tendency of traders to invoke Article 30 of the Treaty as a means of challenging any rules whose effect is to limit their commercial freedom even where such rules are not aimed at products from other Member States, the Court considers it necessary to re-examine and clarify its case-law on this matter. Parag. 16: By contrast, contrary to what has previously been decided, the application to products from other Member States of national provisions restricting or prohibiting certain selling arrangements is not such as to hinder directly or indirectly, actually or potentially, trade between Member States within the meaning of the Dassonville judgment, so long as those provisions apply to all relevant traders operating within the national territory and so long as they affect in the same manner, in law and in fact, the marketing of domestic products and of those from other Member States. In this respect, provided that we are in front of a selling arrangements detached of the physical representation of the product and that this selling arrag. That not turn out in a discrimination btw Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 good coming from a different MS, that measure is legitimate, which is the mean difference btw C.d.D & Dassonville. In Dassonville is directly hindering intra-eu trade and in C.d.D we have neutral recognition but there are mandatory requirements in which an exception will be activated against general principles and then Keck, where those cases qualified as selling arrangements art. 34 does not apply at all. In Keck doctrine, what is out of the courts is political issues concerning the way MS Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. conceive how markets should be defined but not the way in which the goods are produced. Effects of 3 judgements doctrine: by virtue of art. 34 & the way Luxembourg conceives this rule, any sort of barrier btw MS disappear to an extent (Dassonville where directly and indirectly hindering). This doctrine by the court has been criticised because every MS trying to stablish regulations concerning the quality standards of its products will be ignored bc if there is another MS using lower quality standards, even with recognition rules, would be considered valid in the market of that MS applying higher quality standards. However, this is a question for EU law- makers that you need a harmonizing eu instruments stablishing standards. II. EU COMPETITION LAW (anti-trust) 1. Analysis of art. 101 & 102 TFEU concerning the defense of competition When dealing with antitrust, what the legal system tries to ensure is that the market will function without interfere. The basic idea is that offer and demand of good and services will not be altered by third elements (e.g. agreements btw corporations trying to fix prices, or abusive decisions trying to influence the market). The main aim of anti- trust law is that the market works properly. In order to guarantee that, we have these 2 articles, and each one deals with diff situations: Art. 101: agreements btw undertakings trying to restrict commercial relationships Art. 102: abuse of dominant position in the market FIRSTLY, ART. 101 STATES: 1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: a) directly or indirectly fix purchase or selling prices or any other trading conditions; limit or control production, markets, technical development, or investment; b) share markets or sources of supply; c) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; d) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. In this 1st parag. We find the formula through which we stablish the general prohibition of agreements of undertaking with the aim of restriction, prevention, distortion. 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. If we enter in the sort of agreement described in parag. 1, will be void and none party will be entitled to claim any sort of right flowing from this agreement. E.g.: for a long time under swiss law, there was no prohibition concerning anti trust law and therefore, sometimes relevant EU undertakings reach agreements subject to swiss law breaching Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 compromises that indeed fall within art. 101, which will be null and void, even though CH has nothing to do EU. The point is that that contract that could be valid under swiss law has no legal force before EU court bc the treaty itself stablishes it. Parag. 3: exception of the general prohibition in parag. 1 The provisions of paragraph 1 may, however, be declared inapplicable in the case of: - any agreement or category of agreements between undertakings, - any decision or category of decisions by associations of undertakings, - any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question. There is an exception but we do have also negative conditions in order to reply it. This is rule of proportionality, saying that if we have another measure to reach these targets that impose less restriction on commerce you must hold it and the one you selected is null and void (a), and secondly, even if these positive elements are reach through the commercial scheme but the final result is that will destroy completely competition is still illegal. E.g.: In Cartier, I have entered into a license contract whereby someone who is the owner of an exclusive right based on IP right authorise me for the economic exploitation of it, of luxury watches. Therefore, Mr Cartier authorises me to commercialize them in Spain. Someday, the French responsible for Cartier, says that we have breach the license and they are gonna revoke it because I am selling cartier watches next to Mercadona. According to the license the only places where you can sell cartiers are in super fashion shops but I say that according to 101 such a clause amounts to a restriction of competition bc it is for me to decide where I can find my clients. In order to protect the image I can limit the ability to sell it in mercadona. It is true that the product has a legitimate interest in defending its image but when dealing with 101 we are dealing with the foundation of EU system. However, the license is valid bc when we buy a cartier watch we do it not to know what time is it bc we can do it in another way, we buy it in order to proclaim that we have a Cartier and in order to do that, we are buying a luxury product that only some people can afford, so it is for the interest for the consumers to restrict the distribution channels and that will base the products with this special value they have. NOTION OF ELEMENTS: Undertakings (case 41/90 Höfner): parag. 21 the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed and, secondly, that employment procurement is an economic activity. Does not equate to corporations (legal persons) it is a wider concept. Indeed, in the sense of art. 101 is an effect base concept, bc we are talking about reality with an impact in commercial relationships. If we analyse Luxembourg’s case law, these are cases falling within 101 and within the notion of undertakings investors, opera singers, barristers, agricultural cooperatives, multinational corporations. There another logic applied by the ECJ completely different from other business law approach: legal personality principle” even if a certain corporation is linked to another one, these are diff Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 legal persons and in order to transfer liability to one another, we need to prove that the subsidiary is in fact or in law subject to the control of the principal company, otherwise you cannot contaminate the parental company for the subsidiary. Once we are capable to prove that e.g. the subsidiary is owned by the parent company (has majority of share capital), the percentage reverses and the court will understand that the parent and the subsidiary are acting as a single entity in com. Relationships. In terms of whether or not Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. they are exerting control over the market, in both company are considered as a single entity and it will be easier to the Commission to demonstrate that we have an anti-trust law, bc it is easier to demonstrate the control over the market. Case 501/11 parag. 108: The presumption that decisive influence is exercised over a subsidiary wholly or almost wholly owned by its parent company is intended, in particular, to strike a balance between, on the one hand, the importance of the objective of combatting conduct contrary to the competition rules, in particular to Art. 101, and of preventing a repetition of such conduct (…) Parag. 109: the aforesaid presumption is based on the fact that, save in quite exceptional circumstances, a company holding all, or almost all, the capital of a subsidiary can, by dint merely of holding it, exercise decisive influence over that subsidiary’s conduct (…) The presumption is, however, rebuttable and the entities wishing to rebut it may adduce all factors relating to the economic, organisational and legal links tying the subsidiary to the parent company (…) The defendant must prove that the control is relevant, where in ordinary procedure it is for the claimant to demonstrate the parental control. Impact of agreements (relevant), concerned practices and decisions: quantitative Q. Here, we apply the “de minimis rule”: the impact of these practices is so irrelevant we will not consider if they are illegal, the Commission will not trigger proceedings against. How do we measure it? Concerning that, the Commission published a notice on the effect of trade, which is the NAAT (Non-Appreciable Affectation of Trade Test) parag. 52 Agreements are not capable of appreciably affecting trade between Member States when the following cumulative conditions are met: (a) The aggregate market share of the parties on any relevant market within the Community affected by the agreement does not exceed 5 %, and (b) In the case of horizontal agreements, the aggregate annual Community turnover of the undertakings concerned in the products covered by the agreement does not exceed 40 million euro (…) In the case of vertical agreements, the aggregate annual Community turnover of the supplier in the products covered by the agreement does not exceed 40 million euro. Agreements: Not necessarily a written agreement according to 101 Concerted Practices: could consist in just exchanging info btw the agents of the market E.g.: there is an association in which a relevant nº of farmers cultivate a kind of mandarins and then they had to sell them to a certain trader. This association to which the farmers belonged, received information about the amount of mandarins produced that at the moment they were Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 sold and the price for which they were sold, under the vision of anti-trust authorities, given the practices result to this scheme, the client received so much info placed in a privilege position in order to understand the dynamics of the market and give them the capacity of controlling the market. Obviously, they never tried to control it, but it was just the possibility through these practices amounted to an illegal act. Decisions from associations: Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. E.g: Spanish bar associations usually recommend the prices that lawyers should apply for their services, but courts reach the conclusion that even the fact it is just a recommendation, it can alter the normal development of the market. The way of EU treats this field is sophisticated bc it is a question of possibility; a mere recommendation would be considered as illegal. EXCEPTIONS NOT DESCRIBED IN 101: Art 101 makes non-discrimination with the economic activity, but we can find diff articles in the TFEU establishing that certain fields will be privileged: national security in art. 346 TFEU; agriculture art. 42; providers entrusted with the provision of services of general economic interest art. 106.2. This is very relevant bc these are exceptions to the general rule which are not described in 101. For example, a big American corporation in early 90s altered its accountability and it was reflecting to the market an image completely fault. The reason that lead to this situation was the fact that accounts and lawyers were working in no-logical obligations; accounts have a jury in front of authorities in order to establish exactly the economic activity that they are providing but that’s not what lawyers do, the duty of lawyers is bf their clients. And therefore, sort of conflict arises btw the professions. Case 309/99 from Netherlands about bar association in ND: a certain bar did not admit the possibility of providing services in the same corporation by lawyers and accounts due to the conflict of interests of these 2 professions. When they established this policy, someone said that this is a decision made by an association that restricts trade btw MS bc of the denial of participating in the corporation. The answer from the court was in parag. 105-107 & 109: The aim of the 1993 Regulation is therefore to ensure that, in the Member State concerned, the rules of professional conduct for members of the Bar are complied with, having regard to the prevailing perceptions of the profession in that State. The Bar of the Netherlands was entitled to consider that members of the Bar might no longer be in a position to advise and represent their clients independently and in the observance of strict professional secrecy if they belonged to an organisation which is also responsible for producing an account of the financial results of the transactions in respect of which their services were called upon and for certifying those accounts. The bar association said that lawyers must be independent and free to advice their clients and if they are working together they don’t have this free and will entitle a conflict of interests. Moreover, the concurrent pursuit of the activities of statutory auditor and of adviser, in particular legal adviser, also raises questions within the accountancy profession itself (…) A regulation such as the 1993 Regulation could therefore reasonably be considered to be necessary in order to ensure the proper practice of the legal profession, as it is organised in the Member State concerned. In light of those considerations, it does not appear that the effects restrictive of competition such as those resulting for members of the Bar practising in the Netherlands from a regulation such as the 1993 Regulation go beyond what is necessary in order to ensure the proper practice of the legal profession Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 This exception is not one described in 101. From a defense of competition we could say that we must permit the lawyers and accountants all together to provide services and permit competition, but according to the court we should not mix bc they are diff. CARTELS: There are 4 conditions to recognise it: 1) The major suppliers of the product will participate 2) They agree on how to coordinate their behaviour 3) There is a mechanism to detect and punish cartel members who cheat by cutting prices below the cartel price: like a mafia 4) There are high entry barriers to prevent competitors entrance into the market: the cartel ensures high levels of profitability bc there won’t be new competitors This is a kind of monopoly and usually, some of the mechanisms put in place by the EC and national authorities to fight against cartels are “leniency programmes”: if one of the members betray the cartel, they will benefit that traitor. If you confess, and you disclose the practitioners and identity of those you are acting, no punishment for you. THE GENERAL COURT, DIFFERENT FROM ECJ, OF FIRST INSTANCE EC APPLIES A DIF APPROACH ON HOW 101 SHOULD BE INTERPRETED Case 49/92 where certain general principles are described in parag. 117: According to that case-law, although that requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors, it does however strictly preclude any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market Even if you are sharing your own behaviour (my strategy in the market would be X), and in that sense, you are going gain certain control in the market and illegal. In that situation, there is no even any sort of cooperation btw market agents but the pure behaviour of the agents in which one of them is unfolding its future behaviour and the other one receiving it. “OBJECT AND EFFECTS” The object itself regardless of the effect that the agreement, concerted practiced or decision will suffice to sanction according to 101, even no producing no effect at all. The EC does not need to prove anticompetitive effects. As a precedence, we have ECJ Case 8/08: T-Mobile 28 As regards the distinction to be drawn between concerted practices having an anti- competitive object and those with anti-competitive effects, it must be borne in mind that an anti- competitive object and anti-competitive effects constitute not cumulative but alternative conditions in determining whether a practice falls within the prohibition in Article 101 EC. It has been settled case-law that the alternative nature of that requirement, indicated by the conjunction ‘or’, means that it is necessary, first, to consider the precise purpose of the concerted practice, in the economic context in which it is to be pursued. Where, however, an analysis of the terms of the concerted practice does not reveal the effect on competition to be sufficiently deleterious, its consequences should then be considered and, for it to be caught by the prohibition, it is necessary to find that those factors are present which establish that competition has in fact been prevented or restricted or distorted to an appreciable extent. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 29 Moreover, in deciding whether a concerted practice is prohibited by Article 101 EC, there is no need to take account of its actual effects once it is apparent that its object is to prevent, restrict or distort competition within the common market. The distinction between ‘infringements by object’ and ‘infringements by effect’ arises from the fact that certain forms of collusion between undertakings can be regarded, by their very nature, as being injurious to the proper functioning of normal competition. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. SECONDLY, ART. 102 The main difference with 101 is that we don’t need the existence of agreements, decisions or concerted practices to trigger the prohibition established in 102. In 101, is always linked to these type of agreements, there was a coordination, but we don’t need this cooperation btw undertakings in order to apply 102. What we are analysing now is the abuse of dominant position of a single undertaking. So due to the sole power of this undertaking, this corporation is altering the normal functioning. Whereas in 101 we need to demonstrate this link and coordination, however we don’t need it for application of 102 in courts. The rationale is that the efficiency of the market, the possibility of establishing a health relationship btw offer and demand, can be altered when the cooperation is so powerful that this undertaking does not feel the pressure of the market and consequently, does not feel the need to adjust prices to produce goods, bc the market exerts no pressure over this undertaking. It states: Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States Such abuse may, in particular, consist in: (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. The constitutive elements that we need to prove in court in order to trigger the application of 102: the existence of a dominant position in the market; secondly, the abuse of this dominant position; thirdly, the likelihood of an impact in the market However, we will need to fill these abstract categories with economic elements, otherwise we cannot apply with precision 102. The notion of dominance There are 2 relevant elements to check whether or not there is a dominant position: The market shares, the control that the undertaking is capable to exert over the market; and, Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 There is a jurisprudential presumption whereby if the kind of control over the market about proximately 50% of that market, that automatically triggers a iuris tantum presumption (rebuttable, possible to prove the inexistence) that there is a dominance in the market. There is an initial judgement by Luxembourg Hofmann-La Roche C-85/76, that estblises the formula with which that one can say that an undertaking is dominating the market, that it when it can act freely. Reservados todos los derechos. No se permite la explotación económica ni la transformación de esta obra. Queda permitida la impresión en su totalidad. secondly, addition of factors that will depend on the economic behaviour of the undertaking under analysis. If the entry to the market is or not it is, even if a certain corporation control 90% and consequently decide to rise extremely the prices, if other competitors can enter easily in the same market and offer reasonable prices, then there is no dominance. Abuse of this dominant position Without abuse, you cannot trigger 102. For example, certain well now corporation like Google there are clearly dominant in the market, but unless they abuse that position there is no illegal behaviour. In order to determine whether or not it is dominant, we don’t need a monopolistic position in the market, remembering that normally a 50% of the market makes us think about dominance. This notion is controversial and we don’t have a clearly definition. We usually differentiate 2 kinds of abuses: Exploitative abuse Situations in which a certain company, due to its dominance, decides to apply excessive prices to its customers. Imagine, the law firm Garrigues is the only one in the country and the type of control they can exert is extraordinary, and to the provision of services they rise prices. The problem is how can we stablish that prices are excessive, that is the reason why the EC is not very concerted of this type of abuse because it is not easy to establish where is the line btw normal and excessive prices. However, if we establish a price we will need to consider every price beyond the marginal cost of production as excessive, and lots of company will fall within 102, so that is why ECJ has create a precedent United Brands Case 27/76 When the difference with the marginal cost of production is absolutely disproportional that could represent an exploitative abuse. However, the EC is not very concerned with them because it is not easy to assess (not too much procedures) Exclusionary abuse Conducts whereby the undertaking is trying to impede that other competitors enter into the same market E.g.: we have to 2 supermarkets receiving products from different suppliers, and one of them is trying to prevent the other super to prosper. In order to do that, the first one is stablishing really hard conditions to the suppliers if they supply to the second one. III. INTERNATIONAL UNFAIR COMPETITION (“competencia desleal”) 1. Directive on Unfair Competition Practices. This is a field that for a long time has been harmonised from an international legal basis, but most relevant source of public international law with this matter is the Convention of Paris made in 20 May 1883 (art. 10 bis). According to this article: Nacida para sacar matrículas, experta en tener que matricularme tres veces de lo mismo - coches.net a64b0469ff35958ef4ab887a898bd50bdfbbe91a-2840469 (1) The countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition. (2) Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition. (3) The following in particular shall be prohibited: 1. all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor; 2. false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor; 3. indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods. (2) E.g.: a company devoted to the distribution of food in EU working in the law firm & one of the advertisement campaigns wanted to say, “We have the best apples in the world”. And they asked the firm whether this statement could represent a legal problem At least within the EU, customers receive protection and the burdes of proof is in the one who speaks. Probably no one would be capable saying that they bought the apples because they truly believed they were the bests in the world, the logic is that given the fact we’re dealing with customers and they have specia