Competition Law - Elective - Complete Notes - Distinction achieved. B&W for printer savings and own highlighting/colour-coding. Added level of detail on each module including case law for extra marks. All in order of course as covered.
MARKET = RPM + RGM. As defined in Commission Notice on the definition of relevant market for the purposes of
COMP: MARKET DEFINITION Community competition law “Market Definition Notice” (EU) and OFT403 (UK). Remember: the wider the market is defined,
the lower the market share figures of the undertaking will be.
1. RELEVANT PRODUCT MARKET [RPM] 2. RELEVANT GEOGRAPHICAL MARKET [RGM]
• Those products and/or services which are regarded as interchangeable or • Areas in which the undertakings are involved in supply goods/services
substitutable by the consumer. • In which conditions of competition are sufficiently homogenous.
• By reason of products’ characteristics, price and intended use (Market Definition • Can be local, regional, national, EU/EEA-wide, worldwide or even a
Notice [“MDN”]& Continental Can) common language area.
• For discussion on separate markets for related products see Hilti summary. (A) STARTING POINT: WHOLE OF EEA THEN NARROW DOWN
(Hilti)
(A) DEMAND SUBSTITUTION • Approach = initially look at variations in market shares and pricing
• MDN makes it clear that this is the most immediate and effective force on between different geographic areas to form a preliminary view test that
suppliers of a given product and therefore should be given the most consideration initial assessment by examining more closely any national tendencies or
i.e. greater weight is given. (para 13 and para 14) customer is key! preferences, current purchasing patterns by customers, product brands and
• Range of products that are viewed as substitutes by the consumer. other relevant factors = DEMAND SUBSTITUTION
o IOW: the extent to which customers will switch to other sources of
supply. (B) SUFFICIENTLY SIMILAR: DIFFERENT BUT NOT
• Determined by SSNIP test – Small but Significant Not-transitory Increase in Price DISCRIMINATORY
(para 17 in MDN) • Conditions of sale are sufficiently equivalent.
o Whether parties customers would switch to readily available substitutes if • Need to look for obstacles/barriers isolating a given area from competition
5%-10% increase. Hypothetical tested during investigations. outside that area.
• Example = Tetra Pak II: carton only for UHT milk products as over long period of • Ensures that those companies located in differing areas do not face
time there was only marginal substitution between carton and non-carton products. impediments in developing their sales on competitive terms throughout the
whole geographic market.
o E.g. requirements for a local presence in order to sell in that area
(B) SUPPLY SUBSTITUTION the conditions of access to distribution channels, costs associated
• Suppliers are able to switch production in the short term without incurring with setting up a distribution network, and the presence or absence
significant additional costs or risks (para 20 in MDN) of regulatory barriers arising from public procurement, price
o IOW: the extent to which other suppliers can change their production to regulations, quotas and tariffs limiting trade or production,
enter the market on which the firm operates; can they join the market technical standards, monopolies, freedom of establishment,
quickly from ancillary markets? requirements for administrative authorizations, packaging
• In response to 5%-10% increase in price ie again determined by SSNIP test regulations, etc.
• Possible where companies market a wide range of qualities or grades of one • The Commission will take into account the process of market
product e.g. paper. integration.
NOTE that RPM can be very narrow (e.g. Kassaregister: extended to spare parts as a
separate product market as they were designed as such to be the only spare part
available for these cash registers).
1
, COMPETITION – HORIZONTAL AGREEMENTS
ANALYTICAL FRAMEWORK FOR ART 101 // CHAPTER I
Horizontal relationship (i.e. firms at the same level of the supply or
production chain).
Cartel, the most abusive form = an ‘agreement’ between competing firms to
control prices or exclude entry of a new competitor into a market.
1. State the law
which applies Therefore:
Art 101
Chapter I
Chapter I largely follows Art 101 and therefore will flag differences as they
arise during the analysis.
Need for them to be SEPARATE economic entities companies within the
same group do not count, nor do pure agency agreements (i.e. he agent is not
taking on its own risk). Note that liability passes to successor firms:
Compagnie Royale and agreements made within trade associations also
count.
Paragraph 21 of the Höfner and Elser judgment states that every entity
engaged in economic activity does so as an undertaking.
2. Two or more o Economic activity = “any activity consisting in offering goods or
undertakings services on a given market “(Pavolov)
o Definition of economic activity is wide – provision of goods and
services even extended to the Spanish Post Office in Spanish Courier
Services.
State the parties in the question. Who are they and what do they do in order
to satisfy “all legal or natural persons carrying on economic or commercial
activities”
Term ‘agreement’ is interpreted widely and covers all types of commercial
arrangements whether in writing or agreed verbally; including ‘gentleman’s
agreements’(Chemiepharma); “concurrence of wills” in Bayer v
Commission.
A decision need not be legally binding to be caught (IAZ International
Belgium NV)
Concerted practice from Dyestuffs: a form of coordination which “knowingly
3. Agreement or substitutes practical cooperation… for the risks of competition.”
Concerted a concerted practice can arise from the exchange of information at a single
Practice meeting (Hüls)
Difficulty arises in establishing evidence and intent. Especially when the
case involves an oligopoly; whereby parallel behaviour is more likely to be a
natural and unavoidable consequence of the market instead of evidence of
collusion (Woodpulp). Look to the transparency of the market.
State what the parties are doing, what is the evidence that an agreement or
concerted practice – no matter how informal – is in place.
1
, Wherever there is a potential influences on the pattern of trade; another low
threshold.
STM: “actual, potential, direct or indirect influence on the patterns of trade
between MS” Must be possible to foresee with a sufficient degree of
probability on the basis of a set of objective factors of law or fact.
In Commercial Solvents v Commission the ECJ held that there would be an
effect on trade where the conduct brought about an alteration in the structure
of competition in the common market.
Furthermore, worth flagging that just because behaviour only relates to
behaviour in one MS, this could still impact trade between MS as this could
tie the market up e.g. French company unable to break into the German
market because it’s already divvied up between 3 companies.
State what the parties are doing which is against usual market ebb and flow:
4. Which may affect think price, consumer choice, innovation.
trade
NAAT as a guideline on jurisdiction:
in the EU or
As discussed in the Effect on Trade Guidelines, the Commission would be
the UK?
likely to determine agreements as Not Appreciably Affecting Trade if:
o COMBINED market share does not exceed 5%; and
o Horizontal: COMBINED market turnover does not exceed EUR
40m.
Therefore raises a presumption that it would be NCAs in MS…
Where effect felt within UK and other MS then CMA applies Art 101 and
Ch I.
Where effect felt only in UK then CMA can only apply Ch I.
Where are the parties based? Where is the market based? Where are the
customers? Anything cross-border? Possibility to conduct RPM and RGM
analysis here or wait for NAOMI.
If an agreement has as its object the prevention, restriction or distortion of
competition, it will be caught without the need to prove its effects on the
market: (Expedia). They do not even need to be shown that they are in the
commercial interests of the parties (although they generally are): Sumimoto
and Nippon Steel Corp. This is because they are deemed so injurious to
competition by their very nature.
They are said to lead to negative effects on the market, in terms of falling
production and price increases, resulting in poor allocation of resources to
the detriment, in particular, of consumers who pay higher prices (as
explained by the ECJ in Cartes Bancaires)
5. Has as its object
Restrictions on object include:
or effect
o Fixing prices (Art101(1)(a)) e.g. Dutch Beer Cartel Cases) can
include exchanging price information (T-Mobile, Forex) and
confirmed in Commission’s Guidelines on Horizontal Cooperation
Agreements. Types of price-fixing agreements listed in 5.2.3.1 in TB.
o Limiting output or sales (Art101(1)(b)) such as quotas (White Lead
Cases)
o Market sharing (Art101(1)(c) = carving up geographical (Power
Transformers; agreeing to share Japanese and European markets)
locations and/or customer bases. Commonly seen on airline routes e.g.
SAS-Maersk.
2
, o Applying dissimilar conditions to equivalent transactions with other
trading parties, thereby placing them at a competitive disadvantage.
o Making the conclusion of contracts subject to acceptance by other
parties of supplementary obligations which, by their very nature or
according to commercial usage, have no connection with the subject
matter of such contracts.
Commission Guidance:
o Bid-rigging/collusive tendering (Pre-Insulated Pipes)
o Others as list in not all-inclusive.
Where it is not possible to say that the object of an agreement is to restrict
competition, it is necessary to assess its effect on actual and potential
competition before it can be found to infringe Art 101(1).
MasterCard v Commission: agreement must be liable to have an
appreciable adverse impact on the parameters of competition, such as the
price, the quantity and quality of the goods or services
Negatively defined in Volk v Vervaecke: an agreement only falls outside
the prohibition where it only has an insignificant effect on the market.
Apply to facts. What on the facts means that there is a prevention, restriction
or distort competition.
6. The prevention,
restriction or
Think: Does it eliminate price competition or keep the price artificially high?
distortion of
Does it restrict consumer choice? Does it reduce the number of products
trade in EU or
available in a particular area or to a particular set of customers? Is it creating a
UK
situation where the parties are protected from usual competitive effects of the
market?
7. Where no
exclusion or
exemption
applies/Techniques
of Avoidance
NAOMI
De Minimis Notice introduces NAOMI as a safe harbour:
o Horizontal agreements which on aggregate (aka COMBINED) = do
not exceed 10%.
o Note that NAOMI does not apply to ‘hardcore’ or object restrictions.
o Use as gateway for discussing exclusion or exemptions…
Market share analysis may therefore be required here
Individual Exemptions
Article 101(3) Exemption/S9 CA 1998
Two positive and two negative tests:
+ Agreement must contribute to an improvement in the production or
distribution of goods or the promotion of technical or economic progress.
3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller racheld06. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $23.30. You're not tied to anything after your purchase.