Into into Cartels (anti-trust law) & vertical block exemptions explained
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Course
Competition Law (319)
Institution
Lancaster University (LU)
Lecture notes covering:
- The rule of reason doctrine
- Vertical block exemptions
->Commission regulation (EU) 2022/720
- Cartels
- what is a cartel?
- examples of cartels
- how to deter cartels
- EU cartel Fines
- CMA fines
- The harm a cartel causes
- other...
- An agreement for the sale of a business could contain an objectively necessary non-
competition clause.
- Perfectly legitimate to include a non-compete on the sale of a business.
- Some restriction of competition.
- The restriction is ancillary to the pro-competitive agreement, therefore its permitted.
Delimitis v Henninger Brau (Case C-234/89)
- Agreements must be placed in the economic context.
- Guidelines are set out on the economic factors to be used in assessing the position under
Article 101(1).
Rule of reason Doctrine?
Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (Case C-309/99)
- America don’t have ancillary restraints, they just have a rule of reason.
- Argument around the Dutch bar who had a rule against multi-disciplinary partnerships –
advocates can’t work with others.
- Balancing two goals: competition and the effective supervision of the legal provision.
- The Court heard a number of questions regarding the organisation of the Dutch Bar; in
particular regarding the operation of MDPs.
“97. … For the purposes of application of [Art 101(3)] to a particular case, account must
first of all be taken of the overall context in which the decision of the association of
undertakings was taken or produces its effects. More particularly, account must be taken
of its objectives, which are here connected with the need to make rules relating to
organisation, qualifications, professional ethics, supervision and liability, in order to
ensure that the ultimate consumers of legal services and the sound administration of
justice are provided with the necessary guarantees in relation to integrity and experience.
It has then to be considered whether the consequential effects restrictive of competition
are inherent in the pursuit of those objectives.
Does this only apply to ‘non-competition’ objectives?
Vertical block exemption – Umbrella
- Exempts a whole category of agreement.
- If you fulfil the terms of the regulation, the agreement is automatically exempt. Therefore,
cant be contrary to competition rules which gives them legal certainty.
, Competition Law 319
Commission Regulation (EU) 2022/720
On the application of Article 101(3) of the TFEU, to categories of vertical agreements and concerted
practices
o Article 1: Definition of a vertical block
- An agreement where there are diff levels of the supply chain.
- As long as you’re not directly competing and you’re at a diff level of the supply hain, it’s
a vertical agreement.
o
Article 2: all vertical agreements are exempt.
o
Article 3: Unless: a party has more than 30% market share. (Market Share threshold).
- If they hold market power, they won’t be exempted.
o Article 4: restrictions
- terms that aren’t permitted and so will result in the loss of the benefit of the block
exemption e.g price fixing.
If you don’t get the benefit of the automatic block exemption it doesn’t mean you cant get the
benefit under 101(3) at all. You just have to make your case and individually justify why the
agreement doesn’t restrict/meets the 4 terms of 101(3).
UK still has the old block exemption as retained by EU law, doesn’t have the new one.
- On the application of Article 101(3) of the TFEU, to categories of vertical agreements
and concerted practices
- Article 4: ‘Hard core’ restrictions.
- Article 5: Excluded restrictions.
- Article 6: Withdrawal: where a market is highlight concentrated Guidelines on Vertical
Restraints [2022] OJ C 248/1
Cartels:
- Particular types of agreements
“Competition is War, and ‘War is Hell’” - Arthur Jerome Eddy, 1920
- Competition hasn’t always been seen as a positive thing.
- Results in agreement between competitors not to compete.
Cartels are the ‘supreme evil of antitrust’: Verizon Communications v Law Offices of Curtis V
Trinko, 2004
What is a cartel?
- It is an illegal secret agreement between competitors to fix prices, restrict supply and/or
divide up markets.
- The agreement may take a wide variety of forms but often relates to sales prices or
increases in prices, restrictions on sales or production capacities, sharing out of product or
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