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Summary Agreement problem question maps
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Agreements problem question map:Text of key legislation:
Article 101(1) TFEU (1st Step) Article 101 (3) TFEU (2nd Step)
The following shall be prohibited as incompatible with the common market: all agreements The provisions of paragraph 1 may, however, be declared inapplicable in
between undertakings, decisions by associations of undertakings and concerted practices the cases of:
which may affect trade between Member States and which have as their object or effect the • any agreement or category of agreements between
prevention, restriction or distortion of competition within the common market, and in undertakings;
particular those which: • any decision or category of decisions by associations of
undertakings;
(a) directly or indirectly fix purchase or selling prices or any other trading conditions; • any concerted practice or category of concerted practices,
(b) limit or control production, markets, technical development, or investment; which contributes to improving the production or distribution of goods
or to promoting technical or economic progress, while allowing
(c) share markets or sources of supply; consumers a fair share of the resulting benefit, and which does not:
(d) apply dissimilar conditions to equivalent transactions with other trading parties, (a) impose on the undertakings concerned restrictions which are
thereby placing them at a competitive disadvantage; not indispensable to the attainment of these objectives;
(e) make the conclusion of contracts subject to acceptance by the other parties of (b) afford such undertakings the possibility of eliminating
supplementary obligations which, by their nature or according to commercial usage, competition in respect of a substantial part of the products in
have no connection with the subject of such contracts. question.
Equivalents to this:
• UK – Chapter I of the Competition Act
• US – Section 1 of the Sherman Act
Question 1 – Are there one or several entities engaged in economic activity?
Question 1 – Are there one or several entities engaged in economic activity?
Remember that provisions on agreements only apply where there are two or more independent entities engaged in an economic activity à
Key issues to bear in mind:
1 - A group of companies under common control (e.g. a parent and its subsidiary) is a single economic unit (‘undertaking’, in EU parlance).
• Intra group transactions (that is, transactions between companies under common control) are not caught by the provisions on agreements
• A group of companies under common control is a single undertaking (that is, a single undertaking) for competition law purposes
• Whether or not firms within the same group have a distinct legal personality does not matter; the fact that they are under common control matters
• An agreement concluded by a private entity and a subsidiary is a single undertaking
,Case C-73/95 Viho Europe v Commission
o ‘51. It follows that, where there is no agreement between economically independent entities, relations within an economic unit cannot amount to an agreement
or concerted practice between undertakings which restricts competition within the meaning of Article [101(1)] of the Treaty. Where, as in this case, the
subsidiary, although having a separate legal personality, does not freely determine its conduct on the market but carries out the instructions given to it
directly or indirectly by the parent company by which it is wholly controlled, Article [101(1)] does not apply to the relationship between the subsidiary and the
parent company with which it forms an economic unit’.
o This is the relevant case to support the idea that if a subsidiary is controlled by a parent company then a single undertaking is formed
o The subsidiary, although having a separate legal personality, did not freely determine its conduct, carried out instructions given directly/indirectly
AKZO v Commission
o One of the issues was whether the Commission could address a decision to a parent company that it was liable for infringing Art 101 where it was a subsidiary
company that was actually involved in cartel
o Parent is in a position to exercise decisive influence over the subsidiary
o Commission may regard the parent as jointly and severally liable
A second consequence is that cooperation between a principal and its agent is not caught by the provisions on agreements
o This is so insofar as, for the purposes of the contractual arrangement between a principal and an agent, the latter acts on behalf of the former
o The fundamental question is whether the agent bears any of the risks that the transaction entails
o If the agent bears no risks, its relationship with the principal is not caught by the provisions on agreements
2 - An employee is not an ‘undertaking’ (she would not be an independent entity engaged in an economic activity).
• Employees are not undertakings within the meaning of Article 101 TFEU (or at least not in their capacity as employees of a firm).
• Albany - the ECJ considered that trade unions’ activities are not subject to scrutiny under Article 101 TFEU insofar as they relate to the improvement of
conditions of employment and at work.
3 - A genuine agent is not an undertaking (a genuine agent is one that does not bear the commercial risks involved in the activity).
• Agreements between a principal and an agent are excluded from the prohibition
• These agreements include, for instance, those concluded between newspaper publishers and newsagents, whereby the latter get a commission on the sales of
each paper.
• Such an agreement is considered to be analogous to the relationship between a parent company and its subsidiary. Put differently, it is seen as a form of vertical
integration.
• The crucial question, in this regard, is whether the agent bears any risk involved in the sale of the products (for instance, the risk that the newspapers are not
sold). If the risk is born by the principal, then the relationship is not subject to Article 101 TFEU.
4 - The hard-core of State activities are not economic in nature (including activities driven by solidarity concerns, such as public healthcare and public pensions).
• Activities that form the core of the public powers of a State are not subject to competition rules
• For instance, where the State entities acquire medical equipment, they are not deemed to act as undertakings within the meaning of Article 101 TFEU, according
to the FENIN judgment (Case T-319/99, FENIN v Commission EU:T:2003:50).
+ Form of entity does not matter, it is the exercise of the economic activity that matters
• An undertaking is an entity engaged in economic activity - the form doesn’t matter, all that matters is that if in effect they are engaged in economic activity
, • E.g. an independent lawyer will be an undertaking in UK and EU competition law
Other info:
Wouters C-309/99: Hofner and Elser C-41/90: Pavlov C-180/98:
Facts: Facts: It has also been
• The Dutch court referred the case to CJEU to ask, among other things, whether a regulation concerning • Q - Whether a consistently held that
partnerships between members of the Bar and other professionals is to be regarded as a decision monopoly of any activity consisting
taken by an association of undertakings within the meaning of Article 101(1) TFEU employment in offering goods or
procurement services on a given
Held: granted to a public market is an economic
• Concept of an undertaking covers any entity engaged in economic activity, regardless of its legal status employment agency activity.
and the way in which it is financed constituted an abuse
• Any activity consisting of offering goods and services on a given market is an economic activity of dominant position No need to prove profit
• Members of the Bar offer, for a fee, a service in the form of legal assistance and bear the financial risks within the meaning motive or economic
attached to the performance of those activities of Article 102 TFEU. purpose
• = economic entity
• But DOES NOT apply to activity which, by its nature, its aim and the rules to which it is subject does not Held:
belong to the sphere of economic activity …or which is connected the exercise of the powers of a public • Concept of
authority undertaking
encompasses every
Associations of undertakings (Wouters) entity engaged in an
- Undertakings of the same general type and it make itself responsible for representing and defending economic activity,
their common interest vis a vis other economic operator, govt bodies and the public in general regardless of the
- Examples include agricultural cooperatives, trade associations, professional bodies representing legal status and the
lawyers, doctors etc… entity of the way in
- Thus, ‘CJ made it clear that members of the Bar which offered, for a fee, services in the form of legal which it is financed
assistance carried out an economic activity and so were undertakings for the purposes of the rules. (para.21)
Neither the complex and technical nature of the services provided nor the fact that the profession was
regulated altered this conclusion.’ (textbook)
- ‘It was acting as the regulatory body of a profession, the practice of which constitutes an economic
activity. It thus concluded that the Bar of the Netherlands must be regarded as an association of
undertakings within the meaning of Article 101(1) when adopting a regulation such as one which
prohibited certain multidisciplinary partnerships. ‘Such a regulation constitutes the expression of the
intention of the delegates of the members of a profession that they should act in a particular manner in
carrying on their economic activity.’ (Textbook)
In Laurent Piau,195 for example, the GC held that although a sporting association constituted an association of
undertakings it also constituted an undertaking insofar as it engaged in economic activity in a market itself
, Even where the entity is a non-profit, if the members engage in economic activity it is an economic entity.
Do their decisions have economic implications? Then yes.
Question 2 – Is there explicit coordination between 2 or more undertakings?
Question 2 – Is there explicit coordination between 2 or more undertakings?
The fundamental question is whether, irrespective of the form, there is explicit coordination between two or more undertakings (for instance in the form of an
agreement or concerted practice within the meaning of Article 101(1) TFEU.
Note that tacit collusion does not amount to explicit coordination and is therefore not caught by the provisions on agreements (whether in the EU-UK or the US
system).
The EU courts favour a pragmatic approach to the definition of when inter-firm coordination exists – the question is whether firms are given the means to explicitly
coordinate their conduct
• What matters is that there is a concurrence of wills (meeting of minds) between the undertakings - this is the relevant consideration
• If an agreement comes with standard terms and conditions that will be an agreement for the purposes of competition
• We want to identify situations when the concurrence of wills - what the parties have agreed upon is uncontroversial and easy to establish e.g. formal agreement
Bayer v Commission:
• General Court stated that the concept of agreement “centres around the existence of a concurrence of wills between at least two parties, the form in which it is
manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention.”
• A ‘single and continuous infringement’ (below)
• An agreement may be oral C-28/77
• Constitution of a trade association might be construed as an agreement on the part of its members
Factors that do not affect the existence of an agreement:
Undertaking forced into an agreement The agreement was never implemented Formal agreement has not been reached on all
matters
Agreement found to exist in the following scenarios:
• Contract stricto sensu
• Gentlemen’s agreements or mere ‘understandings’
• ‘Guidelines’ issued by a manufacturer
• Standard terms and conditions in a contract
‘…concerted practices…’
• Captures loose forms of cooperation
• ICI V Commission C-48/69‘à A form of coordination between undertakings which, without having reached the stage where an agreement properly so-called
has been concluded, knowingly substitutes practical cooperation between them for the risks of competition’
• The case law makes it clear that the so-called ‘gentlemen’s agreements’ or standard contractual conditions are deemed sufficient to trigger the application of
the prohibition. Whether or not such understandings are binding within the meaning of contract law is irrelevant for the purposes of the application of
competition law. The fundamental question, in this regard, is whether there is a concurrence of wills between two or more undertakings. The notion of
agreement is typically used to identify the instances in which the existence of a concurrence of wills is not questioned.
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