Article 101 of the Treaty on the Functioning of the European Union

Article 101 of the Treaty on the Functioning of the European Union prohibits cartels and other agreements that could disrupt free competition in the European Economic Area's internal market . Article 101 reads,[1]

1. The following shall be prohibited as incompatible with the internal 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 internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) 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.

2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.

3. 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.

Businesses ("undertakings") infringing the provisions of Article 101 are liable to unlimited fines by the European Commission, but the EU has no capability to impose prison sentences. Member States should not intervene here, as the Commission and the ECJ have the sole authority over EU competition law. However, Member States usually have their own domestic competition law which they may enforce, provided it is not contrary to EU law. [2] The role of the Commission is the area is quasi-judicial and subject to appeal to the ECJ.

Aims and objectives

Conventional wisdom declares that the aim of domestic competition law (such as that of the UK) is to provide a remedy to litigants whose interests are damaged by the anti-competitive behaviour of others, whereas the EU takes a broader view and has the goal of maintaining transparent markets and a "level playing field".[3] [4] Thus, the main objectives of the EU competition law are to maintain openness and to unify the internal market; to ensure economic efficiency in the marketplace; to ensure the conditions of effective competition and competitiveness; and to protect consumers.[5]

However, some argue that the goals of Article 101 TFEU (ex Article 81 EC) are unclear. There are two main schools of thought: the predominant view is that only consumer welfare considerations are relevant there.[6] An alternative view is that other Member State and European Union public policy goals (such as public health and the environment) should also be considered there.[7][8]

Undertakings

Article 101 TFEU does not specifically ban cartels, instead declaring as illegal all "agreements, decisions and concerted practices" which are anti-competitive and which distort the single market. The term "undertaking" is a Eurospeak word for any person(s) or firms in an enterprise, and is used to describe those "engaged in an economic activity".[9] The term excludes (i) employees, who are by their "very nature the opposite of the independent exercise of an economic or commercial activity",[10] and (ii) public services based on "solidarity" for a "social purpose".[11]

Collusion

See also: Collusion

Undertakings must then have formed an agreement, developed a "concerted practice", or, within an association, taken a decision. Like US antitrust, this just means all the same thing. According to Advocate General Reischl in Van Landewyck [1980][12] there is no need to distinguish an agreement from a concerted practice, because they are merely convenient labels. Any kind of dealing or contact, or a "meeting of the minds" between parties could potentially be counted as illegal collusion.

This includes both horizontal (e.g. between retailers) and vertical (e.g. between retailers and suppliers) agreements, effectively outlawing the operation of cartels within the EU. Article 101 has been construed very widely to include both informal agreements (gentlemen's agreements) and concerted practices where firms tend to raise or lower prices at the same time without having physically agreed to do so. However, a coincidental increase in prices will not in itself prove a concerted practice, there must also be evidence that the parties involved were aware that their behaviour may prejudice the normal operation of the competition within the common market. This latter subjective requirement of knowledge is not, in principle, necessary in respect of agreements. As far as agreements are concerned the mere anticompetitive effect is sufficient to make it illegal even if the parties were unaware of it or did not intend such effect to take place.

Trade between Member States

Article 101 covers agreements and anti-competitive practices that might affect "trade between Member States". This provision has been interpreted broadly: for example, several agreements amongst firms with no production in the EU have been considered to affect trade between Member States. In the Webb-Pomerene case, EU law was applied to a US cartel with no production in the EU.[13] The ECJ has also held that "trade between Member States" includes "trade between regions of a Member State", to prevent cartels "carving up" territories for their own benefit.[14]

Exemptions

Exemptions to Article 101 behaviour fall into three categories. First, Article 101(3) creates an exemption where the practice is beneficial to consumers, e.g., by facilitating technological advances (efficiencies), but does not restrict all competition in the area. In practice very few official exemptions were given by the Commission and a new system for dealing with them is currently under review. Secondly, the Commission has agreed to exempt 'Agreements of minor importance' (except those fixing sale prices) from Article 101. This exemption applies to small companies, together holding no more than 10% of the relevant market in the case of horizontal agreements and 15% each in the case of vertical agreements (the de minimis condition). In this situation as with Article 102 (see below), market definition is a crucial, but often highly difficult, matter to resolve. Thirdly, the Commission has also introduced a collection of block exemptions for different types of contract and in particular in the case of vertical agreements.[15] These include a list of permitted contract terms, and a list of those banned in these exemptions (the so-called hardcore restrictions).

See also

References

Notes

  1. ↑ TFEU
  2. ↑ Factortame
  3. ↑ Brasserie de Haecht 23/67 =
  4. ↑ "European Union Law: Text, Cases and Materials - John Tillotson
  5. ↑ Kaczorowska, Alina European Union Law. Milton Park, Abingdon, Oxon : Routledge, 2011. Print.
  6. ↑ See, for example, the Commission's Article 101(3) Guidelines, the CFI's recent Glaxo Case and certain academic works, such as Okeoghene Odudu, The boundaries of EC competition law: the scope of article 101. Oxford: Oxford University Press, 2006.
  7. ↑ Chris Townley, Article 101 TFEU and Public Policy, Hart Publishing, 2009.
  8. ↑ The ECJ's judgement in the Glaxo case is eagerly awaited, for example.
  9. ↑ Hoefner v Macroton GmbH [1991]
  10. ↑ per AG Jacobs, Albany International BV v Stichting Bedrijfspensioenfonds Textielindustrie [1999] ECR I-5751 (C-67/96)
  11. ↑ FENIN v. Commission [2004]
  12. ↑ Van Landewyck [1980]
  13. ↑ Cavicchioli, F.(2000):The Application of EC Competition Law to Non-European (U.S.) Corporations. Master Thesis. University of Georgia School of Law.
  14. ↑ Cementhandelaren 8/72
  15. ↑ Commission Regulation no.330/2010 of 20 April 2010
This article is issued from Wikipedia - version of the Tuesday, April 12, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.