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Competition law Why competition law? Articles 81; restrictive practices- treaty outlawing restrictive practices. If you have two undertaklings or decisions by associations; agreements by members OR concerted practices (courses of conduct)

How far can this be a breach of pracrice in the absence of a specific or written agreement- how can you read intention into that?

These having object or effect of prevention, restriction or distottion of competition within the common market The community dimension- if able to foresee with sufficient degree of

probability on the basis of a set of objective factors of law aor fact that the agreement may have in influence, direc or indirect, actual or potential on trade between MS- note link to dassonville through link to common
market. There are explanatory notices; where circumstances not having appreciable impact on competition or interstate trade.. wont institute proceeding or fine assume in good faith. See slide 6 week 10. Agregate market share no more than: 10% if actual.. etc etc see slide 7

Object or effect? Can we balance/ have a rule of reason? What is prohibited conduct? Direct or indirect fixing of prices or other conditions. If you have an agreement that prices are going to be fixed; a constraint to competition because you cant compete with lower prices Agreements to limit or control production, markets, technical development or investment TO share markets or supply to those market To apply dissimilar conditions to similar transactions, creating a competitive disadvantage Supplementary obligastions in contracts Can be horizontal or vertical; vertical agreements are more contentious.

Basically- horizontal usually less likely to have effect than vertical Does not need to be a formal agreement Concerted practices; basically companies know about these laws; theyre not going to spell it out in order to get caught. o However how do we know whether this is a reactionary price reduction, or with an external/internal basis. ICI v Commission; knowingly substituting practical co-operation between the parties for the risks of competition, without being an agreement as such. o Court accepted that there was a complex set of facts involving simultaneous price increases some made in advance. The court accepts that viewed as a whole these reveal progressive co-operation between parties, conduct not spontaneous, advance announcements eliminating large part of risk involved in indipendent change oc condiuct o The elimination of the rick of unilateral conduct. Listen again- quite confused? Consequences of breaches of art 81(2) and (3) Consequences; agreement void 81(2) Exception if certain conditions fulfilled and (courage v crehan) Beer tie agreement publican being sued for failure to pay, he counterclaimed with allegation of loss and damage due to anticompetitive terms in the beer tie agreement- obligations imposed on him to buy beer. He was suffering loss and damage, hence counterclaim HOWEVER; he was party to this agreement!! You cant rely on your own wrong, surely? How does the principle of competition apply here? HELD: it would impair effectiveness of competition law if claim for damages was available in principle. The fact that he was party to an agreement should in itself be an insuperable barrieris permissible to have a national rule that would bar you from damages where party bears significant responsibility for distortion of competition. o Where one party was significantly more dominant and therefore imposes anticompetitive terms etc

Manfredi case;

Green paper 2005 and follow up white paper in 2008. Commission taking forward, trying to rationalise; Trying to strengthen enforcement and make it easier for those who have suffered to recover their losses

Article 81(3) ..and article 81(1) listen. May be decl;ared inapploicable to agreement or category of agreements- block exceptions and excemption for individual agreements excepitions? o Must: contribute to improving production or distribution or promoting technical or economic progress while allowing consumers a fair share of the resulting benefit. NOTE: Not impose restrictions that are nto indispensible to achieving benefit- not too much Not afford iopportunity to eliminate competiion in substantial parts of products in question PREVIOUS ISSUES: NOTIFICATINO AND EXCEPTION BY THE COMMISSION ONLY althoughthe prohibition hard direct effect, applied by national courts, the exceptions could not!!! o Therefore long complex procedure for indicudual exempt Complex and long procedure for individual exemption Comfort letters gave some measure of legal certainty Block exemptions were used more widely- ok if your business falls into the scope, but difficult and anticompetitive itself if you want something different. Listen and note slides 19 20. Didnt listen here. Courts now competent to judge not only prohibition, but also on exemption in 81(3) ENFORCEMENT- THE protection of rights of companies have been enshrined in XXXXX. This is one of the most significant issues which have occurred. Whilstleblower leniency schemes. ARGH FORGOT TO RECORD UP TO NOW> ARGH. continued use of dawn raids. Regulation in 2008 on leniency procedure to encourage disclosure of information reliance on whistle blowers etc Article 82- abuse of market through your share

any abuse by one of more undertakings of a dominant position within the marketel.. slide 22 o o o Direct or indirectly imposing unfair purchase or selling prices or other unfair trading conditions limiting procuction to keep prices high, markets or technical development to the prejudica of consuimers applying dissimilar conditions to different equivalent transactions or impose additional obligations thereby placing a competitive disiadvantage. o making conclusion of contracts subject to suplementnary unconnected obligations.

United brands Fruit. Are bananas part of the same market as other fruit. Elasticicy of demand- is one product substituted for others? listen again What about a dominant position? A position of strenth which enables the

undertaking which enables it to preventy effective competition being maintained on the relevant market by giving it the power to behave to an appreciable contentlalala see slide 27.
Dominance: are there any other factors present which reinforce your position dominance? UBrans; 40%-45% was dominant, however in LA ROCHE- was not dominant with a 43% share other case- AKZO; 50% very large share was domainant. are there other factors though? o Barriers to entry..discussed in hoffman la roche economies of scale, superior technology etc- if this makes market penetration more difficult for others, more protection for your company- easier to show. o CAN THER EBE JOINT DOMINANCE? YES- conglomoratinos acting together, certainly if same part of economic unit of corporate group. o moving beyond- collective dominance more dominated. IF not structurally part of the same unit, but indipendent firms acting together. IN some cases the court have accepted that ollygolistic measures could be ? Having a dominant position is not unlawful. Abuse of that position is.

once in dominant position, an oblifgation ensuses not to abuse that position. o 1) exclusionary; excluding competitors- trying to shut them out of the parket. Predatory pricing to protect position or cutting out of market place by other measues o 2) making excessive profits or otherwise harming consumers through sale and profitability how can you tell the difference between just good business and then competitive isuses? LOTS of case law.

Microsoft care abuse of dominant position bundling together media player software in the operating system. defences?

ENFORCEMENT_ LISTEN AGAIN> NOT ON IT.

Mergers between companies can create or reinforce a dominant position Ther are certain indications- process is 2 stage in order to comply 1) preliminary decision which would clear the merger quickly 2) More detailed scrutiny.

there are processes between inveistigation going between national comietition authorities and the commission. Up and down. test: is it likely signidicantly to pimpede effective competition in parciualr to creating dominant position- test is found in art 2 of the regulation., commission distinguishes between cooprinated and noncoordinated practices defences; o o o o even if going to create merger which could impede competition benefit likely to outweigh harms benefit to consumers? failing firm? If about to exit market or collapse, no less anti-competitive alternative, merger more likely to be accepted large turnovers and lots of MS; sometimes approvedPfizer/Pharmicia- Peheney/Alcan- these created the largest in theirs ectors, however rejected nestle etc slide 46

Financial aid to undertakings from the state can distort competition. Subsidising can distort a freely competitive market between the MSs. commission can investigate under art 87. not always an easy relationships with governments- 900million euros have had to be paid back by EDF energy. current economic crisis- commission has its work cut out. Propping up support by governments- protectionist measures and help form governments. commission have created a crisis team temporary framework for tackling effects of crisis guidelines for treatment of impaired assets in banking sector and application of state aid rules in financial sector aid to automotive industries recognised. o o trying to distinguish between those failing companies absolutely, and those who just need a little help commission playing a big role in monitoring state aid. Should be properly authorised and approved to continue competition in Europe. liberalisation. slide 51- listen.

3/11/2009 4:11:00 AM

3/11/2009 4:11:00 AM