Article 101 TFEU is one of the three pillars of EU competition law.

It prohibits
restrictive agreements between independent market operators acting either at the
same level of the economy (horizontal agreements), often as actual or potential
competitors, or at different levels (vertical agreements), mostly as producer and
distributor. It also precludes decisions by associations of undertakings and
concerted practices. These three types of coordinated market behavior fall into the
ambit of EU competition law if they may affect trade between Member States to an
appreciable extent and if they have as their object or effect the prevention,
restriction or distortion of competition within the internal market.

Undertaking

There is no legal definition of the term “undertaking” to be found in the TFEU.

Therefore, the term has
been defined by the Court of Justice in a series of judgments. The Court has opted
for a broad
interpretation focusing on the economic activity of the entity in question.
Accordingly, an undertaking is
“every entity engaged in an economic activity, regardless of the legal status of the
entity and the way in
which it is financed" (e.g. Höfner (1991)) and "a unitary organisation of personnel,
tangible and intangible
elements which pursues a specific economic aim on a long-term basis" (Shell
(1992)).

Article 101 TFEU prohibits agreements between undertakings. Since the

Treaty is silent on the exact definition of an undertaking, the term has
been clarified by case law. In Höfner2 the European Court of Justice held
that any entity engaged in an economic activity, regardless of its legal
status and the way it was financed, amounted to an undertaking. An
economic activity is one that involves the offering of goods and services
on the market3 that could be provided by a private undertaking to earn
profits.4 It is irrelevant whether the organization was set up for an economic
purpose5 or if it is non- profit seeking,6 as is the nature of its legal
personality.7 Entities that fulfil an exclusively social function based on the
principle of solidarity,8 and are entirely non- profit making,9 will not
constitute an undertaking.
2.2 Agreements
All agreements or concerted practices are caught by Article 101 TFEU.
The construction of these terms is deliberately broad. Agreements may be
oral, they do not require sanctioning mechanisms and do not need to be
legally binding. An agreement exists if there is consensus on a plan that
can limit commercial freedom.10 The precise form in which the meeting
of minds occurred is not important provided that it is an accurate expression
of the parties’ intention.11 The mere presence of an undertaking
at a meeting with an anticompetitive object is sufficient to establish its
participation in a cartel unless it has publicly distanced itself from such
conduct.12 It is for the defendant to prove that such participation was
without any anticompetitive intention by demonstrating that it had indicated
to its competitors that it took part in such meetings with a spirit that
was contrary to theirs.13
But it is not only agreements that are caught by Article 101 TFEU.
Concerted practices require a less formal agreement. Parallel conduct
may be held to constitute a concerted practice if the parties cannot otherwise
explain the parallel behaviour.14 Submitted tenders that are not the result of
individual economic calculation, but of knowledge that has been
improperly acquired and joint activity, will prevent competition or at least
distort and restrict it.15 It is therefore not surprising that the Court has
been condemning disclosure of information by competitors16 – even where
it occurs after the tender17 – as violating Article 101(1).
The Commission is under a duty to prove infringements of Article
101 TFEU with sufficient precise and consistent evidence.18 In the case
of infringement based on documentary evidence the burden of proof is
shifted to the defendant, which has to demonstrate that the evidence is
insufficient to establish an infringement, or other plausible explanation of
its conduct.19
The Commission may also (solely) rely on mutually confirmed statements
of undertakings which constitute direct evidence to establish an
infringement.20 The evidence viewed as a whole must be sufficiently
precise and consistent.21 Agreements between undertakings cannot be
rationalized on the basis of unsubstantiated economic reasoning where
such conduct would not have been followed in the absence of an
agreement.22

2.3 Object or Effect

The interpretation of the object or effect of an agreement spurs much debate.
Agreements can be anticompetitive in some aspects but pro- competitive in others.
Even though EU competition law does not adopt a “rule of
reason” as exists in US antitrust law, it still needs to arbitrate between
pro- and anticompetitive agreements. EU law first distinguishes between
an anticompetitive object and an anticompetitive effect.23
Even if the anticompetitive object is not the sole objective, the agreement
will still be held to be anticompetitive.24 If the object is anticompetitive,
there is no need to consider any anticompetitive effect.25 Agreements that
contain hardcore restrictions such as cartel agreements fixing prices, limiting
output or sales, and the allocation of markets or customers are generally
considered to have the object of restricting competition.26 Bid rigging
would thus fall within this list.
If the object of an agreement is not anticompetitive, the effect of the
agreement is then examined.27 The anticompetitive nature of an agreement
is determined by its content, its object and its economic and legal context28
– that is, the market and the context in which it operates is examined.29 An
analysis of the anticompetitive effect would therefore not be necessary in
the context of bid rigging cartels.
In Völk, however, the Court extended the statutory requirements by
demanding that the agreement had to affect trade between Member States and the
free play of competition to an appreciable extent.30 An agreement
does not fall within 101 TFEU if it has only an insignificant effect on the
market, taking into account the weak position of the parties in the market.31
The Commission has described what it understands by an appreciable
effect on competition in its de minimis notice. An agreement that falls
beyond the de minimis thresholds is deemed to have an appreciable effect
on competition and will thus be illegal, unless it falls within one of the
new block exemptions on vertical agreements32 or one of the derogations
of Article 101(3) TFEU. Since the de minimis notice is not applicable to
hard core restrictions,33 it remains unclear for small bidders to determine
if their cartel falls within the ambit of EU competition law.34 Given the
Commission’s limited resources it does, however, seem unlikely that the
Commission would be willing to take up cases where the market share
of the parties is very small.35 The Commission seems to be more likely to
accept that an agreement escapes Article 101 TFEU if it does not have an
appreciable effect on trade.36
2.4 Effect on Trade between Member States
The criterion of the effect of trade between Member States is a jurisdictional
matter and is interpreted broadly. EU law does not apply in purely
national situations.37 The 2004 Community guidelines on the effect on trade
concept contained in Articles 81 and 82 of the Treaty38 (now Articles
101 and 102 TFEU) provide the methodology and guidance to determine
if trade is affected. The guidelines require39 (a) a sufficient degree of probability
on the basis of a set of objective factors of law or fact; (b) an influence
on the pattern of trade between Member States; and (c) a direct or
indirect, actual or potential influence on the pattern of trade.
“Appreciably” is measured in turnover or on the basis of market
share.40 Agreements are not normally capable of affecting trade between
Member States to an appreciable extent if the undertakings have an
aggregate market share of less than 5 per cent and if the aggregate annual
Community turnover in the products covered by the agreement is less than
€40 million. A case by case analysis is, however, essential. Since the guidelines
apply also to hard core violations,41 the thresholds may lead to the
exclusion of small bid rigging cases from enforcement by the Commission.
The courts are not bound by the Commission thresholds and may apply
a broader interpretation of restricting trade between Member States. In
cases where the Commission is unwilling to initiate an investigation, a
private claimant may appear before a national court and initiate proceedings
on the basis of EU competition law or, in the alternative, rely on
national competition law.
2.5 Exemptions
Agreements that would be declared void under Article 101(2) TFEU
may be justified under Article 101(3) if they contribute to improving the
production or distribution of goods or to the promotion of technical or
economic progress, while allowing consumers a fair share of the resulting
benefit, provided they do not (a) impose on the undertakings concerned
restrictions which are not indispensable to the attainment of these objectives;
and (b) afford such undertakings the possibility of eliminating competition
in respect of a substantial part of the products in question.
Pursuant to the Commission guidelines on the application of Article
101(3) for an individual exemption of a bid rigging cartel, there must be efficiency
gains (in the form of lower costs, new production methods, costs
savings, economies of scale or improvements in product quality).42 A fair
share of these benefits must be passed on to consumers,43 and the anticompetitive
restrictions must be necessary and not lead to an elimination of
competition in respect of a substantial part of the products in question. It
is hard to imagine a case in which a bid rigging cartel will lead to efficiency
gains in which procuring entities will benefit. It is therefore hard to believe
that a bid rigging cartel would receive such an exemption.
Similarly, the block exemption regulations are unlikely to afford bid
rigging conspiracies a safe harbour since they generally do not apply to
hard core restrictions.44
The above can be summarized as follows. In the European Union
collusive tendering is outlawed as hard core cartels under Article 101(1)
TFEU.45 While the Court has stated that even hard core violations may not
fall within the ambit of Article 101(1) if they have an insignificant effect on
intra- community trade and/or competition,46 they cannot benefit from the
present Commission de minimis notice.47 Given that the Court has been prepared
to condemn cartels merely based on their anticompetitive object even
in the absence of any such effect,48 and has ruled that the Commission was
not obliged to demonstrate the presence of adverse effects on competition
to establish an infringement under Article 10149 in practice all bid rigging cases
that have an appreciable effect on trade should be outlawed if enforcement
agencies are willing to commit scarce resources to convict them.

U competition law aims to root out anti-competitive business behaviour that

threatens the effective
operation of the internal market, harms consumers, and reduces business
efficiency. Thus, Article 101
sets out that it prohibits, as incompatible with the common market, all agreements
between undertakings
which may affect trade between Member States and which have as their object or
effect the prevention,
restriction, or distortion of competition within the common market. The question is
whether the five
manufacturers violates Article 101 provision, subject to Article 101(3) exemptions.
For breach to be
established, all 3 elements of Article 101 must be satisfied. The first element is to
fulfill the requirement of
undertakings, and whether there are certain agreements or concerted practices
between the
manufacturers.