Philippine Competition Act

R.A. 10667
Effectivity: Aug. 8, 2015
I. Definition & Scope of Application

• Enacted in 2015, Republic Act No. 10667 or the Philippine

Competition Act (PCA), is the country’s primary competition
law.
• It defines, prohibits, and penalizes anti-competitive practices
with the aim of enhancing economic efficiency and
promoting free and fair competition in trade, industry,
and all commercial economic activities.
Scope:

The PCA covers:

• Domestic- any person or entity engaged in trade, industry, and

commerce in the Philippines.

• International- also applies to international trade that may

impact trade, industry, and commerce in the Philippines.
Scope: The PCA covers:

• PCA has an extraterritorial application as it can cover acts

outside the Philippines. It can likewise cover government
entities.

• PCA does not apply to collective bargaining agreements or

arrangements between workers and employers, and other such
activities affecting conditions of employment.
Why competition matters?

• A competitive market is one where there are multiple buyers and

sellers.
• No single entity controls the price of goods or services. As such,
businesses are more attuned to consumer demand and have to
innovate to make their products different and better than the rest.
• For consumers: when businesses compete, consumers benefit
through lower-prices, more product choices, and better-quality
goods and services.
Why competition matters?
• For businesses: Businesses benefit from competition, too. In
competitive markets, no company benefits from undue advantage.
This makes it easier to start and operate a new business.
Competition also enables small businesses to compete with bigger
businesses on fair terms.

• Investments flow to markets that are marked by greater

innovation, where there is a level playing field , and where
competition is protected . With greater investments come more
jobs , which, in turn, increase consumption. Ultimately,
competition contributes to economic growth and poverty
reduction.
Important Terms

1. Acquisition- purchase of securities or assets through

contract or other means for the purpose of control.
2. Control- ability to substantially influence or direct the
actions or decisions of an entity (Section 25)
3. Merger- joining two or more entities into an existing entity or
to form a new entity.

• also includes consolidation

• this is in order to regulate the market
Important Terms

4. Agreement- any type or form of contract, arrangement,

understanding, concerted action

• It may be formal or informal, explicit or tacit, written or oral

• There’s no need for physical control agreement

5. Market Dominant Position- position of economic strength

which makes an entity capably of controlling the relevant market
independently
Important Terms

6. Market- group of goods or services that are sufficiently

interchangeable or substitutable and the object of competition,
and the geographic are where said goods or services are offered

7. Relevant Market- market in which a particular good or

service is sold and which is a combination of the relevant product
market and the relevant geographic market.
II. Powers & Functions of the Philippine
Competition Commission

• The Philippine Competition Commission (PCC) has original and

primary jurisdiction in the enforcement and regulation of all
competition-related issues.

• The PCC is the government agency mandated to implement the

PCA and the national competition policy. Established in
February 2016, the PCC is the main authority on competition-
related matters in the country.
As the antitrust authority of the country, the PCC is mandated to exercise
the following powers and functions:

• Conduct inquiry, investigate, and hear and decide on cases

involving violations of the PCA, its implementing rules, and
other competition laws;
• Monitor and analyze the practice of competition in markets, and
issue advisory opinion, rules, and guidelines on competition
matters for the effective enforcement of the PCA; and
• Review and proposed mergers and acquisition
As the antitrust authority of the country, the PCC is mandated to exercise
the following powers and functions:

• Conduct, publish, and disseminate studies, reports, and other

publications on competition matters to inform and guide the
industry and consumers.
• Stop or redress entities that has entered into anti- competitive
agreement or has abused dominant position by issuing
injunctions, requirement of divestment, and disgorgement of
excess profits

• Disgorgement of excess profits (ex, grab was asked to give rebates to

the customers)
As the antitrust authority of the country, the PCC is mandated to exercise
the following powers and functions:

• Conduct administrative proceedings, imposes sanctions, fines or

penalties for any noncompliance or breach of the Act and its
IRR
• Issue subpoena duces tecum and subpoena ad testificandum to
require production of books, records, etc. that are relevant to the
investigation and personal appearance before the commission.
• Issue show cause orders and cease and desist orders
As the antitrust authority of the country, the PCC is mandated to exercise
the following powers and functions:

• Upon order of the court, undertake inspections of business

premises and other officers, land and vehicles
• Issue adjustment or divesture orders including orders for
corporate reorganization or divestment
• Divestment meaning PCA can ask a corporation to buy out in
some transactions.
As the antitrust authority of the country, the PCC is mandated to exercise
the following powers and functions:

• Adjustment or divesture orders, which are structural remedies, should

only be imposed:
(1) Where there is no equally effective behavioral remedy; or
(2) Where any equally effective behavioral remedy would be more
burdensome for the enterprise concerned than the structural remedy.
Changes to the structure of an enterprise as it existed before the
infringement was committed would only be proportionate to the
substantial risk of a lasting or repeated infringement that derives
from the very structure of the enterprise;
ENFORCEMENT POWERS OF PCC

Office for Competition under the Department of Justice

created under EO 45 still exists with power modified.
• This refers to Section 13. Office for Competition (OFC), Powers and
Functions. The OFC under Department of Justice (DOJ-OFC) shall only
conduct preliminary investigation and undertake prosecution of all
criminal offenses arising under this Act and other competition-related
laws in accordance with Section 31 of Chapter IV of this Act. The OFC
shall be reorganized and allocated resources as may be required
therefor effectively pursue such mandate)
ENFORCEMENT POWERS OF PCC
FACT FINDING; PRELIMINARY INQUIRY
- May be started motu proprio or upon filing of a verified
complaint upon referral by a regulatory agency
- Prelim inquiry shall be completed within 90 days
LENIENCY PROGRAM

• To be granted to any entity in the form of immunity from suit or

reduction of any fine which would otherwise be imposed on a
participant in an anti-competitive agreement as provided in
Section 14 (a) and 14 (b) of this Act in exchange for the
voluntary disclosure of information regarding such an
agreement which satisfies specific criteria prior to or during the
fact finding or preliminary inquiry stage of the case.
NOLO CONTENDERE

• An entity charged under provisions of ACA may enter a plea of

nolo contendere, in which he does not accept nor deny
responsibility for the charges but agrees to accept punishment
as if he had pleaded guilty.
• The plea cannot be used against the defendant entity to prove
liability in a civil suit arising from the criminal action nor in
another cause of action
• The plea may be entered only up to arraignment and after that it
should only be with the permission of the court
NON-ADVERSERIAL REMEDIES

a.) Binding Ruling- when no prior complaint/investigation has

been initiated, an entity which is in doubt as to the legality of
their actions may request the Commission to render a binding
rule for a specified period.
-In case of an adverse binding rule, the applicant will be given
90 days to abide by the ruling and if complied with, the entity will
not be subjected to admin, civil, or criminal action.
NON ADVERSERIAL REMEDIES

b.) Show Cause Order- commission may just order an entity to show
cause why no order of cease and desists should be issued against them
and then pay the fine or re-adjust its business conduct or practices.
c.) Consent Order- before the conclusion of the inquiry, an entity
without admitting a violation, may submit a written proposal for the
entry of a consent order. This shall include payment of a fine, required
compliance report, payment of damages to any private parties, other
terms & conditions.
NON ADVERSERIAL REMEDIES

d.) Monitoring Compliance- commission may just monitor

compliance of an entity. If it passes, issue a certification or resolution to
the effect that the entity has complied with a final and executory ruling,
order, or approval.
e.) Inadmissibility of Evidence in Criminal Proceedings- any
admitted fact or evidence submitted shall not be admissible as evidence
in any criminal proceedings arising from the same act.
 NON ADVERSERIAL REMEDIES

TN: while it has original and primary jurisdiction in the enforcement and
regulation of all competition- related issues, the PCC works with relevant
sector regulators on matters where the regulators’ innate expertise and
knowledge in the sector are critical.

- Independent Quasi- Judicial Body

- Attached Agency to the office of the President
- PCC can issue order for contempt
NON ADVERSERIAL REMEDIES

-Fines will be tripled if the violation involves the trade or

movement of basic necessities and prime commodities under RA
7581
-Any person who suffers direct injury by reason of any violation of
this act may institute separate and independent civil action after
the commission has completed the preliminary inquiry
 NON ADVERSERIAL REMEDIES
- Decisions of the Commission shall be appealed to the Court of
Appeals

- RTC will have original and exclusive jurisdiction over all the criminal
and civil cases involving violations of this Act or other competition-
related laws (regardless of penalties)
• principal business
• where the business act/conduct constitutes the subject matter of a case
STATUTE OF LIMITATION: 5 YEARS

a.) Criminal - from the time violation is discovered by the

offended party

b.) Administrative and Civil Actions- from the time the

cause of action accrues
Decision/ Statute of Limitations

• Decision of the PCC shall appealable to the Court of Appeals

• RTC shall have original and exclusive jurisdiction, regardless of
the penalties and fines herein imposed, of all criminal and civil
cases involving violation of PCA
• Prescriptive period is five (5) years from criminal violation is
discovered and if administrative or civil, the time the action
accrue
 Composition

- Chairperson and 4 Commissioners appointed by the President

- Will have the rank equivalent to a cabinet secretary and
undersecretary
- Salary will be based on an objective classification system
- Fields: economics, law, finance, commerce or engineering
- At least one (1) shall be a member of the Philippine Bar with at least
ten (10) years of experience in the active practice of law
Composition

- At least one (1) shall be an economist

- Executive Director will be appointed by the Commission
Term: seven (7) years, fixed term: 2/4 commissioners shall have
5 years term
Quorum: three (3); required votes: three (3)
III. Prohibited Acts

• Anti- competitive Agreements

• Abuse of Dominant Position
• Prohibited Merger & Acquisition

Main prohibition: any act of agreement which have the object or

effect of substantially preventing, restricting, or lessening
competition shall be prohibited
III. Prohibited Acts

a. Anti- Competitive Agreements

- Are those that substantially prevent, restrict, or lessen

competition
- The agreement may be any type or from of contract, agreement,
or understanding between or among businesses to fix prices or
manipulate bids.
III. Prohibited Acts

- It dies not matter if the said agreement is formal or informal,

explicit (i.e., written or announced)or tacit , or in written or oral
(i.e., verbal) form. It is illegal for business rival to act together in
ways that can limit competition or hinder other businesses from
entering the market.
Elements of ACA

I. There are tow or more separate entities;

II. Which enter into some form of coordination (agreement,
concerted practice, decision); and
III. Which anticompetitive per se or has an anti competitive object or
effect
i. Per se violation

1. Price Fixing- restricting competition as to PRICE, or

COMPONENTS thereof, or OTHER TERMS OF TRADE;
anything affecting the price of commodities

2. Bid Rigging- fixing price at an auction or in any form of bidding

including cover bidding, bid suppression, bid rotation and market
allocation and other analogues practices of bid manipulation
 ii. Non- per se violation ( Object & Effect Prohibition, SLC
Test)

- Subject to the SLC test in order to identify whether an act is a violation or not

The following agreements , between or among competitors which have the

object or effect of substantially preventing, restricting, or lessening
competition shall be prohibited:

1. Output Restriction- Setting , limiting or controlling production, markets,

technical development, or investment;
 ii. Non- per se violation ( Object & Effect Prohibition, SLC
Test)

- Agreement of entities to withhold products in the market in

order to drive the prices up

2. Market Allocation- Dividing or sharing the market whether

by volume of sales or purchases, territory, type of goods or
services, buyers or sellers or any other means;
-Agreement that their divide customers
iii. Others (“SLC Test”)

1. Input Restriction
-Agreement between the supplier of a raw material and a competitor
to restricting the production of raw materials to other competitors
-EX: the only glass manufacturing company restricts its supply of
glass to other competitors
iii. Others (“SLC Test”)

-Agreements or acts that contribute to improving the production

or distribution of goods and services or to promoting technical or
economic progress, while allowing consumers a fair share of the
resulting benefits may not necessarily be deemed a violation of
this Act.
iii. Others (“SLC Test”)

TN: “Not considered competitors for the purposes of this

section”- those entity that controls, is controlled by, or is under
common control with another entity or entities, have common
interest, and are not otherwise able to decide or act
independently of each other
Factors in Determining ACA

• Define the relevant market allegedly affected by the anti-

competitive agreement or conduct

• Determine if there is substantial actual or potential adverse

impact on competition in the relevant market caused by the
alleged agreement or conduct, and if the same outweighs the
actual or potential efficiency gains that result from the
agreement or conduct;
Factors in Determining ACA

• Adopt a broad and forward-looking perspective but also taking

account of past behavior of the parties involved and prevailing
market conditions
• Balance the need to ensure that competition is not prevented or
substantially restricted and the risk improved by undue
intervention
Factors in Determining ACA

• Assess the totality of evidence on whether it is more likely than

not that the entity has engaged in anti- competitive agreement
or conduct
EX of Anti- Competitive Agreements:

1. Price Fixing
- Businesses agree to directly or indirectly fix purchase or selling
price, instead of letting supply and demand determine the prices of
goods and services
2. Output limitation
- Businesses agree to limit production by restricting output or
setting quotas, creating an artificial shortage in the market that
subsequently drives up prices.
EX of Anti- Competitive Agreements:

3. Market Sharing
- Businesses divide the market and claim dominance according to
territory, customer demographic, sales volume or type, creating
local monopolies that deprive consumers of choice.
4. Bid rigging
- Businesses agree to fix prices at an auction or manipulate bids,
forcing buyers to select the higher priced " pre-selected" bid
instead of the best price
EX of Anti- Competitive Agreements:

5. Cartels
- A cartel is an organization formed by competitors in a specific
industry, which enables them to set prices or control levels of
production. Agreements to form cartels or to collude are
considered anti-competitive agreements.
b. Abuse of Dominant Position

- A business may become dominant in a certain industry by

gaining a significant share in the market or becoming an
industry leader by virtue of years in operation
- In the conduct of their business, dominant companies –
considering their size, scope, and position of economic strength
may have a disproportionately severe effect on the market
- Section 27 presumption of dominant position
The PCA defines abuse of dominant position as a conduct of an entity, whether a
company or an individual, with dominant position that substantially prevents,
restricts, or lessens competition in the market:

1. Selling goods or services below cost to drive competition out

2. Imposing barriers to entry or committing acts that prevent
competitors from growing within the market
3. Setting prices or other terms or conditions that discriminate
unreasonable between customers or sellers of the same goods
or services:
EXCEPT:

• Socialized pricing for less fortunate

• Price differential which reflects differences in the cost of
manufacturing, sale, or delivery
• Price differential in response to the competitive price of
payments, services, or changes in the facilities
• Price changes in response to changing market conditions,
marketability of goods or services, or volume
The PCA defines abuse of dominant position as a conduct of an entity, whether
a company or an individual, with dominant position that substantially
prevents, restricts, or lessens competition in the market:

4. Imposing restrictions on the lease or contract for sale or trade

of goods or services
5. Making supply of particular goods or services dependent upon
the purchase of other goods or services from the supplier which
have no direct connection
6. Directly or indirectly imposing unfairly low purchase prices for
goods or services of marginalized sectors
7. Directly or indirectly imposing unfair purchase or selling price
on their competitors, customers, suppliers or consumers
8. Limiting production, markets or technical development to the
prejudice of consumers

How do firms abuse their dominant position?

-Markets that are dominated by a single or a handful of large
companies are particularly vulnerable to ani- competitive
practices.
Factors in Determining Dominant Position

(a) The share of the entity in the relevant market and whether it is
able to fix prices unilaterally or to restrict supply in the
relevant market;
(b) The existence of barriers to entry and the elements which
could foreseeably alter both said barriers and the supply from
competitors;
(c) The existence and power of its competitors;
Factors in Determining Dominant Position

(d) The possibility of access by its competitors or other entities to

its sources of inputs;
(e) The power of its customers to switch to other goods or
services;
(f) Its recent conducts; and
(g) Other criteria established by the regulations of this Act
EX of Abuse of Dominant Position:

1. Predatory pricing
- A dominant firm deliberately incurs losses in the short term by
selling goods or services below the cost of its production, which can
eventually force its competitors out of business.
2. Imposing Barriers to Entry
- Preventing competitors from growing. Imposing unfair regulations to
prevent other competitors from starting their business.
EX of Abuse of Dominant Position:

3. Commercial Tying
- Only arcade company imposes a regulation to its tenants that they
use its laundry company
4. Price discrimination
- A dominant firm sets different prices or conditions for equivalent
transactions
EX of Abuse of Dominant Position:

5. Exclusive Dealings
-agreement that you only supply to a particular bakeshop and no one
else
6. Tying and Bundling
- In selling a nail gun, a particular company will require that only a
certain nail will be used
EX of Abuse of Dominant Position:

7. Abuse of Monopsony Buying Power

- Imposing low prices for the goods and services to the marginalized
sectors but imposing high price for middle class sector

8. Excessive Pricing / Exploitative behavior towards

consumers, customers, or competitors
- A dominant firm charges excessive or unfair prices, or employs other
unfair trading conditions
EX of Abuse of Dominant Position:

9. Output Restriction / Limiting production, markets, or

technical development
- A dominant firm restricts output or refuses to supply , or restricts access
to / use of/ development of a new technology, to the detriment of
consumers.
EX of Abuse of Dominant Position:

TN: It is not illegal to be dominant provided businesses do not

abuse their dominance.

- Nothing in this Act shall be construed or interpreted as a

prohibition on having a dominant position in a relevant market or
on acquiring, maintaining and increasing market share through
legitimate means that do not substantially prevent, restrict or
lessen competition
EX of Abuse of Dominant Position:

- Any conduct which contributes to improving production or

distribution of goods or services within the relevant market, or
promoting technical and economic progress while allowing
consumers a fair share of the resulting benefit may not
necessarily be considered an abuse of dominant position
- The provision shall not constrain the Commission or the
relevant regulator from pursuing measures that would promote
fair competition or more competition as provided in this Act.
TAKE NOTE: SECTION 41. Basic Necessities and Prime
Commodities
- If the violation involves the trade or movement of basic
necessities and prime commodities as defined by Republic Act
No. 7581, as amended, the fine imposed by the Commission of the
courts, as the case may be, shall be tripled.
c. Prohibited Mergers and Acquisitions

- Merger or acquisition agreements that substantially prevent,

restrict, or lessen competition in the relevant market or in the
market for goods or services.
- Mergers and Acquisition are not illegal but they are subject to
the review of the PCA
- Review is either motu proprio or compulsory
Compulsory Notification (Sec.17)

- Notification Threshold: Size of party and Size of Transaction

- Effective March 2020:
• size of party -6 billion
• size of transaction- 2.4 billion

- If the parties and the transaction/s are deemed to be under the

threshold, there is a prohibition from consummating their
argument until 30 days after providing notification to the
commission
Compulsory Notification (Sec.17)

- The period may be extended up to 60 days but not more than 90

days if the Commission deems it necessary to request further
information.

- If the period given expires without any action, the merger or

acquisition shall be deemed approved and the parties may
proceed to implement or consummate it.
Compulsory Notification (Sec.17)

TN: Merger of financial institutions should always have a

favorable recommendation by the appropriate government
agency under the Corporation Code

- This favorable recommendation by a gov. agency with a

competition mandate shall give a rise to a disputable
presumption that the proposed merger/ acquisition is
not violate of this act.
EFFECT OF VIOLATION:

- Agreement will be considered void and subject the parties to an

administrative fine of 1% to 5% of the value of the transaction.
If the Merger/ Acquisition is determined to be
prohibited, the commission may;

1. Prohibit implementation of the agreement;

2. Prohibit implementation unless and until it is modified by
changes specified by the commission;
3. Prohibit implementation unless and until the pertinent party
or parties enter into legally enforceable agreements specified
by the commission.
Notifying Parties (Sec. 2)

(a) Parties to a merger or acquisition

(b) If notice to the Commission is required for a merger or
acquisition, then all acquiring and acquired pre-acquisition
ultimate parent entities or any entity authorized by the
ultimate parent entity to file notification on its behalf
(c) In the formation of a joint venture (other than in connection
with a merger or consolidation), the contributing entities shall
be deemed acquiring entities, and the joint venture shall be
deemed the acquired entity.
 d. Exception (Sec. 21)

- Any entity shall not be prohibited from continuing to own and hold
the stock or other share capital or assets of another corporation
- Acquisition of the stock or other share capital of one or more
corporations solely for investments and not used for voting or
exercising control shall not be prohibited
d. Exception (Sec. 21)

TN:
-the burden of proof under Sec.21 lies with the parties seeking
exemption
-final favorable ruling from the commission may not be
challenged under this act except when there in fraud or false
material information
 Fines & Penalties

Grounds
• Sec. 14- Anti- Competitive Agreements
• Sect. 15- Abuse of Dominant Position
Administrative Penalty
• 1st Offense- Fine of up to P100 Million
• 2nd Offense- Fine of P100 Million to P250 Million
Criminal Penalty
• Imprisonment- 2-7 years
• Fine- P50 Million to P250 Million
IV. The Relevant Market

THE FOLLOWING FACTORS, among others, affecting the

substitutability among goods or services constituting such
market, and the geographic area delineating the boundaries of the
market shall be considered:

a) The possibilities of substituting the goods or services in

question with others of domestic or foreign origin, considering
the technological possibilities, the extent to which substitutes
are available to consumers and the time required for such
substitution;
 IV. The Relevant Market

b) The cost of distribution of the good or services, its raw materials,

its supplements and substitutes from other areas and abroad,
considering freight, insurance, import duties, and non-tariff
restrictions; the restrictions imposed by economic agents or by their
associations; and the time required to supply the market from those
areas;
c) The cost and probability of users or consumers seeking other
markets; and
IV. The Relevant Market

d) National , local or international restrictions which limit the

access by users or consumers to alternate sources of supply or the
acc.ess of suppliers to alternate consumers
V. Control or Dominance of Market

CONTROL
- There is presumption that control exists when the parent
owns directly or indirectly, through subsidiaries, more than ½
of the voting power.
- BUT it need not be certain percentage so, a purchase or
ownership of less than 50% equity of the company does not
necessarily mean that there’s no control
V. Control or Dominance of Market

- There may be a control or internal policy in the corporation that

entities control to an entity

- The ability to govern the financial and operational aspect of the

corporation would also mean control
EX of control despite owning less than ½ of
shareholding:

a) Power to direct/ govern the financial and operating policies

under a statue or agreement;
b) Power to appoint or remove the majority of the members of
the board of directors;
c) Power to cast the majority of votes at meetings of the BOD;
d) Ownership over or the right to use all or significant part of the
assets of the entity;
e) Rights or contract which confer decisive influence on the
decision of the entity
DOMINANCE OF MARKET

- Can exist on the part of one entity (single dominance) or two or

more entities (collective dominance)
- There is rebuttable presumption if the market share of an entity
is at least 50%
FACTORS:

a) The share of the entity in the relevant market and whether it is

able to fix prices unilaterally or to restrict supply in the relevant
market;
b) The existence of barriers to entry and the elements which could
foreseeably alter both said barriers and the supply from
competitors;
c) The existence and power of its competitors;
FACTORS:

d) The possibility of access by its competitors or other entities to

its sources of inputs;
e) The power of its customers to switch to other goods or services;
f) Its recent conducts; and
g) Other criteria established
VI. Forbearance by PCC

- Commission , motu proprio or upon application, prior to its

initiation of an inquiry, may forbear from applying the
provisions of the Act or these Rules, for a limited time , in whole
or in part, in all or specific cases, on an entity or group of
entities, if in its determination;

(a) Enforcement is not necessary to the attainment of the policy

objectives of this Act;
 VI. Forbearance by PCC

(b) Forbearance will neither impede competition in the market

where the entity or group of entities seeking exemption operates nor
in related markets;
(c) Forbearance is consistent with public interest and the benefit
and welfare of the consumers; and
(d) Forbearance is justified in economic terms;
TN: forbearance will be granted for a maximum period of 1 year may be
extended upon the approval of the commission but extension cannot be
more than a year.

PUBLIC HEARING
- May be held to assist the commission in making determination
- Forbearance shall be made public
- If the basis of the exemption order ceases to be valid, the order
may be withdrawn by the commission.
 CASES: 1. United Brands v Commission Case

FACTS: UB was the main supplier of bananas in Europe, using mainly the Chiquita
brand. UBC forbade its distributors/ ripeners to sell bananas that UBC did not
supply. Also, UBC fixed pricing each week; charging a higher price in different
Member States, and imposed unfair prices upon customers in Belgo- Luxemburg
Economic Union, Denmark, The Netherlands and Germany
The Commission viewed United Brands’ action as a breach of Article 86 of the
Treaty of Rome ( now Art 102 of the TFEU). Article 85 prohibits “abuse of a
dominant position” of a relevant market. The case referred for a Preliminary Ruling
to the European Court of Justice under Article 177 ( now Art 267)
 RULING: Agreeing with the Commission ,the ECJ held that United
Brands’ behavior was unlawful:

- The ECJ rejected UBC’s claim that the product market was the “fresh-fruit
market as a whole”. Instead, because of the notion of cross elasticity of
demand and product characteristics, the product market was defined as the
banana market.
- UBC had about 45% of the EU banana market, and 45% was deemed to
amount to a “dominant position”.
- Since the “green banana clause” effectively prevented any competing logistics
firms form carrying Chiquita bananas, it was anti –competitive and in breach
of Art 86.
CASES: 1. United Brands v Commission Case

The Commission defined the relevant product market as Bananas. They

argued that commission had wrongly defined the relevant market. UB
argued that relevant market was not bananas, but fresh fruit in general. In
response, COURT: held that essential issue here to define market was
Interchangeability and Court said: “For the banana market to be regarded as
forming a market which is sufficiently differentiated form the other fruit
markets it must be possible for it to be singled out by such special factors
distinguishing it from other fruits that it is only to a limited extent
interchangeable with them and is only exposed to their competition in a way
that is hardly perceptible”
2. Hoffmann-La Roche & Co. v Commission Case

FACTS:
The commission held that La Roche was in breach of art 102
TFEU by entering into agreements with other undertakings which
requested them to purchase their vitamins exclusively from them.
Hoffman disagreed and claimed they were not dominant as they
only had a 43% market share. Thus, they appealed to the ECJ and
asked if the commission had erred in their interpretation of art
102 TFEU.
ISSUE: Had the commission erred in their interpretation of art 102
TFEU?

HELD:
Yes, “the view may be legitimately taken that very large shares are
in themselves, and save in exceptional circumstances, evidence of
the existence of a dominant position. An undertaking which has a
very large market share and holds it for some time.. Is by virtue of
that share in a position of strength”. As the commission could not
prove other factors that suggested La Roche was dominant, the
courts held that the 43% was insufficient.
2. Hoffmann-La Roche & Co. v Commission Case

The European Law, similarly to most competition laws, does not itself
contain a definition of abuse of a dominant position. However, in
Hoffman- La Roche & Co. AG v Commission of the European
Communities it was observed that: The concept of abuse is an objective
concept relating to the behavior of an undertaking in a dominant position
which is such as to influence the structure of a market where, as a result
of the very presence of the undertaking in question, the degree of
competition is weakened and which, through recourse to methods
different from those which condition normal competition in products or
services on the basis of the transaction of commercial operators, has the
effect of hindering the maintenance of the degree of competition still
existing in the market or the growth of that competition
3. Commercial Solvents v Commission

• Refusal to supply an existing customer

- Concerning termination of an existing customer the term refusal
includes a constructive refusal, for example the charge of
unreasonable prices or the imposition of unfair trading
conditions for the supply in question or the treatment of a
particular customer in a discriminatory manner
3. Commercial Solvents v Commission

The first European case involving a refusal to supply was

Commercial Solvents v Commission in 1974. The Commission
decided that abuse of dominant position existed since refusal to
supply would eliminate Zoja (the competitor) from the
downstream market. The ECJ upheld the Commission’s decision
and held that refusal to supply could amount to an abuse of
dominant position in certain circumstances.
3. Commercial Solvents v Commission

According to the ECJ:

“an undertaking which has a dominant position in the market in
raw material and which with the object of reserving such raw
materials for manufacturing its own derivatives, refuses to supply
a customer, which is itself a manufacturer of theses derivatives,
and therefore risks eliminating all competition on the part of this
customer, is abusing its dominant position”.
3. Commercial Solvents v Commission

This case is important because it was not the ‘mere’ refusal to supply that
infringed Article 82 but the refusal which ‘would amount to eliminate one
of the principal manufacturers in the common market’. The
requirement is not the elimination of all competition but only
of one. However, the Court did not consider whether the Commercial
Solvent’s strategy could produce efficiencies and there was no discussion
in the judgement about the possible benefits to the consumer. It appears
that the competition authorities try to protect the situation of the ‘small’
competitor and so it might have been significant that Zoja was a small
Italian Firm
 4. Bayer v Commission ( Export Ban / Parallel Imports)
Case

FACTS:
Bayer AG, the parent of one of the largest European chemical and
pharmaceutical groups, manufactured Adalat, used to treat cardio-
vascular disease. It was sold by wholly owned subsidiaries in different
member states. National health authorities fix prices for medicines, and
the Spanish and French prices were fixed at a rate 40 percent lower than
UK and France and importing it to the UK, meaning that Bayer UK was
at a loss. Bayer changed its delivery policy, so that it did not fulfil all large
orders placed by Spain and France.
4. Bayer v Commission ( Export Ban / Parallel Imports) Case

The Commission found that Bayer France and Bayer Spain had
made an agreement with wholesalers, which amounted to an
unlawful export ban. Bayer argued that it was restricting sales
from Spain and France to the UK, but it denied that the policy
was implemented through any agreement.
4. Bayer v Commission ( Export Ban / Parallel Imports) Case

RULING:
The ECJ held that Bayer had not acted unlawfully,
because it had simply made a unilateral decision. To say
that this was the same as an agreement would be to confuse (what
is now) TFEU article 101 on collusion, with article 102 on abuse of
monopoly power. This was real unilateral behavior. No
tacit agreement
Findings of the Court

- It does not appear from the judgement under appeal that the
Court of First Instance took the view that an agreement within the
meaning of Article 85(1) of the Treaty could not exist unless
one business partner demands a particular line of
conduct from the other.
Findings of the Court

- On the contrary, the Court of the First Instance set out from the principle that the
concept of an agreement within the meaning of Article 85(1) of the Treaty 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. The Court further recalled, in paragraph 67 of the same
judgement, that for there to be an agreement within the meaning of Article 85(1) of the
Treaty it is sufficient that the undertakings in question should have
expressed their common intention to conduct themselves on the market in
a specific way.
Findings of the Court

- Concerning the appellants’ arguments that the Court of First

Instance should have acknowledged that the manifestation of
Bayer’s intention to restrict parallel impots could constitute the
basis of an agreement prohibited by Article 85(1) of the Treaty, it
is true that the existence of an agreement within the meaning of
that provision can be deduced from the conduct of the parties
concerned.
Findings of the Court

- However, such an agreement cannot be based on what is only the

expression of a unilateral policy of one of the contracting parties,
which can be put into effect without the assistance of others. To hold
that an agreement prohibited by Article 85(1) of the Treaty may be
established simple on the basis of the expression of a unilateral policy
aimed at preventing parallel imports would have the effect of
confusing the scope of that provisions with that Article 86(2)
of the Treaty
Findings of the Court

- For an agreement within the meaning of Article 85(1) of the Treaty to be

capable of being regarded as having been concluded by tacit acceptance,
it is necessary that the manifestation of the wish of one of the
contracting parties to achieve an anti- competitive goal
constitute an invitation to the other party, whether express or
implied, to fulfil that goal jointly, and that applies all the more
where, as in this case, such an agreement is not at first sight in
the interests of the other party, namely the wholesalers.
Findings of the Court

- Therefore, the Court of First Instance was right to examine

whether Bayer’s conduct supported the conclusion that the latter
had required of the wholesalers, as a condition of their future
contractual relations, that they should comply with its new
commercial policy.
5. ICI v Commission ( Dyestuffs) Case

FACTS:
Ten dyestuff producers and distributors were fined for a violation of art
101. They had uniformly increased their price in 1964, 1965, 1967. Before
they increased their price in 1967, representatives of the undertaking met
up. One of the representatives made its intention clear to increase prices
for soluble dyestuff based on aniline before the end of 1967. 2 other
representations insinuated that they are also considering increasing their
price as well. Following that meeting, there was a general uniform
increase in the price of the goods. The commission argued that their
actions were clearly concerted practice.
5. ICI v Commission ( Dyestuffs) Case

ISSUE:
Whether the dyestuffs manufacturers’ practice of publicly
announcing their intention to increase prices at a future date and
subsequently increasing prices simultaneously constituted a
concerted practice under article 85(1) of the EEC Treaty?
5. ICI v Commission ( Dyestuffs) Case

HELD:
YES. The ECJ upheld the decision. They stated that CP is 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”
5. ICI v Commission ( Dyestuffs) Case

The European Court found that three uniform price increases in

the dyestuffs market constituted a progressive cooperation
between the enterprises. The European Court further found that
the enterprises eliminated the risk of independent change thus
temporarily eliminating competitive market conditions. The
dyestuffs manufacturer claimed that the uniformity of the price
increases resulted from the presence of a price leader in an
oligopolistic market.
5. ICI v Commission ( Dyestuffs) Case

The European Court conducted a market analysis to ascertain

whether the dyestuffs manufacturers’ claimed could be sustained
and concluded that the dyestuffs manufacturers engaged in a
concerted practice in violation of article 85(1). The European
Court reasoned that since the dyestuffs market was not an
oligopoly, it was unlikely that three simultaneous price increases
could have come about spontaneously on all the national markets.
5. ICI v Commission ( Dyestuffs) Case

The similarities in rates, timing and range of products affected by

the three price increases indicated a cooperation between the
enterprises to eliminate the risks of competition. Imperial
Chemical demonstrates that a business participates in a concerted
practice when it intentionally cooperates with alleged competitors
in order to eliminate the risks of free competition in the
Community.
5. ICI v Commission ( Dyestuffs) Case

The European Court explained that the concept of a concerted practice

does not necessarily involve a formal agreement but can result from a
cooperation between businesses manifested by their parallel conduct.
Parallel conduct per se cannot be considered a concerted practice but is
suggestive of one if it leads to abnormal competitive market conditions.
The European Court seemed to define a concerted practice as
parallel conduct which eliminates normal competition and
does not arise spontaneously under normal market conditions,
but results from intentional cooperation between alleged
competitors.
5. ICI v Commission ( Dyestuffs) Case

Thus, Imperial Chemical established parallel conduct, distorted

competition, and intentional cooperation as the three constitutive
elements of a concerted practice
 6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II) Joined
Cases C-89,104,114,116,17,125,129/85

FACTS:
Forty-one non-EC producers of bleached sulfate wood pulp, together with two
non-EC trade associations, one U.S. and the other Finnish, brought actions in
the European Court of Justice to annul a decision of the EC Commission. The
Commission had imposed substantial fines on the applicants for violating EC
competition law. Most of the applicants challenged the power of the Community
to apply its competition law extraterritorially to reach them, and considering the
importance of the issue, the Court first heard and decided submissions limited
to the jurisdictional question.
6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II)
Joined Cases C-89,104,114,116,17,125,129/85

The Commission had determined that the producers and the

trade associations had engaged in concerted practices to fix the
price of wood pulp in violation of article 85(1) of the EEC Treaty.
Article 85(1) prohibits agreements 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
common market.”
6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II)
Joined Cases C-89,104,114,116,17,125,129/85

RULING:
In their submissions to the Court, the industry applicants argued
principally that the Commission did not have extraterritorial authority
over the conduct of foreign persons that engaged in no wood pulp
production in the EC, did not maintain offices or subsidiaries within the
EC, and entered into no concerted agreements within the EC. By focusing
on the lack of any direct territorial connection between themselves and
the Community, the industry sought to invoke the stricter versions of the
territoriality principle of jurisdiction.
6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II)
Joined Cases C-89,104,114,116,17,125,129/85

The Court rejected these arguments, concluding first that nothing in

article 85 itself precludes its application to persons situated outside the
Community. The Court reasoned that the concerted practices of the
applicants satisfied the wording of article 85(1): The Practices had the
object and effect of restricting competition in the Common
Market because they coordinated the prices charged to
customers in the Community.
6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II)
Joined Cases C-89,104,114,116,17,125,129/85

The Court next concluded that the Commission’s decision was compatible
with the territoriality principle as universally recognized in public
international law. The Court reasoned that : “an infringement of article
85, such as the conclusion of an agreement which has had the effect of
restricting competition within the Common Market, consists of conduct
made up of two elements: the formation of an agreement, decision
or concerted practice and the implementation thereof.”
6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II)
Joined Cases C-89,104,114,116,17,125,129/85

The Court could not accept that the Community had jurisdiction
only if the challenged conduct originated within the EC: ”If the
applicability of prohibitions laid down under competition law
were made to depend on the place where the agreement was
formed, the result would obviously be to give undertakings an
easy means of evading those prohibitions”
6. A Ahlstrom Osakeyhtio and others v Commission (Wood Pulp II)
Joined Cases C-89,104,114,116,17,125,129/85

The standard adopted by Wood Pulp, requiring an intent or direct

effect of restricting EC competition following from conduct
implemented within the EC, attempts to strike a balance between
the extremes of jurisdiction based purely on territoriality and
that based purely on effects
7. Consten & Grundig v Commission ( Distribution Agreement)
Joined Cases 56 and 58/64

FACTS:
Grundig GmbH contracted to distribute its electronic goods in France,
appointing appointed Consten SaRL as its exclusive distributor. Grundig
guaranteed that no other wholesaler would be allowed to distribute in
France, and that, for the purposes of the distribution of Grundig
products, Consten was given sole authorization to use the Grundig name
and emblems which are registered in Germany and in other Member
States.
7. Consten & Grundig v Commission ( Distribution Agreement)
Joined Cases 56 and 58/64

A third-party company, UNEF, bought Grundig products in

Germany and began distributing “grey imports” into France,
whereupon Consten and Grundig sought to prevent UNEF from
doing so, claiming , inter alia, that UNEF was abusing Grundig’s
copyright in its own trade name and logos.
7. Consten & Grundig v Commission ( Distribution Agreement)
Joined Cases 56 and 58/64

The Commission viewed Consten’s and Grundig’s action against

UNEF as an unlawful breach breach of Article 85 of the Treaty of
Rome ( now Art 101 of the TFEU), as it was important to ensure
that competing parallel imports from one state to another were
unhindered. The case was referred for a Preliminary Ruling to the
European Court of Justice under Article 177.
7. Consten & Grundig v Commission ( Distribution Agreement)
Joined Cases 56 and 58/64

RULNG:
Agreeing with the Commission, the ECJ held that the agreement was
unlawful. It rejected the argument that allowing exclusive
distributorships protected a distributor’s legitimate interest, by
hypothetically preventing competitor ( once the costs for initial market
penetration had been spent) from free riding on the investment of
advertising and marketing initially by the distributor, and then
undercutting prices.
7. Consten & Grundig v Commission ( Distribution Agreement)
Joined Cases 56 and 58/64

An agreement between producer and distributor which might tend to

restore the national divisions in trade between Member States might be
such as to frustrate the most fundamental objectives of the Community.
The Treaty, whose preamble and content aim at abolishing the barriers
between States, and which in several provisions gives evidence of a stern
attitude with regard to their reappearance, could not allow undertakings
to reconstruct such barriers.
8. Groupement des Cartes Bancaires v Commission (Payment
Card Scheme) Case C- 67/13 P Court of Justice

FACTS:
CB Group was founded by the main banks active in France to ensure the
interoperability of the systems for payment and withdrawal by bank cards
issued by its members ( the CB system). This system allows the use of
bank cards issued by CB Group members (issuing side) for payments to
all affiliated merchants and for the withdrawal from ATMs controlled by
any of the CB Group members (acquiring side). The disputed measures
consisted of certain fees to be paid by CB Group members depending on
their card issuing/ acquisition of merchants ratio, to attempt to solve a
free-riding problem on the issuing side.
8. Groupement des Cartes Bancaires v Commission (Payment Card
Scheme) Case C- 67/13 P Court of Justice

- The CB group notified the measures to the Commission in 2002 (under

Regulation 17/62). Five years later, the Commission adopted an infringement
decision finding that the purpose of the measures was to keep the price of
payment cards artificially high to the advantage of the major banks of the CB
Group and to the detriment of new entrants . CB Group brought an appeal
against the Commission decision before the GC. In its 2012 judgement, the GC
upheld the decision finding that the pricing measures indeed constituted
restrictions of competition by object. CB group filed and appeal before the ECJ
arguing. inter alia, that the GC erred in law in applying the concept of
restrictions of competition by object.
8. Groupement des Cartes Bancaires v Commission (Payment Card
Scheme) Case C- 67/13 P Court of Justice

RULING:
In line with Advocate General Wahl's opinion, the ECJ upheld the
appeal, set aside the GC's judgement, and referred the case back
to the GC to examine whether the measures at issue could be
prohibited on account of their anti-competitive effects.
 8. Groupement des Cartes Bancaires v Commission (Payment Card
Scheme) Case C- 67/13 P Court of Justice

- Article 101(1) TFEU prohibits agreements that have as their object or effect
the restriction of competition. If it is revealed that an agreement has an anti-
competitive object, anti competitive effects are presumed and there is no need
to show the actual detrimental effects of the allegedly anti competitive
conduct on the market.
8. Groupement des Cartes Bancaires v Commission (Payment Card
Scheme) Case C- 67/13 P Court of Justice

- The ECJ initially recalled its well-known case law according to

which 'by object' restrictions of competition are those that are
regarded, by their very nature, as being harmful to the proper
functioning of normal competition. It clarified that accordingly,
only where the conduct reveals a 'sufficient degree of harm', such
as in price fixing cartel, is the Commission exempted from
proving that the conduct has actual detrimental effects on the
market.
8. Groupement des Cartes Bancaires v Commission (Payment Card
Scheme) Case C- 67/13 P Court of Justice

- In its Analysis of the errors of law committed by the GC, the ECJ concluded
that the GC has failed to properly ascertain whether the CB Group measures in
themselves revealed such a sufficient degree of harm to competition. The ECJ
rejected the GC's view that the concept of 'by object' restrictions should not be
interpreted restrictively since otherwise the Commission would ne exempted
from the obligation to prove the actual efforts on the market of agreements
which are in no way established to be, by their very nature, harmful to the
proper functioning of normal competition. The ECJ held that the GC had erred
in taking the view that a restrictive object of the measures could be inferred
from the wording alone and the mere possibility that the measures may restrict
competition.
9. Tate & Lyle pic and others v Commission Joined Cases T-
202,204, 207/98 General Court [2001] ECR II- 2035

1. The fact that only one of the participants at the meetings between
competing undertaking reveals its intentions is not sufficient to exclude
the possibility of an agreement or concerted practice. The criteria of
coordination and cooperation laid down by the case-law on restrictive
practices, far from requiring the working out of an actual plan, must be
understood in the light of the concept inherent in the provisions of the
Treaty Relating to competition that each economic operator must
determine independently the policy which he intends to adopt on the
common market.
 9. Tate & Lyle pic and others v Commission Joined Cases T-202,204, 207/98
General Court [2001] ECR II- 2035

Although it is correct to say that requirement of independence does not

deprive economic operators of the right to adopt intelligently to the existing
and anticipated conduct of their competitors, it does however strictly
preclude any direct or indirect contract between such operators, the object
or effect whereof is either to influence the conduct on the market of an
actual or potential competitor or to disclose to such a competitor the course
of conduct which they themselves have decided to adopt or contemplate
adopting on the market.
 9. Tate & Lyle pic and others v Commission Joined Cases T-202,204, 207/98
General Court [2001] ECR II- 2035

2. The finding that an undertaking, by its participation in a meeting with an

anti- competitive purpose, not only pursued the aim of eliminating in
advance uncertainty about the future conduct of its competitors but could
not fail to take into account, directly or indirectly, the information obtained
in the course of those meetings in order to determine the policy which it
intended to pursue on the market, is also valid where the participation of
one or more undertakings in meetings with an anti- competitive purpose
does not consist of the exchange of information but is limited to the mere
receipt of information concerning the future conduct of their market
competitors.
9. Tate & Lyle pic and others v Commission Joined Cases T-202,204, 207/98
General Court [2001] ECR II- 2035

3. For the purposes of applying Article 85(1) of the Treaty (now

Article 81(1) EC), there is no need to take account of the concrete
effects of an agreement when it is apparent that it has as its object
the prevention, restriction or distortion of competition within the
common market.
9. Tate & Lyle pic and others v Commission Joined Cases T-202,204, 207/98
General Court [2001] ECR II- 2035

4. For an agreement between undertakings or a concerted practice to be

capable of affecting trade between Member States, it must be possible to
foresee with a sufficient degree of probability and on the basis of objective
factors of law or fact that it may have an influence, direct or indirect,
actual or potential, on the pattern of trade between Member Stated, such
as might prejudice the realization of the aim of a single market between
the Member Stated. Accordingly, it is not necessary that the conduct in
question should in fact have substantially affected trade between Member
States. It is sufficient to establish that the conduct is capable of having
such an effect.
9. Tate & Lyle pic and others v Commission Joined Cases T-202,204, 207/98
General Court [2001] ECR II- 2035

5. The fact that a cartel relates only to the marketing of products

in a single Member State is not sufficient to exclude the
possibility that trade between Member States might be affected.
Since the market concerned is susceptible to imports, the
members of a national price cartel can retain their market share
only if they defend themselves against foreign competition.
10. ETA Fabriques d’Ebauches v SA DK investment and others
Case 31/85 Court of Justice [1985] ECR3933

- The partitioning of the markets brought about by a distribution

network under which every dealer is granted an exclusive right to
distribute a product within the territory allotted to him and is
prohibited from supplying the product outside that territory
constitutes a restriction of competition within the
meaning of article 85 (1) of the EEC treaty.
10. ETA Fabriques d’Ebauches v SA DK investment and others Case 31/85 Court
of Justice [1985] ECR3933

- A guarantee scheme under which a supplier of goods limits the

guarantee to customers of his exclusive distributor places the
latter and the retailers to whom he sells in a privileged
position as against parallel importers and distributors
and must therefore be regarded as having the object or
effect of restricting within the meaning of article 85 (1) of the
EEC treaty.
11. RTE & ITP v Commission ( The Magill Case)
Joined Cases

- At long last the European Court of Justice has published its

decision in the case on refusals to license intellectual property
rights, knowns as Magill. Although the Court held that the refusal
to license copyright and lists of television programmes was an
abuse of a dominant position, the judgement still leaves questions
unanswered.
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

FACTS:
Most homes in the Republic or Ireland and around two-fifths of
Northern Irish homes are able to receive television programmes
broadcast by the Irish State Broadcaster (RTE), ITV and the BBC.
Under United Kingdom and Irish copyright law, the BBC ITV ( acting
through a subsidiary, Independent Television Publications Limited
(“ITP”) and RTE own the copyright in their lists of television
programmes.
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

- These three broadcasters provided their programme schedule

free of charge to daily and periodical newspapers but until 1985
there was no comprehensive weekly listing guide. In 1985 Mr.
Magill decided to produce an Irish guide to all channels and
complained to the European Commission when the three
broadcasters refused to license him to reproduce their weekly
listings.
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

- His complaint in April 1986 sought a declaration that the

three broadcasters were abusing their dominant
positions by refusing to grant licenses for the
publication of their weekly listings and the Commission
decided that there was a breach of Article 86 of the
treaty of Rome .
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

RULING:
The ECJ upheld both the Commission’s and the Court of First
Instance’s view that the refusal by television companies to permit
publication of their listings was a breach of Article 86 and
prevented for which consumer demand existed.
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

- The Magill decision is of great importance to owners of

Intellectual Property Rights- not just copyright but patents,
designs and trademarks as well. Intellectual property rights
protect their owner’s creative or research investment against
third parties and rights of this nature are normally regarded as
allowing their holders complete discretion as to whether or not
to license their rights.
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

- The importance of Article 86 of the Treaty of Rome is clearly

underlined by the Magill judgement and it is a matter of concern
to holders if intellectual property rights that a refusal to
license, even though there may be no classically abusive
behavior such as price fixing, may infringe Article 86.
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

- Although the ECJ has confirmed that the principles in Magill

will apply only in exceptional circumstances, it is likely that the
judgement will lead to further challenges to holders of intellectual
property rights who refuse to license third parties in particular in
the field of computers and telecommunications
11. RTE & ITP v Commission ( The Magill Case) Joined Cases

*258 The ECJ held that there was a clear dominant position with
respect to the information used to compile the listings. It then
held that the refusal to license the listings was an abuse as
it prevented the appearance of a new product, that the
refusal was not justified and that as a consequence the
companies reserved to themselves the secondary market
of weekly television guides.
12. Oscar Bronner GmbH Co. KG v Mediaprint

FACTS:
One large Austrian newspaper group refused to include another
newspaper in its national home delivery service. The smaller
publisher brought an action under paragraph 35 of the federal
competition legislation, which is analogous in content to Article
82, and the Austrian court referred the case to the ECJ to
determine whether the refusal might constitute an abuse of a
dominant position under Article 82.
12. Oscar Bronner GmbH Co. KG v Mediaprint

RULING:
The ECJ held that it was for the national court to determine
the relevant market, considering “ïnter alia, whether home
delivery shcemes constitutes a separate market , or whether other
methods of distributing daily newspapers, such as sale in shops or
at kiosks or delivery by post, are sufficiently interchangeable with
them to have to be taken into account also”.
12. Oscar Bronner GmbH Co. KG v Mediaprint

- The national court should then consider whether the possibility

of regional home-delivery schemes would prevent a finding of
dominance. If the national court found such a separate
market and that there would be an insufficient degree of
interchangeability with regional schemes, the large
group would be in a de facto monopoly position on this
market and so dominant.
12. Oscar Bronner GmbH Co. KG v Mediaprint

- Then the ECJ turned to the question of abuse, where (based

largely on Magill) it said that for there to be an abuse the refusal
would have to (a) be likely to eliminate all competition in the
downstream market by the person refused, (b) be incapable of
objective justification, and ( c) be indispensable to business in
that downstream market, in that there would be no actual or
potential substitute in existence for it.
12. Oscar Bronner GmbH Co. KG v Mediaprint

- The ECJ then proceeded to state that these conditions

were not met in this case, as newspapers can be ( and
are in practice) distributed by post or through sales in
shops and at kiosks.
12. Oscar Bronner GmbH Co. KG v Mediaprint

- It is also stated that, to show that the home-delivery scheme

was indispensable, it was not enough to argue as the complainant
had done it was not economically viable to set up his own scheme
by reason of his small circulation, but that the complainant must
at least show that it was “not economically viable to create a
second home-delivery scheme for the distribution of daily
newspapers with a circulation comparable to that of the daily
newspapers distributed by the existing scheme”
13. IMS Health GmbH & Co. OHG v NDC Health
GmbH KG C-418/01 Court of Justice [2000] ECR I-5039

FACTS:
IMS Health is the world’s largest supplier of information on sales
and the prescription of pharmaceutical products and had
developed a successful system, the “1860 brick structure” for
compiling this information which was protected by copyright
13. IMS Health GmbH & Co. OHG v NDC Health GmbH KG C-
418/01 Court of Justice [2000] ECR I-5039

- NDC and AzyX tried to market a similar system but this

failed as the brick structure devised by IMS had become
the industry standard for those carrying out analysis of
the German pharmaceutical markets. NDC asked IMS for a
license to use the 1860 brick structure which was refused.
13. IMS Health GmbH & Co. OHG v NDC Health GmbH KG C-
418/01 Court of Justice [2000] ECR I-5039

- IMS brought an action before the local courts in Germany

alleging that NDC’s data collection system had infringed IMS’s
copyright. The German court decided in favour of IMS, ruling
that its 1860 brick structure system for data collection was
protected by copyright. However, the national court
considered that IMS could not refuse constituted an
abuse of dominant position under EC law.
13. IMS Health GmbH & Co. OHG v NDC Health GmbH KG C-
418/01 Court of Justice [2000] ECR I-5039

- The German court referred a number of questions to the ECJ on

the circumstances under which such behaviour constitutes an
abuse of a dominant position.
13. IMS Health GmbH & Co. OHG v NDC Health GmbH KG C-
418/01 Court of Justice [2000] ECR I-5039

RULING:
The exclusive right to reproduction forms part of the copyright-
holder’s rights , so that a refusal of a license cannot, in itself
constitute an abuse of a dominant position. Nevertheless, the
exercise of an exclusive right may, in exceptional
circumstances, give rise to abusive conduct. The ECJ ruled
that where a copyright holder refuses to give access to a product
or service indispensable to carrying on business this will only be
considered an abuse where:
13. IMS Health GmbH & Co. OHG v NDC Health GmbH KG C-
418/01 Court of Justice [2000] ECR I-5039

• The undertaking which requested the license intends to offer

new products or services not offered by the owner of the
copyright and for which there is a potential consumer demand.
• The refusal cannot be justified by objective considerations
• The refusal is such as to reserve to the undertaking which owns
the copyright the relevant market by eliminating all competition
in that market.
13. IMS Health GmbH & Co. OHG v NDC Health GmbH KG C-
418/01 Court of Justice [2000] ECR I-5039

- The ECJ has restated the existing law that only in “exceptional
circumstances” will an intellectual property right owner in a
dominant position be required to grant a license of that property.
The conditions to be fulfilled for an abuse to be found remain
strict, offering some comfort to copyright owners. It is now the
German court to decide these difficult factual questions.
14. Microsoft Corporation v Commission Tying and
Bundling Case

FACTS:
In 1993, the American software company Novell claimed that
Microsoft was blocking its competitors out of the market through
anti-competitive practices. The complaint centered on the license
practices at the time which required royalties from each computer
sold by a supplier of Microsoft’s operating system, whether or not
the unit actually contained the Windows operating system.
Microsoft reached a settlement in 1994, ending some of its license
practice.
14. Microsoft Corporation v Commission Tying and Bundling
Case

- In 1998, Sun Microsystems raised a complaint about the lack of

disclosure of some of the interfaces to Windows NT. The case
widened when the EU examined how streaming media
technologies were integrated with Windows.
14. Microsoft Corporation v Commission Tying and Bundling
Case

RULING:
Citing ongoing abuse by Microsoft, the EU reached a preliminary decision
in the case in 2003 and ordered the company to offer both a version of
Windows without Windows Media Player and the information necessary
for competing networking software to interact fully with Windows
desktops and servers. In March 2004, the EU ordered Microsoft to pay
€497 million ($ 794 million or €381 million), the largest fine ever handed
out by the EU at the time, in addition to the previous penalties, which
included 120 days to divulge the server information and 90 days to
procedure a version of Windows without Windows Media Player
14. Microsoft Corporation v Commission Tying and Bundling
Case

- The first two types of conduct by Microsoft that was censured by

the European Commission was the company’s refusal to supple
competitors which “interoperability information” and to
authorise them to use such information to develop and distribute
products competing with its own products on the workgroup
server operating system (OS) market (i.e., file, print, group, and
user administration services).
14. Microsoft Corporation v Commission Tying and Bundling
Case

- The Commission found that this refusal resulted in the

foreclosure of competitors from the server OS market
and ordered Microsoft to disclose details of its client/
server and server/ server communication protocols to
any parties interests in developing and distributing
workgroup server operating systems.
14. Microsoft Corporation v Commission Tying and Bundling
Case

- Addressing the second type of potentially anticompetitive

conduct by Microsoft, the Commission determined that the
“tying” of Windows Media Player to Windows PC OS
prevented the suppliers of other media players from
gaining comparable access to consumer PCs. Microsoft
was consequently required to offer a version of Windows without
Windows Media Player. In addition , Microsoft was fine EUR.
497.2 million in 2004.
14. Microsoft Corporation v Commission Tying and Bundling
Case

- The European Court of First Instance (CFI) upheld the

Commission’s decision with the exception of one elements
appointing a monitoring trustee to supervise implementation of
the remedies at Microsoft's expense .