EU Antitrust law

EU Antitrust law

General introduction

Antitrust and Competition

© Łukasz Stępkowski

EU Competition Law - overview

• 3(1)b of the Treaty on the functioning of the European Union stipulates that the EU shall have exclusive competence, inter alia, in regard to the establishing of the competition rules necessary for the functioning of the internal market

• Back in the day of the European Community this was firmly within the so-called ’first pillar’ of the Union; nowadays it is part of the Union law as it currently stands (i.e. pillars no longer exist, don’t use old textbooks)

• ’Competition rules’ refer to a broader concept than that of ’antitrust

law’

EU Competition Law

• EU law on competition mainly includes:

• Antitrust law (esp. Articles 101 and 102 TFEU)

• Restrictive agreements and practices

• Abuse of dominant position

• EU Merger control (concentrations with what-is-now-an EU dimension)

• Rules on special or exclusive rights (art. 106 TFEU)

• Rules on State aid (esp. Articles 107 and 108 TFEU)

• Competition rules are (obviously) related to the single internal market of the Union, for said market would be unable to exist without them

• However, these are different legal norms than the fundamental

freedoms of the internal market (e.g. than the free movement of

goods)

EU Competition Law and its subject

• EU competition law, as it’s name would suggest, regulates competition

• For the purposes of the class, we may assume that it includes not only the (structure of the) market itself, but also the behaviour of

undertakings, the effects of such behaviour and the underlying market conditions

From Faull, Nikpay (eds), EU Competition Law, Oxford 2014, fig. 1.2

The Idea of Antitrust

• ’Antitrust law’: the body of law designed to protect trade and commerce from restraints, monopolies, price-fixing and discrimination (Black’s Law Dictionary 9e, 2009, p. 111)

• As such, antitrust law is related to issues of entry and exit barriers, pricing, supply, demand (and distribution), as well as market partitioning

• Furthermore, antitrust law serves as a check on market power of an

undertaking, that is the power to raise prices above competitive level

while maintaining profitability, having in mind the issues of output,

consumer choice, product quality and innovation

Antitrust in EU law

• The European Union has its own set of rules related to the idea of antitrust

• This is a self-standing body of law different from, e.g., US antitrust law, both as to its rationale and its contents

• The FEU Treaty does not expressly refer to ’antitrust’, but in the

Commission’s practice Articles 101 and 102 TFEU are referred to as main provisions of EU ’antitrust’ law

• Example: The Commission’s Report on Ten Years of Antitrust Enforcement under Regulation 1/2003 (http://eur-lex.europa.eu/legal-content/EN/TXT/?

qid=1488910086982&uri=CELEX:52014SC0230)

The EU approach to antitrust

• Other jurisdictions may adopt an approach to antitrust involving a so- called „rule of reason”, i.e. a restriction on competition has to be analyzed whether (and if so, how much) it is harmful and/or beneficial for competiton

• In addition, some restrictions may be deemed illegal „per se” because of the harmful effects they introduce

• Such restrictions illegal per se include horizontal price fixing and market division

• Outside the per se rule a restriction had to be analysed on a case-by-

case basis, which would in turn likely be time-consuming

The EU approach to antitrust-cont.

• EU antitrust law does not have a rule of reason (viz. T-112/99 Métropole télévision, EU:T:2001:215, para. 72 et seq.)

• Instead, EU antitrust law works on a different basis (somewhat normative one) in that it involves (for 101 TFEU):

• Automatic application to restraints

• Pain of nullity

• Self-assessment

• Individual and block exemptions that may apply to any type of horizontal and vertical restraint (no per se rules, although some restraints are very difficult to justify, e.g. resale price maintenance)

• Some academics are vocal supporters of economic analysis under EU law and

dispute the idea of a normative approach (see Craig and de Burca’s criticism of

T-112/99 Métropole)

The EU approach to antitrust-cont.

• A part of the EU approach is to establish normative ’safe harbours’ for undertakings in the form of block exemptions

• A block exemption relieves an undertaking from the need to self-assess provided that its conditions are met

• The effect of a block exemption is to render a restriction compliant with

Article 101(1) TFEU, by way of introducting a normative way to apply Article 101(3) TFEU

• Cf. Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted

practices, Art. 2(1) http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?

uri=CELEX:32010R0330&from=PL

The key actors in antitrust

• The enforcement of EU competition law at EU level mainly involves

the European Commission (art. 105(1) TFEU: (…) the Commission shall ensure the application of the principles laid down in Articles 101 and 102), subject to review of the Court of Justice of the European Union.

• However, National Competition Authorities (NCAs) also play a role,

because EU law is supposed to be concurrently applied by them along national law (art. 5, regulation 1/2003: The competition authorities of the Member States shall have the power to apply Articles 81 and 82 of the Treaty in individual cases)

• Furthermore, Articles 101 and 102 TFEU are capable to be applied by

the national courts (art. 6, regulation 1/2003)

The Commission’s regulatory role

• Apart from enforcement under EU competition procedures, the Commission acts as a regulator

• While the general legislative role rests with the Council (art. 103(1)

TFEU), the Commission may issue regulations under 105(3) TFEU,

which refers to art. 103(2)b and 101(3) TFEU – normative

simplification and general block exemptions

The Commission’s quasi-requlatory role • Apart from adopting regulations, the Commission also issues guidelines

on the application of antitrust law

• Those are soft-law instruments

• Such guidelines (notices) are not binding on Member States (C-360/09 Pfleiderer, EU:C:2011:389, para. 21, C-226/11 Expedia, EU:C:2012:795, para. 29)

• However, guidelines are binding on the Commission, in that they

impose a limit on the exercise of its discretion; the Commission must

not depart from the content of a notice without being in breach of the

general principles of law, in particular the principles of equal treatment

and the protection of legitimate expectations (Expedia, para. 28)

Notices and guidelines

• While notices and guidelines adopted and issued by the Commission do not bind Member States, this is not to say that they have no legal effect whatsoever

• Even if a soft law act is not binding, it has a legal effect of requiring national courts and NCAs to take it into consideration in order to decide disputes submitted to them, in particular where such

guidelines cast light on the interpretation of national measures

adopted in order to implement them or where they are designed to supplement binding European Union provisions (see C 410/13 ‑

Baltlanta, EU:C:2014:2134, para. 64)

Antitrust and private enforcement

• While perhaps the most obvious way of enforcing EU antitrust law is left to the Commission and NCAs, Articles 101 and 102 TFEU may also be invoked by private parties (i.e. these articles have direct effect)

• Consequently, Article 101 TFEU may be a basis of a claim for damages before a national court, e.g. where an undertaking has incurred harm because of conduct of another

• There is now a directive for private enforcement:

• Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law

provisions of the Member States (Directive 2014/104)

Antitrust and private enforcement

• Directive 2014/104 confers a right to compensation for actual loss and for loss of profit, plus the payment of interest for a person who has

suffered harm due to infringement of Articles 101 or 102 TFEU

• It may not lead to overcompensation

• Member States were supposed to transpose the Directive by 27

December 2016

Anticompetitive Object

• Some restrictions have an anticompetitive object

• Such restrictions infringe competition by their very contents and it is not required to show that they exhibit anticompetitive effects

• If an anticompetitive object is found then no requirement to additionally look for anticompetitive effect exists

• Restriction by object is appreciable (Expedia, para. 37)

• If a restriction has an anticompetitive object any actual restriction

may be only potential (C-8/08 T-Mobile, EU:C:2009:343, para. 31)

Anticompetitive Object – cont.

• Some anticompetitive objects are found under Art. 101(1) a-e TFEU

• However, the list is not exhaustive

• In order to determine whether an agreement involves a restriction of

competition ‘by object’, regard must be had to the content of its provisions, its objectives and the economic and legal context of which it forms a part.

• When determining that context, it is also appropriate to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question

• although the parties’ intention is not a necessary factor in determining whether an agreement is restrictive, there is nothing prohibiting the competition

authorities, the national courts or the Courts of the European Union from taking that factor into account

• Allianz, para. 34-37

De minimis rule / appreciable effect

• EU antitrust law does not apply to all restrictions

• Where an agreement or a concerted practice does not restrict competition by object, its effect should be considered

• Where said effect has no appreciable influence on competition, it is considered to fall within the de minimis rule (cf. C 32/11 ‑ Allianz,

EU:C:2013:160, para. 34)

• There is a Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice)

• http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=148893083019 9&uri=CELEX:52014XC0830(01

)

Antitrust and Consumers

• While a restriction on competition may of course be detrimental to consumers, consumer harm is not a prerequisite for application of Article 101 or 102 TFEU

• It is also not required for a finding that a restriction has an anticompetitive object

• Articles 101 and 102 TFEU apply even if a restriction is irrelevant for consumers and it is the competition itself that is being harmed

• „(…) a finding of an anti-competitive object of an agreement may not be made subject to a requirement of proof that the agreement entails disadvantages for final consumers” C-501/06 P GlaxoSmithKline,

EU:C:2009:610, para. 63-64

Thank you for your attention