The Law of the Internal Market, Competition

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The Law of the Internal Market, Competition

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Internal Market basic principles

• Art.14 The internal market shall comprise an
  area without internal frontiers in which the free
  movement of goods, persons, services and capital
  is ensured.
• Art. 12 prohibition of discrimination based on
  nationality

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I. Tariff barriers to trade Custom duties and
charges having equivalent effect (CD CEE)

• Rule prohibition of Custom Duties CEE
• Definition Charge having equivalent effect
• Any pecuniary charge imposed unilaterally,
  however small
• By reason of the fact that they cross a frontier
• Whatever its designation or mode of application

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II. Fiscal tariff barriers to trade Internal
Taxation

• Purpose Neutrality of internal taxation
  regarding competition between domestic and
  imported products
• Prohibition of excess taxation if import and
  domestic product are
• - similar
• - in competition

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III. Non-tariff barriers to trade quantitative
restrictions and MEEs

• Rule PROHIBITION Quantitative restrictions (QR)
  and measures having equivalent effect (MEEs)
• Exception Justified restrictions for import and
  export barriers public policy, public security,
  public morals.

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Measures having equivalent effect?

• All trading measures enacted by Member States
  which are capable of hindering, directly or
  indirectly, actually or potentially,
  intra-Community trade.
• Net cast wide

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Cassis de Dijon mutual recognition

• Mutual recognition principle Goods lawfully
  produced and marketed in one MS can be sold in
  another MS unless justified mandatory requirement.

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Mutual recognition a classic case in details
(Reinheitsgebot)

• Case 178/84, Reinheitsgebot
• Prohibition on the marketing under the
  designation bier of beers absolute ban on the
  marketing of beers containing additives
• Is it a measure of equivalent effect? Can Germany
  justify it?

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Consequences of Cassis de Dijon

• Promotes Community interest, but erodes diverse
  (high) national standards
• Traders all over Europe challenge MEEs invoking
  that their commercial freedom is breached.
• How to contravene such disperse challenges and
  conserve national regulatory autonomy? What are
  the limits to and (interest in) harmonisation?

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Keck and Mithouard

• Distinction between product requirements and
  certain selling arrangements
• Difference in market access effect and thus aim
  is not to restrict volume of trade ? permitted

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Freedom of establishment scope of activities

• Art. 43 EC restrictions on the freedom of
  establishment of nationals of a Member State in
  the territory of another Member State shall be
  prohibited. Such prohibition shall also apply to
  restrictions on the setting-up of agencies,
  branches or subsidiaries by nationals of any
  Member State established in the territory of any
  Member State.
• shall include the right to take up and pursue
  activities as self-employed persons and to set up
  and manage undertakings, in particular companies
  or firms.

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Freedom of establishment scope of persons

• Natural persons national of a Member State
• Legal persons company incorporated in one of the
  Member States
• Legal issues
• Multiple branches? European company law
  progresses slowly, resistance and its reasons

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FMW Content of rights of workers

• Market access rights Art. 39(1)
• Discrimination and restrictions prohibited
• Related rights case law on social advantages
• Treaty exceptions
• - Art. 39(3) EC public policy, public security,
  public health ( Dir. 2004/38/EC Art. )

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Cartels, Abuse of dominant position and Merger
Regulations
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Background objectives

• Objectives of EC competition law
• Workable competition
• Common market
• Pillars of EC competition law
• Relationship between EC competition law
  national law
• Relationship between EC competition law 4
  freedoms

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Latest cartel news

• The European Commission fined six companies a
  total 67.6 million euros on Wednesday (7 October)
  after concluding they had taken part in a power
  transformer cartel. The EU watchdog fined Swiss
  engineering group ABB 33.8 million euros and
  Japan's Toshiba Corp 13.2 million for taking part
  in a "gentlemen's agreement" not to compete
  against each other in Europe and Japan. Germany's
  Siemens had its fine waived because it blew the
  whistle on the cartel. The Commission's
  investigation started with surprise inspections
  in February 2007."The Commission has now put an
  end to this rip-off by the self-appointed
  'gentlemen'," European Union Competition
  Commissioner Neelie Kroes said in a statement.
• Euractiv 7 October 2009 www.euractiv.com

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IP/07/509 Brussels, 18th April 2007 Competition
Commission fines members of beer cartel in The
Netherlands over 273 million The European
Commission has fined the Dutch brewers Heineken,
Grolsch and Bavaria a total of 273 783 000 for
operating a cartel on the beer market in The
Netherlands, in clear violation of EC Treaty
rules that outlaw restrictive business practices
(Article 81). The Commission's decision names the
Heineken group, Grolsch and Bavaria, together
with the InBev group which also participated in
the cartel. Beer consumption is around 80 litres
per capita in The Netherlands. Between at least
1996 and 1999, the four brewers held numerous
unofficial meetings, during which they
coordinated prices and price increases of beer in
The Netherlands. InBev received no fines as they
provided decisive information about the cartel
under the Commissions leniency programme.
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Ten highest cartel fines per undertaking (since
1969)

• Last update 8th July 2009
• Year Undertaking Case Amount in
• 2008 Saint Gobain Car glass 896.000.000
• 2009 E.ON Gas 553.000.000
• 2009 GDFSuez Gas 553.000.000
• 2007 ThyssenKrupp Elevators and escalators
  479.669.850
• 2001 F. Hoffmann-La Roche AG Vitamins
  462.000.000
• 2007 Siemens AG Gas Insulated switchgear
  396.562.500
• 2008 Pilkington Car glass 370.000.000
• 2008 Sasol Ltd Candle waxes 318.200.000
• 2006 Eni SpA Synthetic rubber 272.250.000
• 2002 Lafarge SA Plasterboard 249.600.000
• Amounts corrected for changes following
  judgments of the CFI and ECJ.

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The type of cartels prohibited

• Type of conduct
• Agreement
• Concerted practice
• Restriction of competition
• Effect on trade between MS
• Assessment
• - How could competition in the market have
  developed without the alleged conduct?
• - Distinction between horizontal and vertical
  agreements

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Restriction of competition (II)

• Object price cartels, market sharing, absolute
  territorial protection ? no need to examine the
  restrictive effects of an agreement, they are
  restricted
• Otherwise ?
• Looking at Effect factual and economic context
• Appreciable effect (de minimis)
• Quantitative criterion market shares
• 10 horizontal agreements
• 15 vertical agreements
• Qualitative criterion cumulative effect network
  of agreements

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Prohibition of Abuse of dominant position

• Existence of dominant position ? relevant market?
• Dominant position is abused
• Abusive conduct may affect trade between Member
  States

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Controlling mergers

• EU Approval needed
• Application for prior notification
• Examination by Commission

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Why control State Aid in EU?

• Brussels to help struggling companies
• By Nikki Tait in Brussels
• Published December 17 2008 1317 Last updated
  December 17 2008 2223
• Companies across the European Union could get
  more help to weather
• the economic turmoil in the form of direct cash
  grants and cheap
• loans after Brussels relaxed state aid rules on
  Wednesday.
• Under the measures the second easing of rules
  in two weeks
• governments can offer more heavily subsidised
  interest rates on all
• loans, cheaper state guarantees, and interest
  rate reductions on
• investment loans if they relate to products that
  improve environmental protection.

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State aids and the procedural rules (II) New
State aids

• Notification Article 2, Reg. 659/1999
• Exemptions
• E.g. De minimis aid Reg. 1998/2006
• E.g. General Block Exemption Regulation 800/2008
• Standstill Article 3 Reg Article 88(3) EC
  direct effect
• Preliminary investigation Article 4
• Formal investigation Article 6

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State aids and the procedural rules (III)
Existing State aids

• Commission shall keep under constant review all
  systems of aid (Article 88(1) EC)

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State aids and the procedural rules (IV) Role of
the national court

• Article 88(3) EC has direct effect
• Unlawful aid
• Not notified, but granted
• Notified, but granted before the Commission has
  adopted a final decision
• Aid granted in violation of a decision
• Order restitution in accordance with national
  procedural rules
• Court cannot rule on compatibility of aid with
  Article 87 EC (no direct effect)

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State aids and the procedural rules (IV) Role of
the Commission

• Commission rules on the compatibility of aid
  schemes
• It cannot order State aid to be restituted solely
  on the ground that it has not been notified
  (first further examination required)
• Articles 10-15, Reg. 659/1999 order recovery
  under certain conditions