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• APPLICATION OF EC COMPETITION LAW
• BY THE DOMESTIC JUDICIARY
• ? Agreements and Concerted Practices
• ? Object or Effect of Restricting Competition
• Dr. Franz Urlesberger
• Schönherr Rechtsanwälte

SCHÖNHERR
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Requirements of Art 81

• Involvement of two or more independent
  undertakings or an association of undertakings
• Agreements or concerted practices
• having the object or effect to restrict
  competition
• Intra-state element
• Appreciability.

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Collusion between competitors
What shall I do about it? They say this is no
concerted practice but their way to greet each
other!
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Agreements and Concerted Practices

• Policy decision no cooperation between
  independent undertakings
• Is parallel behaviour result of collusion or
• natural effect?

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What Constitutes an Agreement?

• interpreted broadly (no legalistic/formalistic
  approach)
• not limited to legally enforceable agreements
• Gentlemen's agreements
• mutual understandings
• oral or in writing

concurrence of wills required
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Agreements - Examples

• Settlement of a law suit (Penneys, OJ 1978 L
  60/19)
• Gentlemans agreements (Case 41/69, ACF
  Chemipharma)
• Understandings (National Panasonic, OJ 1982 L
  354/28)
• Single overall agreement (ENI, OJ 1987 L 5/13)
• Oral agreements (Case 28/77, Tepea v Commission)
• Constitution of a trade association (Nuovo CEGAM,
  OJ 1984 L 99/29)
• Guidelines adhered to by another party (Anheuser,
  OJ 2000 L 49/37)

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Agreement vs Concerted Practice

• ECJ No need for classification(C-49/92,
  Commission v ANIC)
• Concept of a Single Overall Agreement(Polypropy
  lene, OJ 1986 L 230/1)

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Concerted Practices Definition (1)

• ECJ in Dyestuffs (Case 48/69)
• "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.

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Concerted Practices Definition (2)

• ECJ in Suiker Unie (Case 40/73)
• "any direct or indirect contact between such
  operators, the object of 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.

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Concerted Practices Definition (3)

• Polypropylene (OJ 1986 L 230/1)
• "there are many forms and degrees of collusion
  and it does not require the making of a formal
  agreement. An infringement of Article 81 may well
  exist where the parties have not even spelled out
  an agreement in terms but each infers commitment
  from the other on the basis of conduct"

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Concerted Practices Must there be an Effect? (1)

• A concerted practice requires
• some form of concertation and
• a (coordinated) practice resulting from such
  concertation
• But (anti-competitive) effects must not be
  proven

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Concerted Practices Must there be an Effect?
(2)

• ECJ in Hüls (C-199/92 1999 ECR I-4287)
• A concerted practice is caught by Article 81
  (1) EC, even in the absence of anti-competitive
  effects on the market.
• e.g. information exchange (concertation) ?
  consideration of information (coordinated
  practice) ? no price increase (no effect) ? still
  caught by Art 81.

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Burdon of Prooffor a Concerted Practice

• In principle Commission
• What evidence constitutes proof?
• Direct evidence (documents, testimonies etc)
• Indirect evidence (indications)
• Is parallel behaviour evidence?
• Dyestuffs
• Wood Pulp

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Unilateral Behaviour

• Concurrence of wills required by Art 81 EC
• Broad interpretation
• AEG Telefunken (Case 107/82)
• Ford (Case 25/84)
• Sandoz (C-277/87)
• Narrow interpretation
• Volkswagen (T-208/01)
• Bayer (C-2, 3/01)

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Object or Effect of Restricting Competition -
Preliminary Remarks

• Prior to Reg 1 (1 May 2004)
• agreements within Art 81 (1) are unenforceable,
  if
• neither block exempted nor
• notified to the Commission under Art 81 (3)
• Since Reg 1
• restrictive agreement are enforceable if Art 81
  (3) is satisfied
• focus has shifted from Art 81 (1) to Art 81 (3)

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Object or Effect

• Suggests ...
• two alternatives
• a certain order
• Only if the object of an agreement is not
  anti-competitive its effect must be assessed
  (Société Technique Minière).
• subjective intention of the parties is
  irrelevant
• agreements with anti-competitive object may only
  be lawful on the basis of Art 81 (3)

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Agreements having as their object a restriction
of competition

• Horizontal agreements
• Price fixing
• Market sharing
• Output/sales limitations
• Exchanges of price information
• Collective exclusive dealing
• Vertical agreements
• Resale price maintenance
• Restrictions of passive sales

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Agreements having as their effect a restriction
of competition (1)

• Economic concept Analysis of the agreement in
  its market context is required.
• Contractual restrictions may have pro-competitive
  effects, e.g.
• exclusive distribution agreements or
• consortia agreements.

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Agreements having as their effect a restriction
of competition (2)

• Restriction of the freedom of action in relation
  to market parameters.
• Not Intra-group agreements, market remote
  activities or in the absence of freedom to act.
• Adverse effect on the market (prices, quality,
  variety, innovation, etc)
• Guidance in Commission Guidelines, in particular
  on
• horizontal cooperation agreements (OJ 2001 C
  3/02) and
• vertical restraints (OJ 2000 C 291/01).

SCHÖNHERR