3.1 Elements
Article 101 (1) TFEU outlines general prohibition regarding anti-competitve agreements when it provides: ‘The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by as-sociations of undertakings and concerted practices which may affect trade be-tween Member States and which have as their object of effect the prevention, re-striction or distortion of competition within the common market [...]’.
Pursuant to the cited provision, it is easy to see that five conditions must be met in order to find that a conduct falls within the prohibition of restrictive agreements, namely:
1. must be an agreement or concerted practice between undertakings or a decision by associations of undertakings;
2. must be an agreement or concerted practice between undertakings or a decision by associations of undertakings;
3. have effect on trade between Member States;
4. its object or effect;
5. must be the prevention, restriction or distortion of competition within the common market.
Ad 1) We have already dealt with the concept of undertaking when we dis-cussed the scope of competition rules in Chapter I, therefore at this point it should be noted that in order to speak about the prohibition contained in Article 101 (1) TFEU, it is required that there at least be two undertakings in the sense of competition law. The situation is that the nature of the prohibition is such that one single undertaking cannot commit the infringement. The undertakings are
307 Judgment of 15 September 2005 in Case T-325/01, DaimlerChrysler AG v Commission of the Euro-pean Communities, [2005] ECR II-03319 at 85.
not deemed independent if one undertaking has no real freedom to determine its course of action on the market.308
Ad 2) The prohibition on agreements restricting competition laid out in Article 101 (1) TFEU might be infringed by undertakings in three forms, i.e. through an agreement, concerted practice or a decision by associations of undertakings.
Article 101 (1) TFEU distinguishes between concerted practice, an agreement between undertakings and a decision by an association of undertakings in order to extend the prohibitions stipulated in this provision to all the coordinations and collusions between undertakings.309
In order to classify an interaction between undertakings as an agreement , it is sufficient to have an agreement on that the undertakings concerned express their joint intention to conduct themselves on the market in a specific way. As regards the form in which this joint intention is expressed, it is sufficient for a stipula-tion to qualify as an expression of the parties' intenstipula-tion to behave on the market in accordance with its terms without its having to constitute a valid and binding contract under national law. It follows from this that the concept of an agreement within the meaning of Article 101 (1) TFEU centres around the existence of a concurrence of wills between at least two parties, where the form in which it is manifested is unimportant so long as it constitutes the faithful expression of the parties’ intention.310
We speak of concerted practice when the coordination between undertakings, without having reached the stage where an agreement as such has been con-cluded, consciously substitutes practical cooperation between them for the risks of competition.311 A concerted practice by its nature does not have all the ele-ments of a contract but may arise out of a coordination which becomes apparent from the behaviour of the participants.312 The prohibition of concerted practices includes any direct or indirect contact between undertakings, 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.313
308 Judgment of 31 October 1974 in Case C-15-74, Centrafarm BV et Adriaan de Peijper v Sterling Drug Inc., [1974] ECR 01147 at 41.
309 Judgement of 23 November 2006 in Case C-238/05, Asnef-Equifax, Servicios de Información sobre Solvencia y Crédito, SL v Asociación de Usuarios de Servicios Bancarios (Ausbanc), [2006]
ECR11125 at 32.
310 Judgement of 26 October 2000 in Case T-41/96, Bayer AG v Commission of the European Commu-nities, [2000] ECR II-03383 at 67–69.
311 Judgement of 14 July 1972 in Cases C-48, 49, 51-57/69, Imperial Chemical Industries Ltd. v Commission of the European Communities, [1972] ECR 00619 at 64.
312 Ibid., at 65.
313 Judgement of 16 December 1975 in Cases C-40-73-48-73., 50-73., 54-73-56-73., 111-73., 113-73.
and 114-73, Coöperatieve Vereniging ‘Suiker Unie’ UA and Others v Commission of the European Communities, [1975] ECR 01663. at 174.
Decisions by an association of undertakings mean any independent market de-cisions made (in the absence of any explicit order from state law) by an associa-tion of undertakings, whether mandatory, recommended or even apparent in a less strict form. This includes e.g. recommending a price, information sharing, or even the statutes of a civil society organization.
Ad 3) An agreement, concerted practice or a decision by an association of un-dertakings (hereinafter jointly referred to as ‘agreement’) must appreciably af-fect trade between Member States. The efaf-fect on trade criterion confines the scope of application of Articles 101 and 102 TFEU to agreements having a mini-mum level of cross-border effects within the European Union.314
The requirement implies that there must be an impact on cross-border eco-nomic activity involving at least two Member States.315
It should be noted that the concept of trade is a wide concept, since it covers all cross-border economic activities. If an agreement interferes with the pattern of trade between Member States,316 or with the structure of competition in the common market,317 then it might be qualified as one that affects trade. In order to determine that an agreement might affect trade between Member States, it must be possible to foresee with a sufficient degree of probability, on the basis of a set of objective factors of law or of fact, that the agreement in question may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States.318
Ad 4) The object or effect of an agreement must be the restriction of competi-tion. Object and effect are alternative requirements, which means that if either of them is fulfilled, it is possible to establish the infringement.
On the basis of the separation of object and effect, we divide anti-competitive agreements into hard-core cartels and other agreements. In the case of hard-core restrictions, it is not necessary to prove that the agreement at issue has actually restricted competition, but it is sufficient if the agreement has been concluded.
The following is considered hard-core anti-competitive agreements (cartels or horizontal hard-core anticompetitive agreements) between competitors:
• price-fixing;
• output restrictions of limiting production;
• market sharing;
314 Guidelines on the effect on trade concept contained in Arts. 81 and 82 of the Treaty [OJ C 101 of 27.4.2004], para 13.
315 Ibid., para 21.
316 Judgement of 30 June 1966 in Case C-56/65, Société Technique Minére v Maschinenbau Ulm GmbH, [1966] ECR 00235.
317 Judgement of 6 March 1974 in Joined Cases C-6-7/73, Istituto Chemioterapico Italiano S.p.A. and Commercial Solvents Corporation v Commission of the European Communities, [1974] ECR 00223 at 32.
318 Case C-56/65 Société Technique Minére v Maschinenbau Ulm GmbH.
• collective boycott; and
• information sharing on actual or future prices.
Hard-core anti-competitive agreements between non-competitors (so-called vertical hard-core anticompetitive agreements) are the following:
• resale price maintenance;
• absolute territorial protection;
• export ban.
From the above, it is evident that in these cases it is sufficient to prove the ex-istense of the agreement, in other cases – in the case of the so called effect-based cases –, however, the actual anti-competitive effect shall also be proved. In this regard, it can be said that agreements between competitors are more likely to be anti-competitive than agreements between non-competitors, thus agreements be-tween undertakings at a different level of the production or distribution chain are less likely to be anti-competitive. It can be stated as a general principle that while inter-brand competition (e.g. competition between TV producers) is strong, vertical agreements are less likely to be actually anti-competitive, as if inter-brand competition were weak. In this case, therefore, intra-brand competi-tion (e.g. competicompeti-tion between the distributors of the same producer) is less im-portant. It does not mean that these later agreements in the case in question can-not be anti-competitive.
Ad 5) An agreement should be such that prevents, restricts or distorts compe-tition on the common market. There is no substantial difference between the three concepts. In each case, we are examining whether there is restriction of competition or not, or if an agreement is theoretically capable of having such ef-fect. Consequently, these three terms are used in conjunction in practice.
3.2 Exemptions
The fact that an agreement restricts competition within the meaning of Article 101 TFEU implies that it is forbidden. It does not mean, however, that it is nec-essarily illegal because an agreement which falls under the cited provision might be legal if it is exempted from the ban.
There are two grounds on which exemption is possible:
• under Article 101 (3) TFEU (individual exemption);
• under a Block Exemption Regulation.
Under Article 101 (3) TFEU the provisions of paragraph 1 may, however, be declared inapplicable in the case of319
319 See also: Guidelines on the application of Article 81 (3) of the Treaty, OJ C 101, 27.4.2004, pp. 97–
118.
• an agreement or category of agreements between undertakings,
• a decision or category of decisions by associations of undertakings,
• a concerted practice or category of concerted practices,
contributes to improving the production or distribution of goods or to promot-ing technical or economic progress, while allowpromot-ing consumers a fair share of the resulting benefit, and which does not:
(a) impose on the undertakings concerned restrictions which are not indis-pensable to the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in re-spect of a substantial part of the products in question.
In the case of block exemptions, the legislature has created a set of conditions under which there is an automatic presumption that the conditions of Article 101 (3) TFEU are met. The Commission has issued several block exemptions, for in-stance, certain vertical agreements or research and development agreements are exempted under block exemptions. Some block exemptions are general,320 while others relate to special sectors.321
Deciding whether an agreement is exempted under individual exemption or block exemption is the task of the undertaking concerned.
In concluding that an agreement is anti-competitive, the burden of proof is on the European Commission, i.e. it is them who have to prove that the conditions of Article 101 (1) TFEU are met, while the undertakings concerned shall prove that despite that, the agreement is legal, since the conditions of Article 101 (3) TFEU or the conditions of a block exemption are met.