Art 101 1TFEU Article 1011 The following shall

Art. 101 (1)TFEU Article 101(1): The following shall be internal market: PROHIBITED as incompatible with the ALL AGREEMENTS between undertakings, decisions by associations of undertakings and concerted practices which may AFFECT TRADE BETWEEN MS & which have as their OBJECT or EFFECT PREVENTION or RESTRICTION or DISTORTION of COMPETITION within the internal market

Art. 101(2) Article 101(2): Any agreements or decisions prohibited by Article 101(1) shall be automatically void = CIVIL LAW NULLITY Irrespective whether an ID has been issued or not, a practice prohibited by Art. 101(1) TFEU, and not exempt by Art. 101(3), is not legally binding in terms of civil law even if there is no antitrust decision declaring that it is/was illegal in terms of ECL NOTE: nullity can affect a whole or part of an agreement

Art. 101(3)TFEU Article 101(3): The prohibition may be declared inapplicable for multilateral practices which • contributes to improving the production or distribution of goods or • contributes to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, • and which does not: • impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; • give them the possibility of eliminating competition in respect of a substantial part of the products in question Note: Art. 101(3) makes the character of the prohibition contained in Art. 101(1) CONDITIONAL!

1. BASICS: Fundamental assumptions undertakings must independently define their market policy (strategy) otherwise, ‘multilateral cooperation’ can resemble ‘dominance’ but they can intelligently adapt to the conduct of competitors Ø most multilateral practices do not infringe ECL eg contracts Ø many multilateral practices affect competition/consumers both in + & in – Ø some are fundamentally anticompetitive by intended purpose (object) or effect Ø ECL only goes against competition restricting multilateral practices = ECL precludes any direct / indirect contact the object /effect of which is to influence market conduct of actual/potential competitors or to disclosure of internal business plans

‘multilateral’ practices Multilateral = at least 2 independent undertakings (functional definition) EVEN IF ONE/SOME ARE PASSIVE VERTICAL: express or implied agreements by dealers in the attitude adopted by the manufacturer ACTIONS taken WITHIN A SINGLE ECONOMIC UNIT ARE NOT considered MULTIALTERAL = internal division of tasks inside the group. ü cannot take decisions on market strategy independently ü have to respect guidelines of control holding entity do not compete with each other HORIZONTAL practices are seen as more dangerous => stricter enforcement VERTICAL practices are generally less restrictive => treated with less strictness

Character of intervention ECL enforcement in multilateral cases is very PRAGMATIC A) only severe cases are investigated on the basis of the De minimis rule (‘appreciable’ restriction is not expected from practices between small companies]) + B) uncovering (& stopping) a cartel is more important than justice (penalising all offenders) Ø Ø LENIENCY [a whistle blower can escape penalty if it helps uncover a cartel] + EU settlement procedure [companies that are willing to cooperate can get 10% fine discount] C). the ‘effects over form’ doctrine (functional approach) is used

Covered FORMS THE PROHIBITION (of initiating & concluding & entering & participation in competition restricting agreements) follows a functional approach = COVERS ANY FORM OF MULTILATERAL COORDINATION 1) Agreements sensu stricto ü must be multilateral ü oral & written / binding & non-binding ü concerning: production, distribution, promotion etc ü HORIZONTAL or. VERTICAL (incl. exclusive supply/purchase, setting conditions of resale) 2) Decisions of associations of undertakings = association acts for its members = reducing the number of entities active on the market ü ü binding (eg joint selling agreement) & not binding ‘acts’ of the association (eg internal recommendations) membership criteria are also a ‘decision’ as they determine who is ‘in’ (can benefit from) Concerted practices (collusion, cartels) – informal but intentional; explicit arrangements 3)

2. Prohibition of ‘abuse’ [conditional] prohibition of multilateral practices that prevent, restrict or distort competition = anticompetitive multilateral practices Anticompetitiveness can be found in • the OBJECT [aim/purpose] of the multilateral practice • the actual EFFECT [result] of the multilateral practice OBJECT = objective goal/purpose, not a subjective opinion of parties on intents or incentives of their behaviour EFFECT = appreciable negative influence

EU list - exemplary Article 101(1) TFEU PROHIBITS, in particular: (a) directly/indirectly fix purchase/selling prices or any other trading conditions; [PRICE FIXING] (b) limit/control production/markets/technical development/ investment; [OUTPUT/MARKET RESTRICTIONS] (c) share markets/sources of supply; [MARKET SHARING] (d) apply dissimilar conditions to equivalent transactions. . . ; [DISCRIMINATION] (e) make the conclusion of contracts subject to acceptance. . . of supplementary obligations which. . . have no connection with the subject of such contracts. [BUNDLING/TYING]

2. 1. RESTRICTIVE by ‘object’ UNQUESTIONABLY ANTICOMPETITIVE OBJECT MOST SERIOUSE COMPETITION VIOLATIONS = HARDCORE RESTRICTIONS BLACK-LISTED PROVISIONS Ø normally do not produce any beneficial effects Ø can not normally be approved even with extensive commitments Ø if present, they preclude the application of the de minimis rule Ø mostly horizontal in nature but also include vertical RPM NOTE: tender fixing in national competition laws

Hardcore EU Article 101(1) TFEU does not explicitly specify which restrictions are considered hardcore EU jurisprudence puts on the black list: PRICE & CC FIXING: horizontal price fixing & vertical resale price maintenance (RPM) with respect to minimal and fixed prices O/M RESTRICTIONS: horizontal market allocation & horizontal output restrictions MARKET SHARING: some vertical territorial restrictions Eg Consumer Detergents of 2011 & LCD of 2010

+ in MSs: BID RIGGING collusion between undertakings entering a tender, or by those entering and organizer concerning the terms and conditions of bids to be proposed, particularly as regards the scope of works and the price ü Fundamentally ‘NATIONAL’ FORM OF INFRINGEMENT - infringes competition & ‘national/public’ interests ü Not an infringement under Art. 101 TFEU and yet explicitly listed most national competition laws as a hardcore restriction; Bid rigging is a criminal offence in the US! ü Prohibited irrespective of market share

2. 2. Restrictive by ‘effects’ Ø If a practice has a restrictive aim (‘object’) it is not necessary to assess if it actually resulted in anticompetitive effects but the Commission usually does assess them anyway Ø Subject to the prohibition of Art. 101(1) TFEU are, aside from those with an anticompetitive object, also those multilateral practice which notably impede competition even if they do so unintentionally Ø for a multilateral practice to fall under the prohibition even without a restrictive aim, its ANTICOMPETITIVE EFFECTS MUST BE APPRECIABLE -> De minimis rule (De minimis non curat preator) = not all anticompetitive agreements ‘deserve’ public intervention

Agreements of minor importance 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) 2014/C 291/01 De minimis applies: I) QUANTITATIVE CRITERIA: MINOR MARKET SHERE EU: Notice on agreements of minor importance § marker share < 10% for horizontal § marker share < 15% for vertical § market share < 5% for networks of similar agreements (cumulative foreclosure effect of parallel networks of agreements having similar effects on the market) + II) QUALITATIVE CRITERIA: NO HARDCORE RESTRICTIONS – de minimis does not apply even to the smallest agreement if it contains black-listed provisions (anticompetitive object)

3. Enforcement Article 101 TFEU breaches are dealt with by: INFRINGEMENT decision (ID) – DECLARES that a given practice is a breach of Art. 101 TFEU – Art. 1(1) Reg 1/2003: authorities issue ‘DECLARATORY’ DECISIONS (the decision does not establish that the practice is prohibited, it only establish that the practice existed and that it was caught by the statutory prohibition) Ø contains a duty to stop the practice Ø might impose a FINE up to 10% group global turnover Ø now often reached with the use of LENIENCY & SETTLEMENT procedures Ø or a COMMITMENTS decision (CD) Ø Does not state if a infringement was committed => NO FINE Ø Contains binding commitments ALL CARTELS end in an infringement decision but there are no definite rules what type of decision will be issued for non-cartel agreements infringing Article 101 TFEU

3. 1. Infringement Decisions based on Art. 101 TFEU tend to be on cartels Companies can use two specific procedures to limit fines: LENIENCY & the SETTLEMENT PRCEDURE 1) Commission Notice on immunity from fines and reduction of fines in cartel cases 8/12/06 = LENIENCY NOTICE Ø Commission can give immunity from fines (NO FINE) to: the 1 st applicant + submits new & key information that allows finding/proving a cartel, genuine cooperation + ceases participation + not ring leader Ø Commission can give a fine reduction to other applicants: 30 -50% for the 2 nd; 20 -30% 3 rd, up to 20% rest 2) Commission Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Article 7 (infringement) & 23 (fines) of Council Reg 1/2003 = SETTLEMENT NOTICE Ø Possible 10% reduction in fine Ø faster & simpler decisions, lesser costs, less antagonistic

Consumer Detergents cartel Commission decision of 13 April 2011 (COMP/39579) Form: overall scheme of interlinked restrictive practices Parties: HENKEL + P&G + Unilever RM: heavy duty Laundry detergents powders sold to consumers Geog extent: B, Fr, Ger, Greece, It, Portugal, Spain, NL Time frame: 7/1/2005 -8/3/2007 (3 years 2 months) AISE environmetal initiative: indiect/direct price inreases, limiting promotions, coordinate shapre etc Leniency: Henkel 1 st, P&G 2 nd, Unilever 3 rd application Settlement procedure: based on ‘sufficient common understanding as regards evidence, the infringement, expected max fine etc Infringement decision: ORDER TO END the infringement of Art. 101 TFEU /not recommit (but infringement already ended 8/3/05)

Detergents FINE CONDITIONS CONSIDERED: gravity, nature, combined MS of participants, duration BASIC AMOUNT of fine set by reference to value of sales to which the infringement directly or indirectly related in the relevant market in the last year of infringement; ADJUSTMENTS: aggravating and mitigating factors; extra for DETERENCE LENIENCY: Henkel immunity, P&G max reduction of -50%, Unilever got 25% out of possible 30% SETTLEMENT: -10% OVERALL: Henkel 0 P&G 211 200 000 UNILEVER 104 000

2010 LCD (international cartel) Due to the extra-territorial applicability of ECL, non. EU firms must comply with ECL even with respect to practices committed outside the EU if those practices have/can have an effect on the Internal Market EG: Commission fined six foreign (NON EU) LCD panel producers € 650 mln for a price-fixing cartel which harmed EU consumers - buyers of TVs, computers and other products that use the key Liquid Crystal Display component. 1 -2) Samsung Electronics and LG Display of Korea 3 -6) Taiwanese: AU Optronics, Chimei Inno. Lux Corporation, Chunghwa Picture Tubes and Hann. Star Display Corporation. LENIENCY: Samsung got immunity, LG 50%, AU got 20% Note: Maritime carriers and car parts suppliers (many of them Japanese) fined € 546 million in February 2018 three separate cartel settlements – 2 x immunity Japanese firms 19

3. 2. Commitments decisions were meant to be used for agreements with both (+) and (-) effects (like individual exemptions): 1) Multilateral practices without a restrictive object but negative effects > positive effects 2) Multilateral practices with a restrictive object but potentially with positive effects > negative effects 3) Practices which centre on ‘novel’ or problematic issues such as IPR In practice, they are increasingly used when ever it is possible to design working commitments

BA/AA/Iberia: horizontal agreement ≠ cartel Art. 101 (1) JV AGREEMENT (not full function) for EXTENSIVE COOPERATION in relation to key parameters of airline competition that BY ITS NATURE RESTRICT COMPETITION & ACTUAL & POTENTIAL NEGATIVE EFFECTS: joint setting of fares, capacity, schedule, sales & marketing, share overall revenue BA/AA/Iberia = closest competitors! Combined MS 60 -90% RM – scheduled passenger air transport services with NO DEMAND SIDE SUBSTITUTION on the basis of origin & destination (city pair) markets Large efficiencies proven but also very foreclosing FINAL Commitments: Ø 21 slots a week made available at LHR/LGW & NY Ø fare combination, connecting passengers, FFP Ø 10 years applicability & Commission right to review/amend after 5 y

Ebooks – vertical agreement 2011 investigation into VERTICAL agreements between Apple + 5 publishers (1)Penguin, 2) Simon & Schuster (US), 3) Harper. Collins (US), 4) Hachette Livre (Fr), 5) Holtzbrinck/Macmillan (Ger) Problem: joint switch by the publishers from a wholesale model (retailer sets retail prices) to agency contracts with the same key retail price terms (eg unusual retail price MFN) clause, max retail price grids, 30% commission for Apple) Accusation: publishers and APPLE coordinated the switch in order to jointly raise retail prices or prevent the introduction of lower retail prices for e-books on a global scale e. Books commitments: § § § termination of the on-going agency agreements exclusion of certain MFN clauses in the agency agreements during the next five years giving retailers freedom to discount e-books, subject to certain conditions, for 2 years

Cross-border access to pay-TV – Paramount/Sky Commission decision of 26/07/2016 addressed to ‘Paramount’ (similar investigations towards Disney, NBC Universal, Sony, Twenty Century Fox and Warner Bros) about its licensing practices with Sky UK => likely infringement of Art. 101 TFEU ‘by object’, (Art. 101(3) not applicable CONTESTED CONTRACTUAL CLAUSES introduced two-sided, additional duties meant to ensure parties’ compliance with absolute territorial protection (goes directly against the objective of integration) Sky must refuse all unsolicited requests from customers from outside the UK/IRL § Paramount must ensure that broadcasters from outside UK/IRL do not make their pay TV services available inside the UK/IRL § ü Exclusive territorial licenses and demanding appropriate payment for IPR are permissible – ECL cannot limit the essence of IPR ü Contractual clauses cannot go beyond the essence of the IPR = such as those used in this case - exercise of IPR might infringe ECL

Paramount/Sky UK commitments Despite the fact that Paramount disagrees with the conclusions of the Commission, it has nevertheless offered commitments Initial Commitments were published and commented on by interested parties; then Revised and Finalised FINAL COMMITMENTS Paramount will not reintroduce the contested clauses Paramount will not seek to bring action before court/tribunal for violation of an existing duties by the broadcaster Paramount will not act upon or enforce duties placed upon itself under existing contracts Paramount will not circumvent the above commitments These commitments will apply for 5 years!

4. Exemptions - Art. 101(3) anticompetitive agreements are PROHIBITED ↓ automatically VOID (in terms of civil law) ↓ but where positive effects > negative effects, they are exempted from the prohibition = PROHIBITION is CONDITIONAL Art 1(2) Reg 1/2003: Agreements caught by Art. 101(1) which satisfy the conditions of Art. 101(3) are not prohibited, no prior decision to that effect being required; they are valid and enforceable from the moment that the conditions of Art. 101(3) are satisfied & for as long as that remains the case.

Art. 101(3) TFEU Art. 101(3) – The prohibition may be declared inapplicable for: any agreement/category of agreements; any decision/category of decisions by associations of undertakings; any concerted practice/category of concerted practices, which contributes to improving the production or distribution of goods or contributes to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; give them the possibility of eliminating competition in respect of a substantial part of the products in question

UEFA Champions League 2003 clearance 1/2/99 UEFA applied for negative clearance under [Article 101(1)] or, failing this, an exemption under [Article 101(3)] 24/07/03 Commission cleared the joint selling scheme but only after UEFA made extensive concessions to create balance between its rights as the owner of copyright and the needs of competition protection ü 14 separate packages limited in size & scope ü sale by UEFA as well as clubs ü elimination of black-out clauses for new distribution models ü 3 year limit for licence contracts

BLOCK EXEMPTIONS certain categories of multilateral practices which infringe Art. 101(1) but fulfil Art 101(3) are covered by block exemptions BLOCK EXEMPTIONS REGULATIONS = state that specific types of multilateral practices are considered to fulfil the exemption conditions because their positive effects generally outweigh their negative effects Ø Block exemptions are used to ensure the maximum level of legal certainty for companies – the authorities will not pursue a company that assumes in good faith that its operation is covered by a block exemption

Block Exemption Regulations § vertical agreements and concerted practices (30%) until 31/12/2022 § cars (30%) until 31/05/2023 § R&D (25%) until 31/12/2022 § specialisation (20%) until 31/12/2022 § technology transfer (20% for horizontal/30% for vertical) until 30/04/2026