ARTICLE 81 1: APPLICATION CRITERIA

1
ARTICLE 81 (1) APPLICATION CRITERIA

• At least two undertakings
• Coordination of market related conduct
• Prevention, restriction or distortion of
  competition within the Common Market
• as object of the coordination
• as effect of the coordination
• 4. Trade between Member States actually or
  potentially affected
• 5. Impact on competition and trade between Member
  States must be perceptible.

2

• ARTICLE 81 (3) APPLICATION CRITERIA
• Contribution to the improvement of proction or
  distribution or to the promotion of technical or
  economic progress
• Adequate participation of the consumers in the
  positive results achieved by the restriction of
  competition
• No imposition of unnecessary restrictions on the
  parties
• No elimination of competition with regard to a
  substantial part of the products in question
• UNDERLYING RATIONALE ECONOMIC BALANCE
• To be exempted from the prohibition laid down in
  Article 81 (1), a restrictive agreement must
  bring about perceptible
• objective advantages for the economy as a whole
  and in particular for the consumers. Such
  advantages must, moreover, be
• important enough to compensate for the risks and
  perils which the restrictive agreement causes to
  competition.
• Agreements which do not respect the principle of
  proportionality or constitute an impediment to
  the maintenance or
• development of effective competition on the
  relevant market are not exemptable.

3

• ARTICLE 82 APPLICATION CRITERIA
• Undertaking(s) in a dominant position on the
  common market or in a substantial
• part thereof
• Individual market dominance
• Collective market dominance
• 2. Abuse
• Inequitable prices or conditions
• Limitation of production, markets or technical
  progress to the detriment of consumers
• Discrimination of trade partners, thereby putting
  them at disvantage in competition
• Tying practices
• Other abusive practices
• 3. Trade between Member States actually or
  potentially affected
• 4. Perceptible impact on trade between Member
  States

4

• AGREEMENTS HAVING AS THEIR OBJECT A RESTRAINT OF
  COMPETITION
• Principles Indicators for restrictive
  object
• Appraisal ex ante - restrictive clauses
• Objective interpretation - factual and legal
  context of
• - Agreement must be capable of the
  agreement
• having an impact on the market - circumstances
  prevailing at the
• - Intention to restrict competition time
  when the agreement was
• not required made (e.g. conduct and
  interests
• of the parties)

5

• AGREEMENT HAVING AS THEIR EFFECT A RESTRAINT OF
  COMPETITION (cfr. COJ, STM, 1966 ECR 235)
• Principles Indicators for restrictive
  effect
• 1. Agreements without restrictive - nature and
  quantity, limited or otherwise,
• object are also caught of the products
  covered by the agreement
• 2. Appraisal ex ante possible - economic
  importance and market position
• 3. Economic analysisof the of the parties
  and their competitors
• the market required - the isolated nature
  of the agreement or,
• 4. Causal nexus between alternatively, in
  position in a series of
• agreement and effect on agreements
• the market - the degree of severity of the
  restrictive
• clauses
• - the degree of economic freedom remaining
• for competitors

6

• DE MINIMIS RULE
• (as seen by the Court of Justice)
• Principles An agreement containing clauses which
  bx their nature are restrictive of
  competition escapes from the prohibiton
  in Article 85 (1), if it affects the market
• only insignificantly, due to the
  parties, weak position on the relevant market
• (cfr. Völk, 1969 ECR 295, Javico,
  1998 ECR I 1983)
• Applicable To SMUs with combined market shares
  below or around 1
• Applicability doubtful regarding SMNs with
  combined market shares between 1 and 5
• Inapplicable -to large undertakings (cfr. The
  Distillers Company, 1980 ECR 2229)
• -to SMNs with combined market
  shares above 5 cfr. Miller, 1978 ECR 131
• -networks of restrictive
  agreements exceeding a market share of 5
  provided that the market more than
  30 of market in question are covered by parallel
  networks of similar
  restrictions.

7

• DE MINIMIS RULE
• As seen by the Commission (cfr. 2001 Notice)
• Principle Only agreements between undertakings
  with some market power are capable of having a
  significant impact on market conditions. All
  others are of minor importance.
• Applicable to horizontal agreements between
  undertakings with a combined market share
  not exceeding 10
• to vertical agreements between undertakings
  with market shares not exceeding 15
• Inapplicable to agreements having as their
  object hard core restrictions
• to individual networks of similar agreements
  with market shares of more than 5, if parallel
  networks cover more than 30 of the market

8

• Limiting the Reach of Article 81
• Ancillarity to a legitime purpose
  (non-competitive classes)
• Imposed on the seller of an undertaking legal if
  necessary for a successful transfer, but to be
  limited with regard to scope and duration
• imposed on undertakings members of a
  cooperative legal if necessary for the
  maintenance of the cooperative, but to be limited
  with regard to duration.
• Cfr. a) CoJ, Remia, (1985) ECR 2545
• b) CoJ, Gottrup, Klim, (1994) ECR I - 5641

9

• Limiting the Reach of Article 81
• Ancillarity to the market-opening aim
• (territorial and other restrictions)
• Even export bans aimed at ensuring an exclusive
  distributor or license territorial protection are
  legal if necessary for entering a new geographic
  market
• Joint ventures between competitors set up in
  order to enter a new product market are legal.
  Restrictions imposed on the parties or the joint
  venture escape from prohibition rule, if
  necessary for the achievment of that aim.
• Decision Elopak Metal Box ODIN, OJ 1990
  209 page 15
• Cfr CoJ, STM, ECR 235 Nungesser, 1982 ECR
  2015

10

• Limiting the Reach of Article 81
• Ancillarity to public interest
• (Decisions by professional bodies)
• Rules of the Dutch bar prohibiting the
  combination of legal consultancy and auditing
  (cfr. CoJ, Wouters, 2002 ECR I 1577)
• Anti-doping rules of international Olympic
  committee (cfr. CoJ, Meca-Medina and Maycen, 18
  July 2006, case C 519/04
• cfr. I a) Reference to be put here
• b)

11

• Limiting the Reach of Article 81
• SELECTIVE DISTRIBUTION SYSTEMS
• Concept not prohibited if
  prohibited if
• - Manufacturer - relate to technical
  - trade between
• Supplies only selected qualification
  of dealer, selected dealers is
  impeded
• dealers staff, premises - freedom
  of selective
• - Selected dealers resell - are
  qualitative, not dealers to fix their retail
• the contract goods only quantitative
  in nature prices is restricted
• to other selected dealers - are
  proportional with - existence of parallel
• or to final consumers regard to the
  contract systems leads to
  elimination
• - Not selected dealers - goods
  of price competition
• have no access to the - set out
  uniformly and in between
  manufacturers or
• contract goods advance and applied
  or to exclusion of other
• 
  without discrimination forms of
  distribution

12

• Limiting the Reach of Article 81 (1)
• FRANCHISING
• Concept Not restrictive of competition Restrict
  ive of competition
• - combination between - clauses aimed at
  protecting the - clauses preventing
• licensing of IPR (trade franchisors know how and
  price competition inside
• means, signs know-how) assistance methods the
  network
• and exclusive or selective - clauses necessary
  for - clauses on territorial
• distribution maintaining the identity
  and protection of the
• - regular technical and reputation of the
  network franchisor or the
• commercial assistance bearing the
  franchisors franchisees
• provided by franchisor business name or
  symbol (e.g. location clauses)
• to franchisees
• - fee to be paid by franchisees

13
EXCLUSIVE DISTRIBUTION

• CONCEPT
• Manufacturer (M)
• Nominates one
• Sole distributor (SD)
• Acting as his alter ego for the purpose of
• resale of his goods in a defined territory
• outside his home market

• NON-RESTRICTIVE OBLIGATIONS OF SD
• sales promotion
• Use of Ms trade mark
• Offer a complete product range
• Purchasing minimum quantities
• Maintain stocks
• Advertise the contract goods
• Establish network of retailers
• Provide after sales and warrantee services

14
EXCLUSIVE DISTRIBUTION (2)

• Restrictive but exemptable obligations
• Manufacturer (M)
• - exclusive supply
• - non-compete clause
• Sole distributor (SD)
• - exclusive purchasing
• - non compete clause
• - no active sales to territories reserved to M
  or other SDs
• - no sales to final users

• Non-exemptable contractual clauses and agreements
• Resale price maintenance
• Prohibiton of passive sales
• Impediments to parallel trade
• Reciprocal agreements between competing
  manufacturers