Part III
European Law: Substance
Content
1.
Article 101: Jurisdictional Aspects
2.
Forms of Collusion between Undertakings
3.
Restriction of Competition: Anti-competitive Object or Effect
4.
Article 101(3): Exemptions through Pro-competitive Effects
Competitive markets are markets in which economic rivalry is to enhance efficiency. Market ‘forces’ determine the winners and losers of this rivalry, and competition will—ultimately—force inefficient losers out of the market.
Who, however, forces the winner(s) to act efficiently? By the end of the nineteenth century, this question was first raised in the United States. After a period of intense competition, ‘the winning firms were seeking instruments to assure themselves of an easier life’; and they started to use—among other things—the common law ‘trust’ to coordinate their behaviour within the market. To counter the anti-competitive effects of these trusts, the American legislator adopted the first competition law of the modern world: the Sherman Antitrust Act (1890). The Act attacked two cardinal sins within all competition law: anti-competitive agreements and monopolistic markets.
The US experience has significantly shaped the competition law of the European Union; yet the inclusion of a Treaty chapter on EU competition law was originally rooted not so much in competition concerns as such. It was, instead, the ‘general agreement that the elimination of tariff barriers would not achieve its objectives if private agreements of economically powerful firms were permitted to be used to manipulate the flow of trade’, EU competition law was thus—at first—primarily conceived as a complement to the internal market.
This also explains the position of the competition provisions within the EU Treaties. They are found in Chapter 1 of Title VII of the TFEU. The chapter is divided into two sections—one dealing with classic competition law, that is: ‘[r]ules applying to undertakings’; the other with public interferences in the internal market through ‘[a]ids granted by States’. Table 12.1 provides an overview of the various competition rules within the EU Treaties.
EU competition law is thereby built on four pillars. The first pillar deals with anti-competitive cartels and can be found in Article 101. The second pillar concerns situations where a dominant undertaking abuses its market power and is covered in Article 102. The third pillar is unfortunately invisible: when the Treaties were concluded, they did not mention the control of mergers. This constitutional gap has never been closed by subsequent Treaty amendments; yet it has received a legislative closing in the form of the European Union Merger Regulation (EUMR). The fourth pillar of EU competition law concerns ‘public’ interferences into free competition, and in particular State aids.
This final chapter on substantive EU law ‘introduces’ European competition law by exploring only the first pillar: Article 101. This article is in many respects emblematic for the ‘European approach to competition law. We start by considering the ‘jurisdictional’ aspects of the provision in Sections 1 and 2. The ‘substantive’ criteria within Article 101, and their relationship to each other, will then be discussed in Sections 3 and 4.
Cases
Figures
Extra Materials
Useful videos
Useful websites
Further Reading
G. Amato, Antitrust and the Bounds of Power: The Dilemma of Liberal Democracy in the History of the Market (Hart, 1997)
J. Faull, ‘Effect on Trade between Member States’ (1999) 26 Fordham Corporate Law Institute, 481
J. Goyder and A. Albors-Llorens, EC Competition Law (Oxford University Press, 2009)
A. Jones and B. Sufrin, EU Competition Law: Text, Cases and Materials (Oxford University Press, 2013)
I. Lianos, ‘Collusion in Vertical Relations under Article 81 EC’ (2008) 45 CML Rev 1027
O. Odudu, ‘The Meaning of Undertaking within [Article] 81 EC’ (2006) 7 Cambridge Yearbook of European Legal Studies 211
A. Weitbrecht, ‘From Freiburg to Chicago and Beyond: The First 50 Years of European Competition Law’ (2008) 29 European Competition Law Review 81
R. Wish and D. Bailey, Competition Law (Oxford University Press, 2012)
R. Wish and B. Sufrin, ‘Article 85 and the Rule of Reason’ (1987) 7 YEL 1
Content
1.
Past: Britain as an ‘Awkward Partner’?
2.
Present: Withdrawing under Article 50 TEU
3.
Future I: (Possible) Trade Agreements with the Union
4.
Future II: A ‘Hard’ Brexit and the ‘WTO Model’
The British exit from the European Union (‘Brexit’) has occupied the Union for much of the last four years. For the first time since its founding, a Member States decided to deliberately dissociate itself from European integration in an attempt to regain sovereignty and independence.
Why and how did this happen; and may it happen to other Member States of the Union? With several severe crises afflicting the Union in the past decade—especially the financial and the migration crises—the question of whether Brexit constitutes an isolated case or a signal for an era of European disintegration has legitimately been posed.
This chapter, however, seeks to pursue a less ambitious task: it aims to explore the past, present, and future of the British exit decision. Section 1 begins by offering a brief historical overview of the past tensions between the United Kingdom and the European Union in an attempt to better explain the ‘special’ unease with which the United Kingdom viewed European integration. A former imperial and global power, its political self-understanding indeed differed from the very beginning from that of other Member States. Section 2 explores the ‘present’ withdrawal process under Article 50 TEU and the ‘Withdrawal Agreement’. Section 3 tries to look into the future by analysing four possible EU-UK trade relationship options. Will both parties decide to create a common customs union or will they conclude a ‘Canada Plus’ agreement? A future trade deal is currently being negotiated; yet the option of a ‘hard Brexit’ remains. This option is discussed in Section 4.
Figures
Content
1.
The “Market”: Product and Geographic Dimensions
3
1. The “Market”: Product and Geographic Dimensions 3
2.
Market Dominance
5
2. Market Dominance 5
(a) General Considerations
5
(b) Collective Dominance
8
3.
Abuse of Market Dominance
10
3. Abuse of Market Dominance 10
(a) Article 102 [2] (a) and “predatory pricing”
(a) Article 102 [2] (a) and “predatory pricing” 12
12
(b) Article 102 [2] (b) and “refusal to supply”
(b) Article 102 [2] (b) and “refusal to supply” 14
14
(c) Article 102 [2] (c) and “discretionary pricing”
(c) Article 102 [2] (c) and “discretionary pricing” 16
16
(d) Article 102 [2] (d) and “tying or bundling”
(d) Article 102 [2] (d) and “tying or bundling” 18
18
4.
Objective Justification: Apparently Abusive Behaviour?
20
4. Objective Justification: Apparently Abusive Behaviour? 20
The second pillar of EU competition law focuses on the – bad – behaviour of a single undertaking. For Article 102 does not require the collusive behaviour of two or more economic actors. It sanctions the unilateral behaviour of a dominant undertaking where this behaviour amounts to a “market abuse”. The provision states:
Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Article 102 encapsulates a number of fundamental choices with regard to the Union’s economic constitution. For by concentrating on a “dominant position within the internal market”, it goes beyond pure monopolies and is thus wider than its American counterpart.1 But by insisting on market abuse, it is also narrower than the American equivalent. For unlike the latter, Article 102 will not directly outlaw market structures. Dominance is not itself prohibited – only the abuse of a dominant position.
Like Article 101, the prohibition of market abuse will however only apply where an abusive behaviour “may affect trade between Member States”. Yet when this abuse is shown to have Union-wide effects it appears to be prohibited as such. For Article 102 has – unlike Article 101 – no “third paragraph” exempting abusive behaviour on the ground of its pro-competitive effects.
In sum: a violation of Article 102 implies the satisfaction of only three criteria. First, we must establish what the “market” is in which the undertaking operates. Second, the undertaking must be “dominant” within that market. And third, the undertaking must have “abused” its dominance.4 All three aspects will be discussed below (a–c). Finally, we will analyse whether the Union legal order has – despite the absence of an express exemption – allowed for “objective justifications” of abusive conduct (d).
Chapter "Competition Law II: Abuse"
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